ADMA Biologics, Inc. :ADMA-US: Earnings Analysis: 2016 By the Numbers : March 14, 2017

ADMA Biologics, Inc. reports financial results for the year ended December 31, 2016.

We analyze the earnings along side the following peers of ADMA Biologics, Inc. – Novavax, Inc., Repligen Corporation, Vical Incorporated and CEL-SCI Corporation (NVAX-US, RGEN-US, VICL-US and CVM-US) that have also reported for this period.

Highlights

  • Gross margins narrowed from 39.93% to -10.76% compared to the same period last year, operating (EBITDA) margins now -158.15% from -209.60%.
  • Year-on-year change in operating cash flow of -18.49% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016 2015 2014 2013 2012
Relevant Numbers (Annual)
Revenues 10.66 7.18 5.92 3.07 1.12
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings -19.52 -17.97 -16.81 -15.53 -7.3
Earnings Growth (YOY) -8.6 -6.88 -8.28 -112.66 -23.68
Net Margin -183.05 -250.36 -284.22 -506.17 -653
EPS -1.61 -1.73 -1.81 -2.38 -0.75
Return on Equity N/A -526.23 -121.91 -100.19 -148.86
Return on Assets -82.34 -70.55 -56.79 -65.33 -79.01

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Earnings Growth Analysis

The company’s year-on-year earnings decline was driven by the drop in gross margins from 39.93% to -10.76%. This drop in earnings would have been worse were in not for operational cost control activities, which helped the operating margins (EBITDA margins) improve from -209.60% to -158.15%. For comparison purposes, gross margins were 39.93% and EBITDA margins were -209.60% in the previous period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

ADMA-US‘s decline in gross margins were offset by some improvements on the balance sheet. The management of working capital, for example, shows progress. The company’s working capital days have fallen to 470.90 days from 939.85 days for the same period last year. This leads Capital Cube to conclude that the gross margin decline is not altogether bad.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

ADMA-US‘s change in operating cash flow of -18.49% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

Margins

The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from -216.14% to -162.56% and (2) one-time items. The company’s pretax margins are now -183.05% compared to -250.36% for the same period last year.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

ADMA Biologics, Inc. is a biopharmaceutical company, which engages in the development and commercialization of human plasma and plasma-derived therapeutics. It operates through the Plasma Collection Center and Research and Development segments. The Plasma Collection Center segment comprises of operations in Georgia. The Research and Development segment involves plasma development operations in New Jersey. The company’s targeted patient populations include immune-compromised individuals who suffer from an underlying immune deficiency disease or who may be immune-suppressed for medical reasons. The company was founded by Adam S. Grossman and Jerrold B. Grossman on June 2, 2006 and is headquartered in Hackensack, NJ.

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