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Columbia Laboratories Reports Fourth Quarter and Full Year 2013 Financial Results

Companies mentioned in this article: Columbia Laboratories, Inc.

BOSTON, March 5, 2014 /PRNewswire/ -- Columbia Laboratories, Inc. (Nasdaq: CBRX) today announced financial results of the three- and twelve-month periods ended December 31, 2013.

Financial highlights for the fourth quarter of 2013:

    --  Total net revenues grew 10% to $7.8 million compared to $7.1 million in
        the fourth quarter of 2012.
    --  GAAP income from operations was $0.8 million compared to $1.0 million in
        the fourth quarter of 2012.
    --  GAAP diluted earnings per share (EPS) was $0.06 compared to GAAP diluted
        EPS of $0.09 in the fourth quarter of 2012.
    --  Non-GAAP adjusted net income was $1.0 million, or $0.08 per diluted
        share, compared to $1.9 million, or $0.17 per diluted share, in the
        fourth quarter of 2012.

Financial highlights for full-year 2013:

    --  Total net revenues grew 13% to $29.2 million compared to $25.8 million
        in 2012.
    --  GAAP income from operations was $5.9 million compared to $2.8 million in
        2012.
    --  GAAP diluted EPS was $0.52 compared to $0.26 in 2012.
    --  Non-GAAP adjusted net income was $8.2 million, or $0.73 per diluted
        share, compared to $4.3 million or $0.39 per diluted share in 2012.

"2013 was a transformative year for Columbia, highlighted by our acquisition of Molecular Profiles. This world-class provider of pharmaceutical development, clinical trial manufacturing, and advanced analytical and consulting services was a key contributor to our double digit revenue growth, and the combined entity is benefitting from multiple synergies," said Frank Condella, Columbia's president and CEO. "We entered 2014 with a strong balance sheet and the right elements in place to deliver long-term revenue growth."

Fourth Quarter Financial Highlights
Revenues:
For the fourth quarter of 2013, revenues increased 10% to $7.8 million as compared with $7.1 million for the same period in 2012. Product revenues from Merck Serono S.A. (Merck Serono) were $3.5 million, a decrease of $1.4 million or 29% as compared to $4.9 million in the fourth quarter of 2012. The decrease primarily reflects the absence of CRINONE(®) (progesterone gel) orders from one of Merck Serono's higher-volume, higher-margin markets during the fourth quarter of 2013. This was due to Merck Serono not shipping CRINONE into this market during a routine license renewal period. During the first three quarters of 2013, Merck Serono increased product shipments in order to meet anticipated inventory requirements for this market during the renewal period. There were no product revenues from Actavis Inc. (Actavis) in the fourth quarter of 2013, as compared to $1.2 million in the fourth quarter of 2012.

Service revenues were $3.0 million for the three months ended December 31, 2013. This was the Company's first full quarter of service revenues following the acquisition of Molecular Profiles in September, 2013.

Gross Profit/Margin: Gross profit for the fourth quarter of 2013 was $3.5 million, compared to $4.0 million for the same period in 2012. Gross profit as a percentage of total revenues was 44% for the fourth quarter of 2013, compared to 56% in the fourth quarter of 2012. The lower gross margin primarily reflects the absence of sales to Merck Serono for one of its higher-volume, higher-margin markets during the fourth quarter of 2013.

Operating Expenses: Operating expenses decreased to $2.7 million for the fourth quarter of 2013, compared to $3.0 million for the fourth quarter of 2012.

Net Income: The Company recorded net income of $1.1 million, or $0.09 per basic and $0.06 per diluted share, for the fourth quarter of 2013, compared to net income of $2.6 million, or $0.24 per basic and $0.09 per diluted share, for the fourth quarter of 2012. Non-GAAP adjusted net income was $1.0 million, or $0.08 per fully diluted share, for the fourth quarter of 2013, compared to $1.9 million, or $0.17 per fully diluted share, for the fourth quarter of 2012. The reconciliation of net income to Non-GAAP adjusted net income is included at the end of this press release.

Full Year 2013 Financial Highlights:
Revenues:
Total revenues for the year ended December 31, 2013 were $29.2 million, an increase of $3.4 million or 13% over the prior year. Full year revenues included $21.3 million in product revenues from Merck Serono, an increase of $4.1 million or 24% from the prior year. There were no product revenues from Actavis in 2013, as compared to $4.3 million in 2012.

Service revenues from our wholly-owned subsidiary, Molecular Profiles, which we acquired on September 12, 2013, were $3.6 million.

Gross Profit/Margin: For the year ended December 31, 2013, gross profit increased to $16.0 million as compared to $13.0 million for 2012, and the gross margin increased from 50% to 55%, primarily driven by increased sales to Merck Serono for its higher-volume, higher-margin countries.

Operating Expenses: Operating expenses for the year ended December 31, 2013, were $10.1 million, a decrease of $0.1 million compared to the prior year.

Net Income: The Company recorded net income of $6.7 million, or $0.59 per basic and $0.52 per diluted share, for the year ended December 31, 2013, compared to net income of $9.9 million, or $0.91 per basic and $0.26 per diluted share, for the prior year. Non-GAAP adjusted net income was $8.2 million, or $0.73 per fully diluted share outstanding, compared to $4.3 million, or $0.39 per fully diluted share outstanding for the prior year. The reconciliation of net income to Non-GAAP adjusted net income is included at the end of this press release.

Balance Sheet
Cash and cash equivalents were $20.7 million at December 31, 2013. Cash flow from operations generated during the three- and twelve-month periods ended December 31, 2013 was $2.1 million and $7.1 million, respectively.

Financial Outlook
CRINONE revenues fluctuate from quarter-to-quarter and year-to-year based in part on the timing of product batch shipments to Merck Serono. As previously disclosed, Merck Serono built up its inventory of CRINONE during the first three quarters of 2013 for one of its higher-volume, higher-margin markets in anticipation of a routine license renewal. During the renewal period, which commenced in the fourth quarter of 2013 and is expected to continue through the first half of 2014, Merck Serono is not expected to ship CRINONE into this market. As a result of the shift in timing of these batch orders, product revenue from Merck Serono was lower for the fourth quarter of 2013; this is expected to continue through the first half of 2014. The Company expects underlying CRINONE worldwide in-market sales will continue to increase throughout 2014 and beyond, driven by Merck Serono's continued growth in emerging markets and entry into new markets.

The Company does not expect any future product revenue from Actavis; in early 2014, Actavis launched a next-generation CRINONE product for the U.S. market, which it is manufacturing in-house. The Company expects to continue receiving a 10% royalty on Actavis' U.S. net sales of CRINONE through mid-2020.

Columbia expects to maintain a positive cash flow from operations going forward.

Conference Call
As previously announced, Columbia's management will hold a conference call to discuss financial results for the fourth quarter and year ended December 31, 2013, as follows:


    Date:                   Wednesday, March 5, 2014

    Time:                   8:30 am EST

    Dial-in numbers:         Toll-free: (877) 870-4263 (U.S.) or (855)
                             669-9657 (Canada)

                            International: (412) 317-0790

    Conference ID:                                               10040650

    Webcast (live &          www.columbialabs.com, under 'Investor' or
     archive):               click here

The teleconference replay will be available approximately one hour after completion through Tuesday, March 11, 2014, at (877) 344-7529 (U.S.) or (412) 317-0088. The conference ID for the replay is 10040650. The archived webcast will be available for one year via the aforementioned URLs.

Non-GAAP Financial Presentation
To supplement our consolidated financial statements presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP), Columbia uses non-GAAP measures. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. The non-GAAP financial measures included in this press release exclude acquisition-related costs, severance and relocation costs associated with the workforce reduction and relocation from Livingston, New Jersey to Boston, Massachusetts, and the change in the fair value of stock warrants. This exclusion may be different from, and therefore not comparable to, similar measures used by other companies.

Columbia's management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenses and expenditures that may not be indicative of our core business operating results. Columbia believes that both management and investors may benefit from referring to these non-GAAP financial measures in assessing Columbia's performance and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to Columbia's historical performance and our competitors' operating results. Columbia believes that these non-GAAP measures may be useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making.

About Columbia Laboratories
Columbia Laboratories, Inc. provides pharmaceutical development, clinical trial manufacturing, and advanced analytical and consulting services to the pharmaceutical industry. The Company has a successful heritage in pharmaceutical research and development, particularly in women's healthcare and drug delivery. Its most successful product to date, CRINONE(®) 8% (progesterone gel), is marketed by Actavis, Inc. in the U.S. and by Merck Serono S.A. in over 60 additional countries worldwide. For more information, please visit www.columbialabs.com.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This communication contains forward-looking statements, which statements are indicated by the words "may," "will," "plans," "believes," "expects," "anticipates," "potential," "should," and similar expressions. These include all statements relating to expected financial performance, including, without limitation, statements involving revenue projections for fiscal 2014, the expected timing of the license renewals, the potential for CRINONE's entry into new markets, and the Company's future growth prospects. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those projected in the forward-looking statements. These statements are based on management's expectations and customer forecasts as of March 5, 2014. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. Factors that might cause future results to differ include, but are not limited to, the following: Actavis' and Merck Serono's success in marketing CRINONE for use in infertility in their respective markets; changes in timing and quantity to Merck Serono's CRINONE supply orders; timely and successful renewals by Merck Serono of the license for CRINONE in major ex-U.S. markets; Merck Serono's success in gaining entry to new markets for CRINONE; the successful launch by Actavis of the next-generation vaginal progesterone product for the U.S. market; our ongoing ability to retain current and attract new customers; difficulties or delays in manufacturing; the availability and pricing of third-party sourced products and materials; successful compliance with FDA, MHRA and other governmental regulations applicable to manufacturing facilities, products and/or businesses; changes in the laws and regulations; the ability to obtain and enforce patents and other intellectual property rights; the impact of patent expiration; the impact of competitive products and pricing; our inability to maintain effective internal controls over reporting; the strength of the United States dollar relative to international currencies, particularly the euro, British pound and the Swiss franc; competitive, economic, and regulatory factors in the pharmaceutical and healthcare industry; general economic conditions; and other risks and uncertainties that may be detailed, from time-to-time, in Columbia's reports filed with the SEC, including, but not limited to, its Annual Report on Form 10-K for the period ended December 31, 2012. Columbia does not undertake any responsibility to revise or update any forward-looking statements contained herein, except as expressly required by law.

CRINONE(®) is a registered trademark of Actavis, Inc. in the U.S. and of Merck Serono S.A. outside the U.S.
Molecular Profiles(TM) is a trademark of Molecular Profiles Ltd., a wholly-owned subsidiary of Columbia Laboratories, Inc.

(tables follow)




                                           COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES
                                           --------------------------------------------

                                              CONSOLIDATED STATEMENTS OF OPERATIONS
                                              -------------------------------------

                                                           (Unaudited)
                                                            ----------


                                                            Three Months Ended December 31,                   Twelve Months Ended December 31,

                                                              2013                          2012                      2013                          2012
                                                              ----                          ----                      ----                          ----

    Revenues

    Product revenues                                                    $3,488,278                $4,931,203                   $21,336,458               $17,925,954

    Product revenues from related party                          -                     1,197,920                         -                     4,304,519

    Service Revenues                                     2,996,753                             -                 3,640,453                             -

    Royalties                                                              110,480                    48,358                       394,491                   380,473

    Royalties from related party                                           911,707                   879,297                     3,436,173                 3,079,379

    Other revenues                                                         300,000                    34,484                       418,877                   138,052
                                                                           -------                    ------                       -------                   -------

    Total net revenues                                                   7,807,218                 7,091,262                    29,226,452                25,828,377


    Cost of product revenues                                             2,482,502                 3,132,640                    10,903,459                12,788,264

    Cost of service revenues                             1,857,833                             -                 2,347,426                             -
                                                         ---------                           ---                 ---------                           ---

    Total cost of revenues                                               4,340,335                 3,132,640                    13,250,885                12,788,264


    Gross profit                                                         3,466,883                 3,958,622                    15,975,567                13,040,113


    Operating expenses

    Sales and marketing                                    360,173                             -                   438,950                             -

    Research and development (net of                             -                       (85,903)                        -                       770,642

    reimbursement from related party:

    three months 2012 - $0; twelve

    months 2012 - $435,199)

    Acquisition related expenses                           183,422                             -                 1,623,368                             -

    General and administrative                                           2,156,647                 3,083,402                     8,038,283                 9,459,963
                                                                         ---------                 ---------                     ---------                 ---------

    Total operating expenses                                             2,700,242                 2,997,499                    10,100,601                10,230,605


    Income from operations                                                 766,641                   961,123                     5,874,966                 2,809,508


    Interest (expense) income, net                                         (24,474)                   56,949                        71,279                   238,033

    Change in fair value of stock warrants                                 316,599                 1,595,530                       794,280                 6,995,099

    Other income (expense), net                                             42,978                    15,428                       (14,187)                 (122,660)
                                                                            ------                    ------                       -------                  --------

    Income before income taxes                                           1,101,744                 2,629,030                     6,726,338                 9,919,980

    Income tax provision (benefit)                                          14,390                    (2,311)                       22,564                     2,707
                                                                            ------                    ------                        ------                     -----

    Net income                                                          $1,087,354                $2,631,341                    $6,703,774                $9,917,273


    Diluted net income per share                                             $0.06                     $0.09                         $0.52                     $0.26


    Diluted weighted average shares                                     12,062,346                11,069,125                    11,273,456                11,063,034

    outstanding


    Basic net income per share                                               $0.09                     $0.24                         $0.59                     $0.91


    Basic weighted average shares                                       12,045,601                10,916,358                    11,259,347                10,914,476

    outstanding


                                                                                
                  COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES
                  --------------------------------------------
                                                                                
                          CONSOLIDATED BALANCE SHEETS
                          ---------------------------
                                                                               
                                                                               
                                      December 31,               December 31,
                                                    
                  2013                        2012
                  ----                        ----
                                                                               
                                      (Unaudited)
                                                                                
    Assets:
                                                                                             
    Cash and cash equivalents                       $20,715,414                 $13,204,067
                                                                                
    Short-term investments                       -                  15,433,967
                                                                                             
    Accounts receivable, net                          8,097,032                   3,353,636
                                                                                             
    Inventories                                       2,583,455                   2,626,606
                                                                                             
    Prepaid expenses and other current
     assets                                             831,138                   1,284,279
                                                                                
                                                                                             
    Total current assets                             32,227,039                  35,902,555
                                                     ----------                  ----------
                                                                                             
    Property and equipment, net                      13,226,330                     927,227
                                                                                             
    Intangibles, net                                  2,828,451                           -
                                                                                             
    Goodwill                                         11,151,925                           -
                                                                                             
    Deferred tax assets                                 570,033                           -
                                                                                             
    Other noncurrent assets                              88,682                      38,882
                                                                                
                                                                                             
    Total Assets                                    $60,092,460                 $36,868,664
                                                                                
                                                                   
                                                                                
    Liabilities and stockholders'
     equity:
                                                                                             
    Accounts payable                                 $2,805,112                  $1,435,660
                                                                                             
    Accrued expenses                                  2,488,096                   2,216,524
                                                                                             
    Deferred revenue                                    753,979                      93,750
                                                                                             
    Note payable                                        250,162                           -
                                                                                
                                                                                             
    Total current liabilities                         6,297,349                   3,745,934
                                                      ---------                   ---------
                                                                                             
    Deferred revenue, net of current
     portion                                          2,242,746                      33,526
                                                                                             
    Note payable, net of current
     portion                                          3,745,275                           -
                                                                                             
    Common stock warrant liability                      379,468                   1,173,747
                                                                                
                                                                                             
    Total Liabilities                                12,664,838                   4,953,207
                                                                                
                                                                                
    Commitments and Contingencies
                                                                                             
    Series C preferred stock                            550,000                     550,000
                                                                   
                                                                                             
    Total stockholders' equity                       46,877,622                  31,365,457
                                                                                
                                                                                             
    Total liabilities and
     stockholders' equity                           $60,092,460                 $36,868,664


                                                                                                                                                          
                                                   COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES
                                                   --------------------------------------------
                                                                                                                                                          
                        Reconciliation of GAAP Income Statement Measures to Non-GAAP Income Statement Measures (Unaudited)
                         -------------------------------------------------------------------------------------------------
                                                                                                                                                          
                                                                                                                                                      
                                                                                  Three Months Ended                      Twelve Months Ended
                                                                               
                                   December 31,                                      December 31,
                                   ------------                                     ------------
                                                                                                                                                       
                                                                                  2013               2012                        2013               2012
                                                                                  ----               ----                        ----               ----
                                                                                                                                                                        
    Income from operations                                                                $766,641             $961,123                $5,874,966           $2,809,508
                                                                                                                                                          
                                                                                                                                                          
    Non-GAAP adjustments to income from operations:
                                                                                                                                                          
    Acquisition related expenses                                               183,422                  -                   1,623,368                  -
                                                                                                                                                                        
    Costs associated with severance and                                                     24,000              905,872                   651,794            1,389,209
                                                                                                                                                                        
    relocation
                                                                                                                                                          
                                                                                                                                                                        
    Total Non-GAAP adjustments to                                                          207,422              905,872                 2,275,162            1,389,209
                                                                                                                                                                        
    income from operations
                                                                                                                                                          
                                                                                                                                                                        
    Non-GAAP adjusted income from operations                                              $974,063           $1,866,995                $8,150,128           $4,198,717
                                                                                                                                                          
                                                                                                                                     
                                                                                                                                     
                                                                                                                                     
                                                                                                                                                      
                                                                                  Three Months Ended                      Twelve Months Ended
                                                                               
                                   December 31,                                     December 31,
                                   ------------                                     ------------
                                                                                                                                                       
                                                                                  2013               2012                        2013               2012
                                                                                  ----               ----                        ----               ----
                                                                                                                                                                        
    Net income                                                                          $1,087,354           $2,631,341                $6,703,774           $9,917,273
                                                                                                                                                          
                                                                                                                                                          
    Non-GAAP adjustments to net income:
                                                                                                                                                          
    Acquisition related expenses                                               183,422                  -                   1,623,368                  -
                                                                                                                                                                        
    Costs associated with severance and                                                     24,000              905,872                   651,794            1,389,209
                                                                                                                                                                        
    relocation
                                                                                                                                                                        
    Change in fair value of stock warrants                                                (316,599)          (1,595,530)                 (794,280)          (6,995,099)
                                                                                                                                                          
                                                                                                                                                                        
    Total Non-GAAP adjustments to net                                                     (109,177)            (689,658)                1,480,882           (5,605,890)
                                                                                                                                                                        
    income
                                                                                                                                                          
                                                                                                                                                                        
    Non-GAAP adjusted net income                                                          $978,177           $1,941,683                $8,184,656           $4,311,383
                                                                                                                                                          
                                                                                                                                     
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                      
                                                                                  Three Months Ended                      Twelve Months Ended
                                                                               
                                   December 31,                                     December 31,
                                   ------------                                     ------------
                                                                                                                                                       
                                                                                  2013               2012                        2013               2012
                                                                                  ----               ----                        ----               ----
                                                                                                                                                                        
    Diluted net income per share                                                             $0.06                $0.09                     $0.52                $0.26
                                                                                                                                                          
                                                                                                                                                          
    Acquisition related expenses                                                  0.02                  -                        0.14                  -
                                                                                                                                                                        
    Costs associated with severance and                                                       0.00                 0.08                      0.06                 0.13
                                                                                                                                                                        
    relocation
                                                                                                                                                          
    Change in fair value of stock warrants                                           -                  -                           -                  -
                                                                                                                                                          
                                                                                                                                                                        
    Total Non-GAAP adjustments to net                                                         0.02                 0.08                      0.20                 0.13
                                                                                                                                                                        
    income
                                                                                                                                                                        
    Non-GAAP diluted adjusted net income per share                                           $0.08                $0.17                     $0.73                $0.39
                                                                                                                                                          
                                                                                                                                                                        
    Weighted average shares used to compute diluted net income per share                12,062,346           11,069,125                11,273,456           11,063,034


    Contact:

    Jonathan Lloyd Jones       Tricia Truehart

    Vice President & CFO       Senior Associate

    Columbia Laboratories,      The Trout Group
     Inc.                       LLC

    (617) 639-1500             (646) 378-2953

SOURCE Columbia Laboratories, Inc.