Shares of Elite Pharmaceuticals, Inc. ELTP have lost 3.3% since the company reported its earnings for the quarter ended Dec. 31, 2024. This compares to the S&P 500 Index’s 1.2% gain over the same time frame. Over the past month, the stock gained 7.6% compared with the S&P 500’s 2% rise.
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Financial Performance
Elite Pharmaceuticals reported consolidated revenues of $14.4 million in the third quarter of fiscal 2025 ended Dec. 31, 2024, reflecting a 7.6% decline from the $15.5 million recorded in the prior-year quarter. The company attributed the decline to timing differences at the end of December, which resulted in shipment delays that pushed revenue recognition into January 2025.
Manufacturing fees, the primary revenue driver, declined 7.1% to $13.7 million from $14.8 million a year earlier. Licensing fees fell 16.3% to $0.6 million from $0.7 million a year earlier, reflecting the company’s shift away from third-party licensing agreements in favor of its own branded sales.
Gross profit came in at $6.1 million, down 13.1% from the prior-year period’s $7 million. The company’s gross margin slipped to 43% from 45% a year ago, impacted by lower revenue levels and an unfavorable product mix.
Operating expenses surged 43.1% to $5 million from $3.5 million a year earlier, primarily due to a 59.2% increase in general and administrative costs to $2.7 million from $1.7 million a year earlier, reflecting higher personnel expenses and regulatory compliance costs. Research and development (R&D) expenses rose 27.8% to $1.8 million from $1.4 million a year earlier as the company expanded its product development efforts. Operating profit declined sharply to $1.1 million from $3.5 million in the prior-year quarter, representing a 68.9% drop.
ELTP reported a net loss of $10.9 million against a net income of $0.7 million in the prior-year quarter. This sharp downturn was primarily driven by a $11.7 million loss related to changes in the fair value of derivative financial instruments — warrants. The company also recorded an income tax expense of $0.2 million against an income tax benefit of $0.8 million in the prior-year quarter.
Elite Pharmaceuticals reported a loss per share of $0.01 for the quarter against breakeven earnings per share in the prior-year period.
Elite Pharmaceuticals Inc. Price, Consensus and EPS Surprise
Elite Pharmaceuticals Inc. price-consensus-eps-surprise-chart | Elite Pharmaceuticals Inc. Quote
Other Key Business Metrics
Interest expense was $16,088 and $18,200 for the three months ended Dec. 31, 2024 and 2023, respectively, and $51,783 and $57,985 for the nine months ended Dec. 31, 2024 and 2023, respectively. The company did not record any gains from settlement agreements in the quarter, whereas the prior-year period had benefited from a $1.8 million gain.
For the nine months ended Dec. 31, 2024, total revenues grew 34.6% to $52 million, driven by a 39.2% increase in manufacturing fees to $50.4 million from $36.2 million. However, the company’s net loss was $21.3 million against a $16.8 million net income in the same period last year. This was largely due to a $27.3 million loss related to derivative financial instruments.
Management Commentary
Elite Pharmaceuticals’ management acknowledged that revenue for the quarter was impacted by shipment delays but noted that these sales were expected to be recognized in the following quarter. The company also highlighted continued progress in developing its product pipeline and expanding its manufacturing capabilities.
Factors Influencing Performance
While the company’s shift toward self-branded sales is expected to drive long-term growth, the transition has weighed on short-term licensing revenue. Additionally, holiday-related shipping delays affected sales timing, pushing some revenue into the following quarter. Increased investment in R&D and regulatory compliance further contributed to margin compression.
The sharp increase in the fair value of derivative financial instruments, a non-cash charge tied to stock warrants, significantly impacted the bottom line. Given ELTP’s capital structure, fluctuations in its stock price could continue to create earnings volatility.
Guidance and Outlook
Elite Pharmaceuticals did not provide specific forward guidance. However, management remains focused on expanding its product portfolio, ramping up manufacturing capabilities and increasing sales under the Elite label.
Other Developments
During the quarter, Elite Pharmaceuticals completed the $900,000 acquisition of three ANDAs from Nostrum Laboratories Inc. These include generic versions of Norco (Acetaminophen and Hydrocodone Bitartrate), Percocet (Oxycodone Hydrochloride and Acetaminophen) and Dolophine (Methadone Hydrochloride) tablets. The acquisition enhances the company’s pipeline in the opioid and pain management segment. While the company has commercially launched its Norco generic, the remaining two products have yet to hit the market.
The company commercially launched its generic version of Vyvanse (Lisdexamfetamine Dimesylate) for attention deficit hyperactivity disorder (ADHD) in December 2024. The product is marketed under the Elite label.
Additionally, on Feb. 9, 2025, the FDA approved ELTP’s newly constructed facility in Northvale, NJ, as a commercial packaging site. This regulatory milestone enhances the company’s ability to scale operations.
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