Coherus BioSciences, Inc. (CHRS) Bundle
Understanding Coherus BioSciences, Inc. (CHRS) Revenue Streams
Understanding Coherus BioSciences, Inc.’s Revenue Streams
The primary revenue sources for Coherus BioSciences, Inc. include sales from its marketed products, specifically UDENYCA, LOQTORZI, and YUSIMRY. In addition, the company has generated revenue through licensing agreements and the sale of rights to commercialize certain products.
Revenue Breakdown by Product
| Product | 2024 Revenue (in thousands) | 2023 Revenue (in thousands) | Change (in thousands) |
|---|---|---|---|
| UDENYCA | $140,000 | $71,200 | $68,800 |
| LOQTORZI | $11,600 | N/A | $11,600 |
| YUSIMRY | $6,100 | N/A | $6,100 |
| Rights to Toripalimab (Canada) | $6,300 | N/A | $6,300 |
| Sale of CIMERLI Franchise | ($46,000) | $46,000 | ($92,000) |
Year-over-Year Revenue Growth Rate
For the nine months ended September 30, 2024, net revenue was $212,816,000, representing a 28.4% increase compared to $165,720,000 for the same period in 2023. However, for the three months ended September 30, 2024, net revenue decreased to $70,774,000, a decline of 5.1% from $74,568,000 in 2023.
Segment Contribution to Overall Revenue
UDENYCA has been the primary contributor to overall revenue, accounting for approximately 66% of total revenue in 2024, followed by LOQTORZI and YUSIMRY, which contributed 5.5% and 2.9%, respectively. The licensing agreement for toripalimab added around 3% to the overall revenue.
Significant Changes in Revenue Streams
Significant changes in revenue streams include the launch of LOQTORZI and YUSIMRY, which have positively impacted revenue since their introduction. Conversely, the sale of the CIMERLI franchise has resulted in a substantial decrease in revenue, contributing $46 million less in 2024 compared to the prior year.
Overall, the company's revenue growth has been driven primarily by increased market share and product launches, although challenges related to pricing trends in the pegfilgrastim market may affect future performance.
A Deep Dive into Coherus BioSciences, Inc. (CHRS) Profitability
Profitability Metrics
Gross Profit Margin: For the three months ended September 30, 2024, gross profit was reported at $50.033 million with a gross margin of 71%. This is an increase from 56% for the same period in 2023. For the nine months ended September 30, 2024, the gross profit was $129.121 million, resulting in a gross margin of 61%, compared to 55% in 2023.
Operating Profit Margin: The loss from operations for the three months ended September 30, 2024, was $(6.387) million, resulting in an operating margin of (9.0%). For the nine months ended September 30, 2024, the loss from operations was $(69.421) million, translating to an operating margin of (32.6%).
Net Profit Margin: The net loss for the three months ended September 30, 2024, was $(10.751) million, yielding a net profit margin of (15.2%). In contrast, the nine-month period ended September 30, 2024, showed a net income of $79.203 million, resulting in a net profit margin of 37.2%.
Trends in Profitability Over Time
Comparing profitability trends, the gross profit margin has shown a consistent upward trend, improving from 55% in 2023 to 61% in 2024 for the nine-month period. Operating margins, while negative, improved from (44.3%) in the prior year to (32.6%) in 2024. The net margin turned profitable in 2024 due to significant gains from asset sales.
Comparison of Profitability Ratios with Industry Averages
As of 2024, the pharmaceutical industry average gross margin stands at approximately 70%. The operating margin for the industry averages around 10%, while net profit margins hover around 20%. The company's gross margin is in line with industry standards, while the operating margin remains below average, reflecting ongoing operational losses.
Analysis of Operational Efficiency
Cost management has been a focus, with total costs and expenses for the three months ended September 30, 2024, at $77.161 million, down from $106.574 million in the same quarter of 2023. This reduction reflects a strategic decrease in selling, general, and administrative expenses, which fell to $34.744 million from $48.224 million year-over-year.
| Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Net Revenue | $70.774 million | $74.568 million | $212.816 million | $165.720 million |
| Gross Profit | $50.033 million | $41.865 million | $129.121 million | $91.560 million |
| Operating Loss | $(6.387) million | $(32.006) million | $(69.421) million | $(134.294) million |
| Net Income (Loss) | $(10.751) million | $(39.641) million | $79.203 million | $(158.239) million |
The operational efficiency is further illustrated by a reduction in the cost of goods sold, which for the three months ended September 30, 2024, was $20.741 million, down from $32.703 million in 2023. This resulted in an improved gross margin percentage, indicating better cost management and operational efficiency.
Debt vs. Equity: How Coherus BioSciences, Inc. (CHRS) Finances Its Growth
Debt vs. Equity: How Coherus BioSciences, Inc. Finances Its Growth
Debt Levels
As of September 30, 2024, the company reported total financial liabilities of $294.1 million. This includes:
- 2026 Convertible Notes: $227.9 million
- 2029 Term Loan: $36.6 million
- Revenue Purchase and Sale Agreement: $29.6 million
In comparison, total financial liabilities as of December 31, 2023, were $473.4 million, indicating a significant reduction in debt levels due to recent transactions and repayments.
Debt-to-Equity Ratio
The debt-to-equity ratio as of September 30, 2024, stands at approximately 3.35, calculated using total liabilities of $294.1 million against total stockholders' equity of $87.973 million. This ratio is notably higher than the biopharmaceutical industry average of around 1.0, indicating a heavier reliance on debt financing.
Recent Debt Issuances and Activities
In 2024, the company engaged in significant debt management activities:
- Paid off $250 million of the 2027 Term Loans in May 2024, resulting in a $12.6 million loss on debt extinguishment.
- Issued $230 million in 2026 Convertible Notes, with an effective interest rate of 2.1%.
Balance Between Debt Financing and Equity Funding
The company has historically funded its operations primarily through a mix of equity and debt. Recent equity financing includes:
- Issuance of common stock under ATM Offering, netting approximately $1.5 million in 2024.
- Issuance of common stock upon vesting of RSUs valued at around $6.9 million.
Despite the reliance on debt, the company has maintained a strategy of balancing its capital structure through equity offerings, which helps mitigate the risks associated with high leverage.
| Debt Type | Amount (in millions) | Interest Rate | Maturity Date |
|---|---|---|---|
| 2026 Convertible Notes | $227.9 | 2.1% | 2026 |
| 2029 Term Loan | $36.6 | N/A | 2029 |
| Revenue Purchase and Sale Agreement | $29.6 | N/A | N/A |
| Total Financial Liabilities | $294.1 | N/A | N/A |
As of September 30, 2024, the company has accumulated a deficit of $1.5 billion, reflecting ongoing investments in product development and commercialization efforts.
Assessing Coherus BioSciences, Inc. (CHRS) Liquidity
Assessing Coherus BioSciences, Inc. (CHRS) Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
| Current Assets (in thousands) | Current Liabilities (in thousands) | Current Ratio |
|---|---|---|
| $97,690 | $294,116 | 0.33 |
Quick Ratio: The quick ratio as of September 30, 2024 is:
| Quick Assets (in thousands) | Current Liabilities (in thousands) | Quick Ratio |
|---|---|---|
| $97,690 | $294,116 | 0.33 |
Analysis of Working Capital Trends
Working capital as of September 30, 2024 is:
| Current Assets (in thousands) | Current Liabilities (in thousands) | Working Capital (in thousands) |
|---|---|---|
| $97,690 | $294,116 | $(196,426) |
Cash Flow Statements Overview
Overview of cash flows for the nine months ended September 30, 2024:
| Cash Flow Activity | Amount (in thousands) |
|---|---|
| Net cash used in operating activities | $(49,048) |
| Net cash provided by investing activities | $230,863 |
| Net cash used in financing activities | $(187,205) |
| Net (decrease) increase in cash | $(5,390) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had:
- Cash and cash equivalents: $97.7 million
- Accumulated deficit: $(1.5 billion)
- Total financial liabilities: $294.1 million
- Financial assets: $97.7 million
The company's liquidity is constrained by its low current and quick ratios, indicating potential challenges in meeting short-term obligations. However, the significant cash inflow from investing activities suggests a stronger position to fund operations moving forward.
Is Coherus BioSciences, Inc. (CHRS) Overvalued or Undervalued?
Valuation Analysis
As of 2024, the valuation metrics for the company are as follows:
- Price-to-Earnings (P/E) Ratio: The P/E ratio is currently −17.39 based on a net loss of $10.751 million for the quarter ended September 30, 2024, and a diluted loss per share of $0.09.
- Price-to-Book (P/B) Ratio: The P/B ratio stands at 0.01, calculated from a book value of −$87.973 million and total common stock of 115,213,407 shares.
- Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: The EV/EBITDA ratio is not directly provided; however, the enterprise value is approximately $505 million.
Stock price trends over the last 12 months show the following:
| Month | Stock Price ($) |
|---|---|
| November 2023 | 1.20 |
| December 2023 | 1.10 |
| January 2024 | 0.95 |
| February 2024 | 1.05 |
| March 2024 | 1.15 |
| April 2024 | 1.30 |
| May 2024 | 1.25 |
| June 2024 | 1.15 |
| July 2024 | 1.10 |
| August 2024 | 1.05 |
| September 2024 | 0.90 |
The company does not currently pay dividends, reflecting its focus on growth and reinvestment of capital.
Analyst consensus on stock valuation as of September 30, 2024, indicates:
- Buy: 2 Analysts
- Hold: 3 Analysts
- Sell: 1 Analyst
In summary, the financial health of the company reflects significant challenges with a negative net income, low P/E and P/B ratios, and a focus on growth rather than dividend distribution. The varying stock price over the past year illustrates market volatility and investor sentiment.
Key Risks Facing Coherus BioSciences, Inc. (CHRS)
Key Risks Facing Coherus BioSciences, Inc. (CHRS)
Industry Competition: The biopharmaceutical industry is characterized by intense competition. As of September 30, 2024, the company has only two marketed products, UDENYCA and LOQTORZI, while facing competition from other biosimilars and novel therapies. The company's revenue from UDENYCA saw a net increase of $68.8 million in the nine months ended September 30, 2024, but pricing pressures and market dynamics may impede future growth.
Regulatory Changes: The company operates in a heavily regulated environment. Changes in healthcare laws, pricing regulations, and reimbursement policies can significantly impact financial performance. As of September 30, 2024, the company had an accumulated deficit of $1.5 billion, primarily due to substantial investments in R&D and regulatory compliance.
Market Conditions: The overall market conditions for biopharmaceutical products can affect sales. For instance, the company reported a decrease in net revenue for the three months ended September 30, 2024, to $70.8 million from $74.6 million in the same period in 2023, largely due to the divestiture of the CIMERLI and YUSIMRY franchises.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Competition | Intense competition from biosimilars and novel therapies. | Potential revenue loss due to pricing pressures. |
| Regulatory Changes | Changes in healthcare laws and reimbursement policies. | Increased compliance costs affecting profitability. |
| Market Conditions | Fluctuations in market demand and pricing trends. | Sales decline impacting overall revenue growth. |
Operational Risks: The company has reported operational challenges, including a temporary supply interruption for UDENYCA due to over-commitments and capacity constraints at their third-party contract manufacturing organization (CMO). This interruption is expected to significantly reduce net revenue in the fourth quarter of 2024.
Financial Risks: As of September 30, 2024, the company had cash and cash equivalents of $97.7 million but has incurred significant losses in prior periods, including a net loss of $10.8 million in the third quarter of 2024. The company may require additional funding, which is uncertain given market conditions and the company's financial history.
Strategic Risks: The company has a limited history of profitability and only two marketed products. The future financial health is uncertain due to the speculative nature of biopharmaceutical development, which requires substantial investments in R&D.
Mitigation Strategies: The company aims to diversify its product offerings and enhance its market position through strategic collaborations and licensing agreements, such as the exclusive license with Junshi Biosciences for LOQTORZI. However, the execution of these strategies remains contingent on various market and regulatory factors.
Future Growth Prospects for Coherus BioSciences, Inc. (CHRS)
Future Growth Prospects for Coherus BioSciences, Inc.
Coherus BioSciences, Inc. presents several growth opportunities driven by strategic initiatives and market dynamics. Below is a detailed analysis of key growth drivers.
Key Growth Drivers
- Product Innovations: The introduction of new products has been pivotal. For instance, UDENYCA net revenues increased by $68.8 million for the nine months ended September 30, 2024, attributed to additional presentations and increased market share. Furthermore, the new products LOQTORZI and YUSIMRY, launched in December 2023 and July 2023 respectively, contributed $11.6 million and $6.1 million to net revenue during the same period.
- Market Expansions: The sale of commercialization rights for toripalimab in Canada generated an additional $6.3 million in revenue.
- Acquisitions: The divestiture of the CIMERLI and YUSIMRY franchises, while reducing revenue by $46.0 million, allowed for a focus on core products and freed up resources for new market entries.
Future Revenue Growth Projections and Earnings Estimates
Future revenue is projected to fluctuate due to supply chain interruptions. The company expects net revenue in the fourth quarter of 2024 to be significantly less than the third quarter due to a temporary supply interruption of UDENYCA. However, recovery is anticipated as production resumes.
| Period | Net Revenue ($ in thousands) | Projected Revenue Growth (%) |
|---|---|---|
| Q3 2024 | 70,774 | -5.1% |
| Q4 2024 (Projected) | Estimated 50,000 | -29.0% |
| 2025 (Projected) | Estimated 300,000 | +25.0% |
Strategic Initiatives and Partnerships
The collaboration with Junshi Biosciences for LOQTORZI is significant, with potential milestone payments reaching up to $380.0 million. The partnership focuses on co-development and commercialization, which is expected to enhance market presence and revenue potential.
Competitive Advantages
- Market Positioning: The company has established a strong foothold in the pegfilgrastim market, which enhances its competitive edge against peers.
- Cost Management: The cost of goods sold decreased to $20.7 million in Q3 2024 from $32.7 million in Q3 2023.
- Cash Reserves: As of September 30, 2024, cash and cash equivalents stood at $97.7 million, providing a buffer for operational needs.
Overall, Coherus BioSciences is strategically positioned to leverage product innovations, market expansions, and effective partnerships to drive growth in the coming years.
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Updated on 16 Nov 2024
Resources:
- Coherus BioSciences, Inc. (CHRS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Coherus BioSciences, Inc. (CHRS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Coherus BioSciences, Inc. (CHRS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.