Elite Pharmaceuticals (OTC:ELTP) released fourth-quarter financial results and hosted an earnings call on Tuesday. Read the complete transcript below.
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The full earnings call is available at https://elite.irpass.com/events_presentations
Summary
Elite Pharmaceuticals Inc reported a substantial 77% increase in total revenues for fiscal year 2026, reaching $149 million, marking another year of record revenue growth.
Operating income rose by 151% to $49 million, attributed to a successful product line expansion and improved product mix yielding better margins.
The company reported a significant improvement in cash flow, with operating cash flow increasing by 219% to $23.7 million and a strengthening balance sheet, highlighted by a 163% increase in cash and a reduction in long-term debt by 20%.
Elite Pharmaceuticals launched several new generic products over the past year, including methadone and filed for a generic coagulant, emphasizing their commitment to pipeline development and sustained growth.
Management highlighted the company’s strong market position, successful internal product development strategy, and readiness for potential NASDAQ listing, underscoring a positive outlook for continued growth and investment attractiveness.
Full Transcript
OPERATOR
Good morning, ladies and gentlemen, and welcome to the Elite Pharmaceuticals Year End of Fiscal Year 2026 conference call. At this time, all lines are placed on a listen-only mode. Before management begins speaking, the conference has the following: Elite Pharmaceuticals Inc would like to remind listeners that remarks made during this call may contain forward-looking statements that involve risks and uncertainties that are subject to change at any time, including, but not limited to, statements about Elite’s expectations regarding forward operating results.
Forward-looking statements are made pursuant to the safe harbor provisions of the federal securities laws and represent management’s current expectations. Actual results may differ materially. Elite disclaims any obligation to update or revise its forward-looking statements except as required by law. More complete information regarding forward-looking statements, risks, and uncertainties can be found in the reports Elite files with the SEC, which are available on Elite’s website at ElitePharma.com under the Investor Relations section.
Elite encourages you to review these documents carefully. With that covered, it is now my pleasure to turn the floor over to your host, Mr. Nasrat Hakim, President and Chief Executive Officer of Elite Pharmaceuticals. Sir, the floor is yours.
Nasrat Hakim, President & CEO
Thank you, Matthew. And good morning, ladies and gentlemen, and thank you for joining us today. My name is Nasrat Hakim. I am Elite’s Chairman and CEO. This is our earnings call. Our CFO, Carter Ward, will give us the financial update, after which I’ll come back with a brief update and answer some of the questions you’ve submitted to Diane. Mr. Ward, you have the floor.
Carter Ward
Thank you, Nasrat. And good morning, everybody. Yesterday we filed our 10-K, which is our annual report for the fiscal year ended March 31, 2026. We’re in a March fiscal year 10-K. If you haven’t seen it yet, it’s available at our website, ElitePharma.com, under the Investor Relations section. Today, as usual, we’re going to provide some context and some color to the financial statements and also answer the finance questions I received overnight and questions we got over the weekend even.
And as always, thank you so much for those questions. We really appreciate you taking the time to ask them. Let me start with the P&L first. Total revenues for the year were $149 million. That’s compared to $84 million for the March 2025 fiscal year last year. That is a $65 million increase, a 77% increase. Another year, another revenue record. So very impressive growth this year. The Elite label. We’re in our third year of the Elite label. The Elite label was launched in fiscal 2024.
So 2026 is our third year, and let’s look at how we’ve done since we’ve launched the Elite label. In the first year, 2024, the revenues were $57 million, and that was a 66% increase over the year prior to launching. So we went from $57 million to the second year we were $84 million. That was last year. And this year, $149 million with a 77% increase. Just to put some of this into perspective, we started this year from a baseline of record revenues.
Last year was record revenues, and not only did we increase the actual dollars, but the percentage increase was also higher than it was last year. So that’s pretty tough to do when the numbers get as big as they are now. When you’re dealing in percentages, it’s hard to increase the percentage. So P&L is clear, solid, sustained growth strategy. How do we do it? It’s typical generics. The strategy is straightforward. Deliver quality product on time and as promised, to become the go-to supplier of choice in the market, which we are for our products, achieve a critical mass, which we’ve done, run efficiently, which we’ve always done, and most importantly, continue pipeline development. We need to develop, produce, develop new products, and launch new products. So further to this, the Elite label started three years ago with generic Adderall, Isradipine, Bendimetricine, a few other products. And in the last two years, just to illustrate pipeline development, last two years, we’ve launched generic Vyvanse, generic Tylenol with codeine, generic Norco, generic Percocet, generic Otrexap, generic Revia.
And we also brought in-house the old products, Naltrexone and Phentermine. We brought those back in-house, and now we’re selling them exclusively on the Elite label. So it’s clear that this is what explains what we reported on our financials this year, the 10-Ks, the 10-Qs. And over the past few years, it’s pipeline development, product launches, that’s where the growth comes from. But to sustain the growth, this requires continued product development.
It never ends, the cycle never ends. So people that follow Elite, we know they’ll notice that since March 31st of this year, three months ago, we’ve launched methadone. We filed an ANDA for a generic coagulant. We reported positive results for a pivotal bioequivalent study. There was a lawsuit relating to oxycodone, which was dismissed. So that’s gone now. That’s not standing in our way. The products we continue to develop, the pipeline development, the efforts never stop, and we are on schedule.
That’s the critical factor to sustain, maintain growth. Let me move down to P&L. We’ll look at operating income 2026. This year, operating income was $49 million. Compare that to $20 million last year. 2025 increases more than $29 million, a 151% increase in operating income profits. First year of the Elite label, we had an operating income of $11 million. Last year, $20 million. This year, $49 million. So the profits since we’ve launched the Elite label have more than quadrupled.
Went from $11 to $49 million. Some of this is due to product mix yielding better margins. But most is due to product line growth and expansion. We’re selling more of the products we started with, we’re adding more products, and we’re selling more of those as well. I’ve been getting this question. I’ll call it a usual question now. I’ve received it many times in the last few quarters, and the question that I’ve got is whether we will continue to increase the percentage rate of growth as well as setting record revenues and profits every year.
Well, all I can say is the infrastructure is in place, the critical mass is there for the Elite label. The product development is on schedule for new products in the pipeline. All the components are in place for growth. But do the math. Percentage math gets tougher as the numbers get bigger. So we did it this year, percentage-wise, we increased really promise on percentages. Let’s just see what happens. But all the fundamentals are in place for growth.
So to sum up, the P&L before moving on, it was quite a year. Record year. Great job by the sales teams, the production teams. These were truly stellar MVP numbers that they put up this year. Got some questions on direct versus indirect sales and the effect on margins. There’s a new table in our financial statements which hopefully will answer some of these questions going forward. It’s in note one to our financials. It’s a large note, and there’s a section disaggregation of revenues, and that shows our direct versus indirect revenues.
So you see, you look at that table. This year, our direct sales were 44% of revenues, and our indirect were 56%. Last year, they flip-flopped. Last year, direct was 59%, and this year it’s 41% indirect, or last year was 41% indirect. Direct sales, they generally have lower volumes, they have higher margins. Indirect is the opposite. They have higher volumes and lower margins. But the thing to keep in mind, remember that distribution channel, whether it’s direct versus indirect, is just one of several factors affecting the margins.
The distribution channel is really more of a driver of volumes as compared to the other, which I’ll call margin drivers. Product mix and real-time market conditions is generally more relevant to margins than our distribution channels. In the market, you have demand, supply, competition, quota availability. You have all of those dynamics going on in the market, and that generally has more of an effect on margins than do the distribution channels. But when you put everything together, the volume, the margin, the direct versus indirect channels, you look at the result.
And what was that result? The result was record revenues, record gross profits, and higher gross margin percentage as well. So triple crown right there. We hit all of the numbers this year as compared to last year. So next, we’ll look at the cash flow statement. Operating cash flow this year was positive $23.7 million. So we can compare that to $7.5 million last year. So our cash flow increased by more than $16 million this year, a 219% increase.
Pretty simple. There’s one word that can explain this, and that word is profits. Profits drive your cash flow. You go down the cash flow statement. Don’t talk about this too much, but there’s cash flows from financing activities. And you look there, and it says bond and loan principal paid was $4.6 million this year. Last year, we paid back bonds and loans $845,000. So we always talk about how we’re committed to reducing long-term debt. And this is pretty obvious there.
It shows right up on our cash flow statement. We are paying down our debts. Now to the balance sheet. Cash was $29.8 million compared to $11.3 million last year. So it’s an $18.5 million increase in cash, 163%. Working capital, my favorite one, is this year was $95 million. Last year was $46 million. Almost a $49 million increase, 106%. Long-term debt was down. We were $4.7 million this year versus $5.8 million last year. So debt went down by $1.2 million, a 20% reduction.
Sum up the balance sheet. You will not see a better balance sheet anywhere really. Cash is up, working capital is up, long-term debt is down. This is the textbook definition of a strengthening balance sheet. Every year we get stronger and stronger. This year included. Have a few more questions. Might as well go through those now. One question. Do we have any more NOLs, net operating losses? Well, NOLs, just so you know, those are the tax losses from the past years, years and years ago.
And they carry forward, we can use them to apply them against current income taxes, which we do. There is a line item on the balance sheet called deferred tax asset which gives the value of those tax deductions. And as of March 31st, those were valued at $7.8 million. And last year at the beginning of the year or the end of last year was $18.4 million. So we used up $10.6 million in NOLs this year. Whenever you have profits, you owe taxes and use up the NOL deductions if you have them.
So we expect that we’re going to have to start making payments of federal taxes in this year. We’re going to use up our NOL. Everything that’s available to us. We always record the expense. Expense gets recorded no matter what. But because of the NOL, we haven’t actually had to make payments to the federal government because of these deductions. But those days are coming to an end. Another question is why is there a 70 million increase in fully diluted shares outstanding?
A little getting in the weeds, but if you look at note one in our earnings per share section, it really has to do with the income attributable to shareholders. Last year was actually a loss. We had $19 million in derivative expense which put us into a loss. And therefore the dilutive effect of the warrants and the options were excluded because they are considered anti-dilutive. So that’s just an accounting thing. This year we had derivative income and we had a net profit.
And so these dilutive instruments, warrants and options were not considered anti-dilutive. So they were put in. It’s the same warrants, it’s the same options. It’s just different accounting treatments depending upon really how the derivative expense goes. Just so you know, the derivatives, if our stock price goes up over the year, we record a derivative expense. And if the stock price goes down, so it went up in 2025, we had expense, it went down in 2026, we had a revenue kind of counterintuitive, but that’s how it goes.
So you want more details, just look at note one of the financial statements that will answer your questions. Hopefully. On earnings per share calculations, I’ve got the usual questions on derivative income. Expense, I already covered that. Stock price up is expense, stock price down is income. I did get a first-time question on the outstanding warrants and a concern about dilution and an impact on the cash flows of these warrants. First, the warrants, they have been outstanding for nine years.
They’re 10-year warrants, they’ve been out for nine years already. And every cap chart that I have prepared since then over the last nine years and every discussion with investment bankers and other parties with serious interest in Elite have included them as part of Elite’s capital structure. Potential dilution from these warrants, that was recognized nine years ago and it has not changed. Secondly, the warrants, the 10-year warrants, already nine years in, that means they expire next year.
So they’re going to either be exercised or they’re going to expire next year. They are done next year one way or the other. There’s a cash exercise option which we’re discussing with Mr. Hakim, who’s the holder of the warrants, and that would obviously be a positive cash effect for the company because he’d be buying the shares, giving the money to the company with no effect on dilution. That dilution would be the same that has been in place for the last nine years.
There’s a cashless exercise option in the warrants and that obviously has no effect on cash and it results in lower dilution than we had been calculating over the nine years. So in all cases, there’s no strain on cash flow and there’s no additional dilution in play. Everything is as it’s been for the last nine years. Another question. Are we considered an accelerated or non-accelerated filer and are we still a smaller reporting company? That is a question.
That’s an excellent question. It’s highly technical and it’s one that I asked quite a while ago of our SEC counsel because I had the same question. So the direct answer is that we will continue to report as we’re doing now. We will continue as a non-accelerated filer and a smaller reporting company through the end of this fiscal year, March 31, 2027. No changes, no change in how we file our 10-K for this year. The next assessment, the next test we have to go through and that will relate to our market float on September 30, 2026, three months from now.
And any changes resulting from that assessment will take effect during the year ended March 2028. So no changes for this year. Let’s see what happens on September 30 and basis of that it will affect the next year. And obviously when we know that, when everything is finalized, it will be disclosed. And then one more final question. We got pretty late last night. Can I speak to the critical audit matter related to the Chargeback Reserve? So in our opinion, our auditors mentioned the Chargeback Reserve as a critical audit matter.
So chargebacks are related to indirect sales. The audit opinion, take a look at it, actually does an excellent job explaining what a chargeback is. It’s the difference between the price the wholesaler pays and the price the end customer pays. It’s a standard thing that happens in the generic business since chargebacks occur after we ship and after we deliver to the wholesaler. GAAP accounting, generally accepted accounting principles, they require that we estimate the amount of chargebacks that we’re going to receive after March 31, but that relate to the shipments that we delivered on or before March 31st. One thing with accounting, most of accounting, there’s estimates involved and with regards to chargebacks, the amounts can be large. So the auditors, because of that, the materiality, they consider a critical, critical matter. And they spend a lot of time, and I mean a lot of time thoroughly vetting all aspects of the underlying, the source documents, the assumptions, the data, very, very thorough on that. Just because of the materiality. It’s pretty standard audit procedures and performed on something that’s very, very common to all generic companies like ours.
So to sum up these financials, yes, you could say the record-breaking streak continues another year. Another record. Record revenues, record profits. Revenues up 77%. Profits up 151%. Operating cash flows more than tripled from last year. The balance sheet continues to strengthen. We had record high working capital. Long-term debt continues to drop. Can’t say enough good things. The pipeline is strong and continued growth potential is out there. The writing on the wall is clear.
The company is stronger than ever. We’re an attractive investment. Nasrat will talk a lot about that, I’m sure, from an M&A standpoint, we get more and more attractive as an investment because of the performance of the company. Also, we’re ready for the NASDAQ. This company is a NASDAQ company. So that option is definitely on the table as well and being considered among all the other options. That concludes my presentation. Our next scheduled report is the 10-Q. It’s for the first quarter of our fiscal 2027 fiscal year. And today, June 30th, is the end of that quarter. And that our next 10-Q is the short turnaround. It’s due in August. So I look forward to speaking with everyone then. And now I’d like to introduce our Chairman and CEO, Mr. Nasrat Hakim.
Nasrat Hakim, President & CEO
Thank you, Carter, for these outstanding numbers. You should have downplayed it a little. You know, every time we have good news, the stock price goes down. So let’s hope this is an exception. It’s been amazing. I’m going to justify a few numbers and go on because it’s really impressive. And this cycle we’ve been on has been outstanding. The revenues for this fiscal year is $149 million. Wow. A 77% increase over last year. Any other company on NASDAQ and anywhere else hits these numbers and the stock will explode.
And if you look at the last five years, we’ve increased revenues on average by 40% per year. This is not the only year we’re doing it. This is not an exception to the rule. This has been established time and time again every quarter, four quarters a year, and for five years now or more. Actually, more like seven. Operating income for this fiscal year, $49 million again. A 151% increase over the previous year. Looking back at five years, that’s an increase of about 80% each year.
I will not go through all the numbers Carter went through. You already have them. But this one is most intriguing. The working capital is at $94.7 million for this year. About three years ago, Elite didn’t have enough money, needed help with working capital to launch our products, and Dave, one of our board members, and myself had to loan the company. We’re happy to loan the company $3 million to get it through launching new products. Today, Elite doesn’t need anybody’s money.
They almost have $100 million in working capital. They’re almost as rich as Carter over this time. Over the past five years, we have transitioned into a solid mid-sized generic company with all the facets of a pharmaceutical company, including our own sales and market. We did that with internal growth, not with acquisitions. We did that by developing and manufacturing our own products, not licensing products. This way, we have maximized profitability for the stockholders.
I know of a lot of companies and a lot of my former CEO colleagues and bosses that take over a company and they go out and buy a whole bunch of products and they license this and that and borrow a billion dollars and then two, three, four years later, you can update and end up bankrupt and the stock goes to zero. We have done everything in a conservative way to protect the stockholders and maximize profitability. We still have the option of licensing and acquiring products from other companies if the opportunity arises and it is advantageous to Elite, and many opportunities have arisen.
But we did not want to take on the headache because it was not really worth it. It’s something that we will consider further in the future. But when something like that comes up, we will look at it. Why? Because we are an established pharmaceutical company that has strong fundamentals and very low debt. Over the past five years, we have introduced our sales and distribution force that has done an exceptional job. We’ve added new products, we expanded our manufacturing and packaging capacity, and I’ll talk about that a little more in a minute.
And we enhanced our revenues and profitability, all while maintaining a strong balance sheet that you just heard from Carter and an efficient workforce. I haven’t done the math, but on average, we generate more than $2 million in revenue per employee. Our product mix is the key to our success. Our sales and operation team have effectively defended and overgrew the market shares of our key products while maintaining good margins. Again, anytime there’s competition, some companies start to dump the prices so they can get more shares, and they don’t care about bringing the whole market down.
Elite is a very responsible company. We have not had that impact on anybody. And even though we enjoy a healthy share of a lot of the big products that we have for a tiny company like us. Liftex, the generics of Vyvanse, was launched about a year ago, and now we have about roughly 10% market share. Elite was able to effectively penetrate the market and defend our market share with minimal disruption to the overall market. And that is really key. That’s how a lot of prices go down when people don’t do that.
The Liftex overall market grew about 20% during each of the last two years. Now it’s mostly generic. Last year, 35% of the volume was with the brand. This year it’s about 15. So the generic brand, generic conversion is almost fully matured now. A little note for everybody, IQVIA does not really reflect Elite sales for what they are for reasons that we don’t fully understand. But what I’m reporting to you now, that we are at 10% of the market. Our sales, Amphetamine IR, the generic Adderall, is another pillar for Elite.
IQVIA shows Elite’s current market share about 14%. Amphetamine IR market has grown 6 to 12% per year in the past few years. This is an old molecular entity. It’s been around for decades, and it’s still growing, and we’re still a part of that growth and going with it. Amphetamine ER is another one of our pillars. IQVIA reports that we have about 12% market share, and this also has been growing and has grown about 8 to 12% per year in the last few years.
The second part of what has been contributing to our revenues are our legacy products. Naltrexone is one of them. We launched it recently, we’ve had it for years, but Baggy and Precision Dosing were selling it. Now that we’re selling it, we are about 12% market share, according to IQVIA, and it’s growing. Isradipine and Trimetramine are small markets. Each one of these products has only one competitor, so Isradipine. Our competitor is Teva, Trimetramine.
It’s broken rich. Even though they are small products, the margins are healthy because there’s only one.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.
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