CXRX 5.35 Bullish Links .They are planning on launching 40 + new products in the coming years , and management is saying debt is manageable. Long for a bounce swingtrade. I have been buying over the last few weeks. Stock is down from 88.12 It should have a nice rally imo. Average daily volume is rising at these price levels which usually indicates institutional buying . Its extremely oversold with over 30% short interest.
Financial stats and daily chart
http://finviz.com/quote.ashx?t=CXRX
Pincher play set up on the daily. ADX black line is at 65 now and the MACD are touching once they start to separate this stock could soar. High probability chart setup .
Daily chart pincher set up
http://stockcharts.com/h-sc/ui?s=CXRX&p=D&b=5&g=0&id=p15769504521
Weelky chart pincher set up.
http://stockcharts.com/h-sc/ui?s=CXRX&p=W&b=5&g=0&id=p81540906101
Recent CC call transcript.
http://seekingalpha.com/article/3999246-concordia-healthcares-cxrx-ceo-mark-thompson-q2-2016-results-earnings-call-transcript
Good luck to all longs and shorts.
40+ product launches = growth. Pasted from CC Call .
Bolded
Since October 2015, we have launched 13 new products and we remain on track to meet our target of 60-plus launches by the fourth quarter of 2018. These are products with relatively low regulatory and clinical risk. They are high margin products that include branded and generic therapies for the treatment of prostate cancer, pain, depression and obesity among other indications.
In addition, we believe they will be important contributors to our business and to the healthcare system. We are also taking steps to ensure our pipeline is continually replenished beyond these 60 launches, by continuing to invest in the development and licensing of new and existing products.
Our teams are continually working to identify additional global development opportunities that add to our pipeline. Our acquisition of the global rights to four new products in the UK have performed well for us since closing on June 1 and further diversifies our product portfolio.
Concordia Healthcare's (CXRX) CEO Mark Thompson on Q2 2016 Results - Earnings Call Transcript
Aug. 12, 2016 2:59 PM ET|2 comments | About: Concordia International Corp (CXRX)
Q2 2016 Earnings Summary
Press Release Analysis News
EPS of $ misses by $-1.38 | Revenue of $231.71M (+ 208.1% Y/Y) beats by $1.95M
Concordia Healthcare Corp. (NASDAQ:CXRX)
Q2 2016 Earnings Conference Call
August 12, 2016 8:30 AM ET
Executives
Adam Peeler - Vice President, Investor Relations and Corporate Communications
Edward Borkowski - Executive Vice President
Adrian de Saldanha - Chief Financial Officer
Mark Thompson - Chairman and Chief Executive Officer
Wayne Kreppner - President & Chief Operating Officer
John Beighton - President of Concordia’s International segment
Analysts
Alan Ridgeway - Scotiabank
Stephan Stewart - Goldman Sachs & Co.
Joel Hurren - RBC Capital Markets
Lennox Gibbs - TD Securities
Martin Landry - GMP Securities
David Common - JPMorgan Chase & Co.
Cynthia Guan - Goldman, Sachs & Co.
David Martin - Bloom Burton & Co.
Operator
Good morning and welcome to Concordia’s Second Quarter 2016 Results Conference Call. My name is Melissa and I will be your conference operator today. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Management has requested that parties limit their questions to two each.
At this time, I would like turn the call over to Adam Peeler, Vice President, Investor Relations and Corporate Communications, Concordia International Corp. Please go ahead, sir.
Adam Peeler
Thanks, Melissa, and good morning, everyone. Before we start, we would like to remind you that all amounts discussed on this call are denominated in U.S. dollars unless otherwise indicated. Please note that statements made during this call may include forward-looking statements and information and future oriented financial information regarding Concordia and its business and disclosure regarding possible events, conditions or results that are based on information currently available to management which indicate managements’ expectations of future growth, results of operations, business performance and business prospects and opportunities.
Such statements are made as of this date and Concordia assumes no obligation to update or revise them to reflect events, disclosures or circumstances except as required by applicable securities laws. Such statements involve significant risks and uncertainties and are not guarantees of future performance or results. A number of these factors could cause results to differ materially from the results discussed today. Given these uncertainties, one should not place undue reliance on these statements and information. Please refer to the forward-looking statements and information and future-oriented financial information sections of our public filings including without limitation our MD&A, Annual Information Form and earnings press release for additional information.
Joining us today are Concordia’s senior management team, including Mr. Mark Thompson, Chairman and Chief Executive Officer; Wayne Kreppner, President and Chief Operating Officer; Adrian de Saldanha, Chief Financial Officer; Edward Borkowski, Executive Vice President; John Beighton, President of Concordia’s International segment; and Dan Peisert, VP of Corporate Affairs.
I will now turn the call over to Ed Borkowski. Ed?
Edward Borkowski
Thanks, Adam, and good morning, everyone. We provided several updates to our business this morning in our press release. In addition to announcing our second quarter, we’ve updated our 2016 forecast, primarily due to changes in currency rates and competition in our North American business, and we have adjusted the carrying value of certain assets in that business. Additionally, we’ve announced several administrative changes, including the suspension of our dividend, which we will discuss later.
I will talk about our guidance, operations, and liquidity; Adrian will discuss our financial results; and Mark will provide closing comments. As mentioned, we have revised our 2016 guidance for two primary reasons. We believe it was appropriate to reflect the significant changes on foreign exchange rates, primarily as a result of Brexit in our guidance. We’ve adjusted our forecast to reflect current exchange rates, which impacted our revenues by approximately $65 million and our adjusted EBITDA by about $38 million.
And secondly, primarily due to increasing competitive pressures on key products in the U.S. business, we are forecasting a revision to revenues of approximately $101 million and adjusted EBITDA by approximately $62 million, inclusive of expense savings this year. Those savings are related to our third-party sales force and tech transfer expenses of approximately $22 million, which is now built into our revised guidance.
My remarks will provide more information on both issues, and then I’ll comment on macro themes for the consolidated business, including leverage and liquidity. Concerning the foreign currency rates, as we disclosed in our press release this morning, our original guidance for this fiscal year was at a constant currency rate of USD$1.53 relative to sterling. We are now using $1.31 as the currency rate.
Now that the Brexit vote is behind us, we have seen the pound sterling settle into a more defined range. Obviously, we can’t predict how that rate will move and we’ll continue to monitor the impact or changes. As you are aware, our reporting currency is the U.S. dollar, yet a significant portion of our revenue, EBITDA and liabilities are denominated in the pound.
As disclosed recently, the pound sterling denominated free cash flow from Concordia International’s 2016 operations is naturally hedged in 2016 bias pound sterling denominated liabilities.
In 2016, these payment obligations include £5 million of principal and £30 million of interest payments in respect of the £500 million term loan, and an earn-out of £140 million payable to the former owners of the International segment. The depreciation of the pound sterling relative to the dollar does not impact our ability to service our debt and meet our earn-out obligations in 2016. Beyond 2016, the company is actively evaluating its hedging options and we intend to solidify our plans in the coming weeks.
Now, I’ll discuss the competitive environment related to our North American products. On July 15, a generic version of Nilandron was approved by the FDA. Nilandron is our off-patent branded therapy for the treatment of metastatic prostate cancer, which we acquired in April 2015, as part of the acquisition of the Covis Portfolio of products. While it’s a product that we knew could eventually have generic competition, we were not expecting a generic in the near-term.
We were anticipating greater growth from Nilandron in the second-half of this year and beyond, which was the rationale for adding additional sales and marketing support for the product. We had initiated these sales and marketing efforts in the first quarter of this year. With the approval of the generic competitor, we are compelling our promotional efforts now that a generic launch and are preparing the launch of our own authorized generic.
Concerning Donnatal, our adjunctive treatment for irritable bowel syndrome, we believe that competition within the therapeutic class will impede our ability to grow the asset in 2016. With new launches of IBS products, we are experienced competition for prescriptions, as healthcare providers evaluate new entrants.
Recent trends indicate that Donnatal is not being prescribed as frequently as we had anticipated, and we do not believe that, we will see the growth we expected from the additional sales efforts in the second-half of 2016. While our contract sales team has had success targeting traditional Donnatal prescribers, the sales team has had limited impact in growing the brand with doctors, who have not traditionally prescribed the drug.
We have also recently experienced the impact of a localized, regional, and in our view, illegal competitor Donnatal, which at this time has had a de minimis impact on sales. We are working to resolve this and have taken legal action against the third-party that has launched this product.
As a result, we are looking at options for our contract sales teams. We still believe in the value of promotional support for Donnatal, and in the near-term, we will continue to support the product and look for other opportunities for the sales force.
Our Plaquenil authorized generic has seen steep and rapid price erosion in the second quarter caused by an additional generic entrants signaling that they intend to participate in the market. Although this event did not significantly impact us until later in the second quarter, we anticipate the impact will be more pronounced in the second-half of the year.
Due to the generic competition for Nilandron and Plaquenil, we have adjusted the carrying value of these products by $567 million. Adrian will provide more detail on the adjustments in a moment, as well additional details for the adjustments in our second quarter financial statements and MD&A.
I also want to discuss a few broader themes for the consolidated business, including leverage and liquidity. Our lowered revised guidance results in a projected year-end 2016 net debt to EBITDA ratio of 6.4 times versus our original projections of 5.5 times.
Importantly, Concordia is currently not subject to any financial maintenance covenants. There are financial maintenance covenants applicable only in the event that the aggregate principal amount of the outstanding undrawn $200 million revolver is greater than 30% of the aggregate amount of the available revolving facility.
Taking into consideration our revised guidance, we continue to believe we have sufficient liquidity to service all of our obligations, and we believe our debt is manageable, given our strong free cash flow profile.
In addition, we’ve suspended our dividend to further strengthen our cash flow and we remain committed to delevering. We concluded the second quarter with a $145 million in cash and have the option to the – half of our £144 million earn-out to the prior owners of our International segment to the middle of the – of first quarter of 2017.
I also want to touch on the performance of our International segment. Despite the currency variances, our International segment generated strong results in the second quarter. International segment revenue for the second quarter of 2016 was $151.5 million, an increase of 9.2% on a sequential quarterly basis.
Adjusted EBITDA for the second quarter of 2016 from the Concordia International segment was $89.2 million, represent an increase of 8% on a sequential basis.
Looking out for the remainder of the year, we believe that there will be continued growth coming from the International segment. This is a business with direct sales channels into strong pharmaceutical market, such as the UK, Australia, France, and the Nordics region and in growing markets like MENA.
Bolded by me.
Since October 2015, we have launched 13 new products and we remain on track to meet our target of 60-plus launches by the fourth quarter of 2018. These are products with relatively low regulatory and clinical risk. They are high margin products that include branded and generic therapies for the treatment of prostate cancer, pain, depression and obesity among other indications.
In addition, we believe they will be important contributors to our business and to the healthcare system. We are also taking steps to ensure our pipeline is continually replenished beyond these 60 launches, by continuing to invest in the development and licensing of new and existing products.
Our teams are continually working to identify additional global development opportunities that add to our pipeline. Our acquisition of the global rights to four new products in the UK have performed well for us since closing on June 1 and further diversifies our product portfolio.
As a reminder, we acquired the global product rights for these products for £21 million upfront and up to £7 million in earn-out payments that if met would be payable in the second quarter of 2017.
When we acquired our International segment last year, we were very excited to gain an international platform for M&A beyond North America. We firmly believe, our International segment and its outstanding team will continue to demonstrate the value of that expanded reach.
We believe we are in a unique and strong position in the specialty pharma industry because of our global footprint, efficient cost structure, advantageous operating structure, and our ability to seamlessly integrate product opportunities and our experienced management team.
Regarding our orphan division, we are continuing to expand the prescriber base for Photofrin’s approved indications, which includes non-small cell lung cancer, Barrett’s Esophagus, and esophageal cancer. We’re also evaluating opportunities to expand Photofrin globally and our Phase 3 trial for cholangiocarcinoma is continuing to enroll patients. We look forward to continuing to build Concordia and delivering long-term growth for the business and our shareholders.
I’ll turn the call over to Adrian, who will provide more detail on our second quarter results.
Adrian de Saldanha
Thanks, Ed, and good morning, everyone. I will begin my comments by discussing our consolidated results for the three and six months ended June 30, 2016. Consolidated revenue for the three and six months ended June 30, 2016 increased by $136.5 million and $350.9 million, respectively, compared to the corresponding periods in 2015.
The increases were primarily due to $151.5 million of revenue for the quarter and $291.4 million year-to-date from the Concordia International segment acquired on October 21, 2015, which is not included in the comparable period. The revenue increase of the corresponding periods in 2015 was also due to additional revenue of $7.5 million and $64.3 million for the quarter and year-to-date, respectively, in the North American segment, due primarily to the Covis Portfolio acquired on April 21, 2015, only being included for a portion of the comparative period.
I will cover segment performance later in my remarks. Gross profit for the three and six months ended June 30, 2016 increased by $108.6 million and $238.2 million, respectively, compared to the corresponding periods in 2015. The increases were primarily due to the timing of the Covis Portfolio and Concordia International acquisitions in April and October 2015, respectively.
Reported GAAP gross profit in 2016 was reduced by non-cash fair value adjustment related to inventory acquired as part of a business acquisition of $0.9 million and $19.5 million, which were charged across the sales for the quarter and year-to-date, respectively.
Adjusted gross profit for the three and six months ended June 30, 2016 which represents gross profit, excluding these non-cash fair value adjustment charged to cost of sales increased by $109.5 million and $257.7 million, respectively, compared to the corresponding periods in 2015.
Our consolidated gross profit as a percentage of revenue for the three and six months period ended June 30, 2016 was 77% and 73%, respectively, compared to 92% and 91% in the corresponding periods of 2015. The change reflects the impact of low margins related to our international business segment, which were not included in the comparative period, as well as the change in mix of low margin authorized generic products in our North American business as compared previous periods.
In addition, the gross profit percentage for the six months period in 2016 was impacted by the largest charge of cost of goods sold in the first quarter in respect of fair value adjustments related to inventory acquired as part of the acquisition of Concordia International.
Excluding the impact of non-cash fair value adjustments, the gross – adjusted gross profit as a percentage of revenues for the three and six months periods ending June 30, 2016 was 77% and 78%, compared with 92% and 91% in the comparative 2015 periods. These decreases compared to comparative periods are mainly result of the inclusion of the International business segment as I’ve described.
As a result of launch of generic competitor Nilandron and competitive product pressures on Plaquenil previously discussed by Ed, both of which were figuring events for the second quarter, we have reassessed the carrying value of intangible assets associated with these products and recorded a total impairment of $567 million.
Operating expenses for the three and six months ended June 30, 2016 increased by $627 million and $706 million, respectively, compared to the corresponding periods in 2015. Operating expenses were higher in both periods due to the non-cash impairment charge of $567 million and the increased size and scale of the company’s business, including the acquisition of the Concordia International business in October 2015.
The company has grown significantly from a business with six core products sold primarily in the United States at the beginning of 2015 to a business with currently ever used from over 200 products sold over in 100 countries. Excluding the non-cash impairment charge, operating expenses continue to decline as a percentage of revenues as the business continues to grow.
Operating loss from continued operations for the three and six months ended June 30, 2016 were $494 million and $434 million, respectively. This represents a change of $518 million and $406 million, compared to the corresponding prior-year periods, due primarily to the $567 million impairment charge recorded in the second quarter of 2016.
Excluding the impairment charge, operating income from continued operations for the three and six month ended June 30, 2016 would have been $48.8 million and $98.9 million higher than the comparative periods in the prior year, primarily due to the increased gross profit from eh Concordia International segment and the Covis Portfolio, partially offset by increased operating expenses reflecting the increased size and scale of the company’s business.
In the second quarter, the company settled a previously disclosed lawsuit involving a former financial consultant of a company for $12.5 million and incurred approximately $100 million of associated legal costs. The net loss from continuing operations for the three and six months ended June 30, 2016 was $570 million and $575 million, respectively, and the company has reported a loss per share of $11.18 per share and $11.28 per share for the three and six months ended June 30, 2016.
The net loss loss was primarily a result of the $567 million impairment charge recorded against Nilandron and Plaquenil and the litigation settlement and related costs of $13.5 million recorded in the second quarter of 2016, as previously described.
EBITDA for the second quarter of 2016 was $454.3 million loss and $345.3 million loss on a year-to-date basis. EBITDA was in loss position as a result of the impairment expenses discussed above and is offset by contributions during the period by Concordia International and the Covis Portfolio acquisition in 2015.
Adjusted EBITDA for the three and six months ended June 30, 2016 was $142.3 million and $283.6 million, respectively, compared to $54.3 million and $73.6 million for the corresponding periods in 2015. Adjusted EBITDA is positive compared to our net loss and it add backs the non-cash impairment of $567 million previously described, as well as litigation settlement costs, acquisition restructuring, and other costs, share-based compensation, non-fair value – non-cash fair value changes, and foreign exchange gains and losses.
Turning to segment performance. The Concordia North American segment was down slightly compared to the first quarter of 2016, as a result of competitive pressures for certain products. Revenue for the three and six months periods ended June 30, 2016 was $77.5 million and $163.6 million, respectively, representing an increase of $5.1 million, or 7% and $60 million, or $0.50, or 8%, respectively, compared to the corresponding periods in 2015.
The increase in 2016 includes the impact of a full quarter and six months to-date results for the Covis Portfolio, which was completed on April 21, 2015, offset in part by product exchanges, competitive pressures experienced in certain products, including Donnatal, as previously discussed by Ed. Sequentially, comparing previous quarters, the second quarter revenue for the North American segment was $77.5 million, compared to our first quarter revenue of $85.9 million and $74.2 million for the fourth quarter of 2015. This reflects a change in product performance and product mix, both of which have impacted our results for these products.
Gross profit for the second quarter of 2016 decreased by $0.5 million compared to the corresponding period in 2015, due to the discontinued of the royalty revenue related to generic Kapvay, as well as higher charge mix and increased inventory provisions.
On a year-to-date basis, gross profit increased by $46.5 million, compared to corresponding period last year, primarily due to additional gross profit earned from the Covis Portfolio, offset by a higher mix of sales to government payors that have low margin, inventory provisions quarter-over-quarter, and the impact of the discontinuation of generic Kapvay royalty effective June 2015.
Our Concordia International business was acquired in October 2015, and therefore, no results are recorded in the comparable periods in 2015. Results for Concordia International have been converted from GBP to U.S. dollars, using an average rate of 1.44 during the second quarter of 2016, at an average rate of 1.43 for the first quarter of 2016.
International segment revenue for the second quarter of 2016 was $151.5 million and $291.4 million for first six months of 2016. International segment revenue increased by 9.2% on a sequential quarterly basis. The segment’s second quarter results included a profit contribution of approximately $2 million from the products acquired on June 1, 2016.
Adjusted EBITDA for the second quarter of 2016 from the Concordia International segment was $89.4 million. Adjusted EBITDA for the six – first six months of 2016 was $171.7 million. International segment adjusted EBITDA increased by $7.1 million, or 9% on a sequential quarterly basis, primarily due to contribution of the products acquired in June 1, 2016, other organic product growth and the resolution of certain product supply issues, which occurred in the first quarter of 2016.
Turning to our Orphan Drug segment, which primarily consist of Photofrin. Revenue for the second quarter of 2016 was $2.7 million, essentially flat compared to the second quarter of 2015 and $0.5 million lower year-to-date compared to the corresponding periods in 2015. Orphan Drug revenue declined primarily due to reduction in distribution revenue in Europe from Ethyol, including the first quarter of 2015, which is no longer distributed by the company.
Regarding our financial position. Our working capital, which we defined as current assets less accounts payable and accrued liability and provision has remained relatively constant at approximately $290 million. The accounts receivable balance of $208 million is reflective of increased revenue rates to certain customers with longer commercial payment terms, therefore, driving up the accounts receivable balance from the comparative 2015 year-end balance of $193 million.
Concordia North America accounts receivable increased by $10.9 million, reflecting primarily the impact of sales mix during 2016, compared to the fourth quarter of 2015, with a higher proportion of authorized generics revenue, which have longer payment terms.
Concordia International accounts receivable increased by $3.0 million, which is due to a high level of sales towards the end of the second quarter of 2016, compared with the fourth quarter of 2015, partially offset by a decline in the foreign exchange rate to convert receivables denominated in pound sterling.
To-date, we have not experienced any significant accounts receivable write-offs within any of our segment and the accounts receivable continue to be settled to cash collection. Total inventory balances of $91.6 million, a decrease compared with the comparative 2015 year-end balance of $106 million.
The change includes a reduction of $16.6 million related Concordia International, due primarily to the release from inventory to cost of goods sold of the remaining non-cash fair value adjustment to inventory acquired as part of the Concordia International acquisition. This decrease in inventory is offset by a Concordia North America’s raw material inventory increasing by $5.5 million, as a result of exceeding certain large levers of active pharmaceutical ingredient raw materials during the second quarter of 2016.
I will now highlight some cash flow items. Our consolidated business continues to earn same cash flows from operations, which were $236.6 million in the first six months of 2016.
During the second quarter, Concordia International completed an acquisition of four generic products and the associated global rights for 21 million pound sterling as disclosed in our quarter [ph] income financial statement.
The U.S. dollar equivalent of $30.7 million is reflected as an investing activity for the period in our current quarter financial statement. During 2016, we also repaid $42.5 million of continued consideration of certain acquisitions completed by International segment prior to October 2015.
Our long-term debt principal was reduced by mandatory amortization payments of $9.5 million during the six months period and we’ve made $133 million of interest payments of the same period, which are included in our cash flow from financing activities. Despite the decline in GBP, cash flow when converted to U.S. dollars for reporting purposes following the decline in the GBP versus U.S. dollar exchange rate after the Brexit bought in June.
It is important to note that our business generates strong cash flows and we are in the process of considering hedging arrangement alternatives, which will further help to match our cash outflows in U.S. dollar and GBP to the cash flow generation in those currencies.
The company ended the second quarter of 2016 with $145.3 million in cash and cash equivalents, and up to $200 million available subject to compliance with certain debt incurrence covenants and our undrawn, secured revolving credit facility.
I will now turn the call over to Mark, who will provide his closing comments. Mark?
Mark Thompson
Thanks, David, and good morning. This was obviously a tough quarter for us. Two of the events that happened, Brexit and generic Nilandron were really unexpected. If I recall sitting here in the Q1 call and discussing Brexit and really nobody believed that it was going to happen, but it did. And across the industry, nobody expected that Nilandron will go generic, but it did, and we take responsibility for that. That’s fully operated business and that happens.
I do believe though that the negative outcomes have occurred, and therefore, the U.S. business will remain flat subject to any BD activities we entertained. The focus going forward really is on the international business. It has a fantastic pipeline. We are in the strokes of some licensing deals. We’re looking across pollinating some of our products. We’re entering into new territories. So it’s a very, very strong business. And as Ed said, we saw 9% quarter-over-quarter growth.
There are no liquidity issues. There are no covenant issues. The business is generating substantial free cash and we’ll continue to do so. I know that the naysayers are saying already that we spend in the dividend, because we need the cash. But if you go back and look at what the dividend was, it was historically put in place to attract investors when we went public.
When we went on the road – road show after road show, institutional investors would always ask us why do you pay a dividend and we told why. But now given where we are and given the amount of leverage, we’re listening to our shareholders and our shareholders are saying deploy that cash to repay debt. And that’s what we’ve decided to do.
Overall, I’m very pleased with the business. We had some tough advances occurring in Q2, but I think the future is very bright for us. We have a great team, and we’re going to continue to leverage the portfolio going forward.
I’ll now open it to questions.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] Your first question comes from the line of Alan Ridgeway from Scotiabank. Your line is open.
Alan Ridgeway
Hi, good morning, guys. Thanks a lot for taking the questions. I guess, I will start on the guidance revision. I think everybody was expecting a revision and – the currency side was as we were anticipating, I think the product revision side is greater than what we thought.
So I was just wondering, is there anyway you guys can provide us with a little bit more detail around the contribution to that $62 million EBITDA decrease as far as Nilandro, and Donnatal and Plaquenil along the lines of, sort of, what are you assuming for Nilandro now in the second-half and going forward? And how bad was the pricing impact on Plaquenil today? We knew there was a new competitor, but and I thought we had someone accounted for the pricing, but I don’t think we’ve recounted enough?
And then finally, if you could just give us on the Donnatal side, how big of a delta from your original budget is the new guidance?
Edward Borkowski
Hey, Al, this is Ed. I’ll try to give a little color on what happened here and Wayne will fill in maybe on some of the economics of what’s going on with – some of these products as well. I mean, of the – basically of the $100 million, I would say about half was related to what we saw in Donnatal in terms of the growth that we saw that we had originally projected to what we’re seeing. And I would say, we’re basically forecasting it to be roughly flat for the balance of the year and going forward.
Nilandron was the next piece of that, and Plaquenil a little less was probably fairly small for this year. Although we understand that the – looking at the pricing going forward was going to have a more significant impact into the future. So those were probably the key components of that. I don’t know, whether, Wayne, you want to add any?
Wayne Kreppner
Yes, I think, I guess, the big driver there was Donnatal. We had obviously forecasted some significant growth in the second-half for Donnatal, based on our sales effort and our smart sales effort. And given where we’re seeing Donnatal now, that sort of flat going forward, we’ve taken that growth out of the revised forecast going forward.
Alan Ridgeway
Okay. So just Ed, so of the $100 – Ed, you said of the $100 million of the revenue decline, about half was – or ballpark half is Donnatal?
Edward Borkowski
Correct.
Alan Ridgeway
Okay. Do you guys have any additional information yet on the Nilandron generic? Has the generic launched? And how quickly can you guys get an AG into the market if that is your plan?
Adrian de Saldanha
The generic has launched. It has not taken significant volumes as yet, but it’s still pretty days. We are planning to launch an AG very soon, that’s the strategy and we’ve done that before and we have partners in place to do that.
Alan Ridgeway
Okay. So the partners are in place and you guys are ready to go. Okay, and then last, maybe, Wayne, just for you. Can you just give us an update on the Photofrin trial and timing to when we might see interim data? And I’ll leave it at that. Thanks for taking the questions, guys.
Wayne Kreppner
Sure. The Photofrin trial continues to move along. We’re continuing to open our up sites and enroll patients a little bit slower than we had anticipated. We were hoping to have the interim analysis, patient level of 45 enrolled by the end of the year. There still isn’t an outside chance we can get there. But we’re looking – forecasting more towards the first-half of next year for that. Again, remember, this is an Orphan Drug segment. There’s a small number of patients. These are very sick patients.
So enrollment in the current clinical trial is more challenging than a normal clinical trial for other products. And so we continue to work through that. But we are still working towards that 45-person interim analysis towards the end of the year. But I think it’s more likely what’s going to happen in the first-half.
Operator
Your next question comes from the line of Stephan Stewart from Goldman Sachs. Your line is open.
Stephan Stewart
Thanks and good morning, guys. Just one question on the UK to start with, I guess, how much of the growth there was from price? And do you see price being less of a driver going forward, given the focus on that side, pressed on regulatory focus?
John Beighton
Yes, this is John Beighton. Certainly price was a driver in results so far. Looking – having said that, we’ve also launched 13 products since we were acquired by Concordia in October. So volume is also a big driver – or has been a big driver. Looking forward, volume is the main driver for us.
As far as price is concerned, there are some modest prices forecast for the future, which we believe will be not an issue for us to take. We’ve also got – actually whilst we will always increase price where we can. There are also price declines factored in, because you can move prices in the UK, that means you can move them down, and that means you can sell more volume. And certainly that is part of our strategy.
Stephan Stewart
Thanks, John.
John Beighton
So we actually don’t – we haven’t adjusted really our strategic plan for the UK business going forward.
Stephan Stewart
I guess, just a follow-up on that and shift to the U.S. I mean, it seems like with these legacy products and no patent protection, they’re always at a risk of competition. Is this changing in anyway your view strategically? How you think about this business? And just on that note, you put out a press release last week around a strategic review, I guess, what’s entailed in that review, and is it – could it be just a shift into strategy here around how you view your focus on legacy products?
Mark Thompson
The focus on legacy products hasn’t really changed. The objective is still to buy products with a clear cash flow trajectory by them well and keep them stable. The legacy business quite honestly has never been about our organic growth, it’s always been about stability and cash flow, which you can take or keep through either some limited promotion or some modest price.
Our view on that business has not changed. With respect to the strategic review, it is ongoing. It has not stopped. We’re looking at one very specific opportunity. I recognize that people are frustrated that it’s taken so long. But again, if you look at the timing and events that have happened over the past couple of quarters, since a significant things like Brexit have come up which have been bumps in the road.
So the full Board is engaged now in what’s going on. And we’re all quite hopeful that we’ll be able to provide some news shortly.
Stephan Stewart
Thanks.
Operator
Your next question comes the line of Joel Hurren from RBC Capital Markets. Your line is open.
Joel Hurren
Good morning. Thanks for taking the question, guys. So I have two quick questions. First one, just wondering, if you can outline your expectations for the fixed charge coverage for this year and next year if you want to be more so for 2016? And then second, wondering if you can also comment a little bit on any pricing pressure you’re seeing on other legacy products? Thank you.
Adrian de Saldanha
So at the moment, our fixed charge coverage ratio was – of around three time. And to the extent that we drove the revolver by more than 30%, the covenant that kicks in – the maintenance covenant kicks in stops at 4.25 times. And then it steps down to four times and eventually 3.75, but that that’s in the future.
Mark Thompson
And the second part of your question about pricing on other products, you haven’t seen any pricing pressure.
Joel Hurren
Okay, perfect. Thank you.
Operator
Your next question comes from the line of Lennox Gibbs from TD Securities. Your line is open.
Lennox Gibbs
Good morning, thanks. So the question pertains to the clinical and commercial argument for Donnatal in this new IBS market? On what basis do you expect Donnatal to be flat? What’s the argument for that?
Adrian de Saldanha
Yes. Well, I think there is a prescriber base for Donnatal that is loyal to Donnatal and continues to prescribing. And though that’s the prescribing base that we originally targeted with our sales effort and we will continue to target as we move forward our sales effort. Reminding them of the Donnatal product and ensuring that patients are getting Donnatal and it’s – that’s really been the focus of a sales effort and targeted promotion.
I think, our sales effort going forward was more about targeting doctors who weren’t traditionally Donnatal prescribers, and trying to get expansion in that market. And that’s what we’re just not seeing the growth in that. However, when we talk about Donnatal being flat, we talk about being flat from where it is today. So we understand there’s competitive pressure in the space. And we’re hopeful our sales effort is going to be able to continue to grow Donnatal, but we’re recognizing that it’s flat going forward from where it is today.
Lennox Gibbs
Okay. And this is flat in terms of market share and you’re fairly confident that it – that did not likely to see erosion from the newer product in terms of market share?
Adrian de Saldanha
Yes. New – we see new products are growing the market rather than eroding Donnatal’s share.
Lennox Gibbs
Okay. Thank you.
Operator
Your next question comes from the line of Martin Landry from GMP Securities. Your line is open.
Martin Landry
Yes, good morning. So on Plaquenil, you’re mentioning new entrants in the market, has that already occurred?
Adrian de Saldanha
Sorry, I’m not – can you repeat the question, I’m not sure I understand what you’re asking?
Martin Landry
You’re talking about Plaquenil seeing some competitive pressure, and then you took a write-down, because you’ve been notified that there’s a competitive pressure from your AG. Is this, because you’re seeing new entrants coming into the market?
Mark Thompson
Yes, we’ve seen some new entrants on the generic side come into the market.
Martin Landry
Yes.
Mark Thompson
That weren’t previously there, yes.
Martin Landry
When did that happen?
Mark Thompson
In May.
Martin Landry
Okay. And is this Ranbaxy coming back?
Mark Thompson
We’re not sure if it’s Ranbaxy or not. Again, with – speaking with an our AG partner, we’re hearing that there’s more than one competitor into the space. Ranbaxy or Sun could be one and we’ve also heard noise about Active [ph] as well.
Martin Landry
Okay, okay. And just lastly on Donnatal, there seems to be a little bit of a disconnect between the IMS data and your sales being down 30% during the quarter. Was there a drawdown of inventory at the distributable level?
Mark Thompson
No not that we’re aware off. And I think when you’re looking at 30%, you’re looking at 30% Q2 2016 versus Q2 2015, which is all a bit of an unfair comparison, because Q2 2016 was a growing quarter – strong quarter for Donnatal. If you look over the first-half, Donnatal itself is down about 14% versus the first-half of last year.
Martin Landry
Okay. What was the decline in scripts year-over-year for Donnatal?
Mark Thompson
Yes, I think we’re seeing a decline in prescriptions year-over-year as well as a slight decline in value of prescription.
Martin Landry
Okay, okay. Thank you.
Operator
Your next question comes from the line of David Common from JPMorgan. Your line is open.
David Common
Great, thank you. We had previously estimated $40 million decline, purely FX impact, AMCo and the EBITDA. So we figured the half year effect would be about $20 million. I wanted to see if that’s right? And similarly, we had previously estimated about $25 million to $30 million impact on your EBITDA annual basis for Nilandron and figure the half year impact would be half of that? Is that approximately in line with your change in guidance?
Adrian de Saldanha
I would say you’re in the ballpark, David. I mean, the currency obviously we said it’s like $38 million, so for the year and that’s, you said $40 million, so it’s – you’re right on top of it. And I think, you’re in the ballpark on Nilandron. We didn’t break them out specifically, but…
David Common
I’m sorry, $38 million, was that your impact on your guidance or for a full-year effect?
Adrian de Saldanha
That was on our guidance.
David Common
Guidance. So I see, we need to annualize that to get and EBITDA impact for the full 12 months?
Adrian de Saldanha
Because we carefully – we’ve already got two quarters under our belt. So that was – I think the currency was like a $11 million and that was also versus just to be clear, our guidance was at $1.53, taking it under $1.31. But we are – the first two quarters, we already had about $11 million of impact in our actual results.
David Common
That’s helpful. Okay, I may have a follow-up beyond on that, just a second try. And then can I ask you – I didn’t quite understand the illegal competitor, I’m not familiar with that dynamic, could you elaborate it please?
Adrian de Saldanha
Yes, so we’ve – the illegal competitor is Donnatal. So we’ve seen companies list products that are in the same category as Donnatal sort of taking advantage of the Donnatal’s unique regular status, essentially this is in the first time it’s happened. As you will recall that we had a lawsuit against a company called Method. That was also the company that listed in illegal Donnatal compare, which was subsequently one that lawsuit earlier this year.
And so what we’ve seen is another company list, and they’ve actually launched product into the marketplace on a small regional basis. And so that’s what we’re dealing with this sort of an illegal competitor, which is doesn’t have a right to beyond the market. But it’s taking advantage of Donnatal regulatory status.
Mark Thompson
But to be clear, the amount of part they’ve sold very, very small.
Adrian de Saldanha
Yes, the amount of part, they’ve sold so far is extremely strong.
David Common
Interesting. Okay, well, I look forward to following up in the next quarter around that. Thank you.
Operator
Your next question comes from the line of Cindy Guan from Goldman Sachs. Your line is open.
Cynthia Guan
Hi, thanks. You mentioned in your earlier remarks that there was one specific opportunity in a strategic review that that you were looking at. Is there any more that you can elaborate on that, maybe what category of potential opportunities that that means, is it at the sale license agreement, et cetera, anything you can elaborate there?
And then secondly, on Donnatal, I think in the NDA you mentioned that you became aware of this third-party that they had to intent to distribute in a legal version of Donnatal in January. I guess, I’m wondering why this wasn’t talked about in the Q1 call, is there something change, and if that case for scenarios similar to the Method situation that you want, or are there – what similarity differences are there? Thanks.
Wayne Kreppner
So I’ll take the Donnatal piece first, and I think Mark will address the special committee question. The listing – the initial listing for the product occurred in January and so let me preference this by answering the second part of your question first. The current situation is exactly the same as the Method situation. And the listing originally showed up in January, but the listing in and of itself is just an indication of product, it’s not necessarily a product available – availability, that didn’t actually occur until May.
So any real impact we see from that listing is really unknown until the product actually launches in the marketplace. And again, back to the earlier point, Method – the Method lawsuit and this lawsuit are very similar and the pattern, which they thought is very similar.
Adrian de Saldanha
[Multiple Speakers] opportunity. Sorry, can you repeat the question on flush out many.
Cynthia Guan
If you could elaborate on what you meant in your earlier remarks about one specific opportunity that you were looking at as part of the strategic review?
Mark Thompson
Because of the way this is going, I can’t give you much more than I already have. We’re evaluating one specific opportunity, which we think very beneficial to the company. But until we get more clarity, I can’t provide any further details.
Cynthia Guan
Okay, understood. Thank you.
Operator
Your next question comes from the line of David Martin from Bloom Burton. Your line is open.
David Martin
Hi, thanks for taking my questions. First one, I’m wondering if any of your drugs in North America were aware of the CBS situation. But have any other major formularies excluded any of your drugs? And in the UK, have you been formally approached by the Department of Health on pricing issues?
Mark Thompson
Okay, I’ll do the UK one first, because that’s straightforward. No, we haven’t.
David Martin
Are you in anyway changing your strategy around product pricing in the UK, because of the political climate?
Mark Thompson
No, no. As I said before, actually going forward, the main driver of growth in the UK and actually indeed the International business is product launch. Interestingly those – the products that we’re launching, the 60 of them that are due to launch by the end of 2018, the majority of those – big majority of those op cost saving medicines for NHS, which was always part of our strategy, is always part of our strategy. So we’re not having to adjust anything as a result of the unfortunate test that we’ve seen recently.
David Martin
Are these generics – are they generics of branded products you already sell in the UK?
Mark Thompson
You mean, the ones that we’re launching?
David Martin
Yes, yes.
Mark Thompson
The developments of – there are mixture of developments of products that we already have on the market not generics, but new strengths, new formulations. They’re also in licensed generics usually niche, usually and reasonably high value spaces, but nevertheless medicines that do save money for payor in the UK.
Edward Borkowski
We said it before the system works very well. It was designed very well. And I think that the UK government is pleased with the way the system operates. So I don’t think you’re going to see any dramatic changes.
David Martin
Okay. And then the North America question?
Adrian de Saldanha
To answer to that, this is the first example of where some of our products have been added to the exclusion list. It’s a bit – it looks like in January that will take effect and that will have a very minimal impact on our business. Time to time we see changes here and there. But we generally have brought two or three coverage across our portfolio...
David Martin
Okay. And then just a quick housekeeping question. What British pound U.S. dollar exchange rate did you use this quarter?
Adrian de Saldanha
For the actual results for the second quarter?
David Martin
Yes, yes.
Mark Thompson
All historic.
Adrian de Saldanha
So that’s disclosed on our – on page two of our MD&A, so the right for the quarter…
David Martin
There was a spot rate and an average rate, I don’t think, you said, which one you used?
Adrian de Saldanha
Okay. So the spot would be that the 1.3395 would be to convert the closing balance sheet.
David Martin
Okay.
Adrian de Saldanha
The average rate would be 1.4354, because the rate declined dramatically just in the dime days of the quarter.
David Martin
So the 1.4354 that was used for the income statement then?
Adrian de Saldanha
Exactly, exactly.
David Martin
Okay, okay. Thank you.
Operator
Your next question comes from the line of [indiscernible] from KLS Diversified. Your line is open.
Unidentified Analyst
Hi, guys, thanks for taking the questions. Just want to follow-up any other offhand drugs in the U.S. that you guys are keeping eye on or we should be keeping eye on for any generics in the market?
Mark Thompson
No, I think the most of the markets or all markets now are completely generic side. The reality is, you could have other generic companies come in around the margins, but they’re not going to take any share.
Unidentified Analyst
Got it. And just a follow-up on Nilandron, so your guidance takes into account, the loss in some market share there, are you guys factoring in the – any potential gain you’ll get from the AG, once you get on the market?
Mark Thompson
Yes, that’s incorporated and what we’re expecting.
Unidentified Analyst
Got it. Okay, good. Thank you.
Operator
There are no further questions at this time. I’ll now turn the call back over to Mr. Thompson.
Mark Thompson
Thank you everybody for participating and listening to today’s call. I believe we have a very robust business and you will see exciting things over the next couple of quarters, particularly around the International side. I’d like to close by thanking all of our employees around the globe, without their efforts, we wouldn’t have the great business that we have. Thank you.
Operator
This concludes today’s conference call. You may now disconnect.
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