Operator: Good morning, ladies and gentlemen, and welcome to the Elite Pharmaceuticals Year-End Fiscal Year 2026 Conference Call. [Operator Instructions]. Before management begins speaking, the conference has the following statement. Elite 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: Thank you, Matthew. 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 Dianne. Mr. Ward, you have the floor.
Carter Ward: Thank you, Nasrat, and good morning, everybody. Yesterday, we filed our 10-K. That's our annual report for the fiscal year ended March 31, 2026. 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. Let me start with the P&L first. Total revenues for the year were $149 million, and that's compared to $84 million for the March 2025 fiscal year last year. That is a $65 million increase, 77% increase. Another year, another revenue record. The Elite label is in its third year — launched in fiscal 2024. First year, 2024, revenues were $57 million, a 66% increase over the year prior to launching. Second year, $84 million. This year, $149 million with a 77% increase. Not only did we increase the actual dollars, but the percentage increase was also higher than last year. That's tough to do when the numbers get as big as they are.
The strategy is straightforward: deliver quality product on time and as promised, become the go-to supplier of choice in the market, achieve a critical mass, run efficiently, and most importantly, continue pipeline development. The Elite label started three years ago with generic Adderall, Isradipine, Phendimetrazine and a few other products. In the last two years, we've launched generic Vyvanse, generic Tylenol with Codeine, generic NORCO, generic Percocet, generic Otrexup, generic ReVia, and we also brought in-house Naltrexone and phentermine, now selling them exclusively on the Elite label. This is what explains our financials — pipeline development and product launches. But to sustain the growth, this requires continued product development. Since March 31 three months ago, we've launched methadone, filed an ANDA for a generic anticoagulant, reported positive results for a pivotal bioequivalent study, and a lawsuit relating to oxycodone was dismissed. Operating income for 2026 was $49 million, compared to $20 million last year — a $29 million increase, 151% increase. First year of the Elite label, operating income was $11 million; last year $20 million; this year $49 million. The profits since we launched the Elite label have more than quadrupled. Some of this is due to product mix yielding better margins, but most is due to product line growth and expansion. On direct versus indirect sales — there's a new table in Note 1 to our financials, disaggregation of revenues, showing direct versus indirect. This year, direct sales were 44% of revenues and indirect were 56%. Last year, direct was 59% and indirect was 41%. Direct sales generally have lower volumes and higher margins. Indirect is the opposite — higher volumes and lower margins. But distribution channel is just one of several factors affecting margins. Product mix and real-time market conditions are generally more relevant to margins than distribution channels. When you put everything together, the result was record revenues, record gross profits and higher gross margin percentage. Triple crown. Operating cash flow this year was positive $23.7 million, compared to $7.5 million last year — a $16 million increase, 219%. Profits drive cash flow. In cash flows from financing activities, bond and loan principal paid was $4.6 million this year versus $845,000 last year. We are paying down our debts. On the balance sheet — cash was $29.8 million compared to $11.3 million last year, an $18.5 million increase, 163%. Working capital was $95 million, up from $46 million, almost a $49 million increase, 106%. Long-term debt was down to $4.7 million from $5.8 million, a 20% reduction. Cash is up, working capital is up, long-term debt is down. This is the textbook definition of a strengthening balance sheet. On NOLs — the deferred tax asset was valued at $7.8 million as of March 31, down from $18.4 million at the beginning of the year. We used up $10.6 million in NOLs this year. We expect to start making payments of federal taxes this year as we use up our remaining NOL deductions. On the increase in fully diluted shares outstanding — last year we had $19 million in derivative expense which put us into a loss, so the dilutive effect of warrants and options were excluded as anti-dilutive. This year, we had derivative income and a net profit, so these dilutive instruments were included. If our stock price goes up over the year, we record a derivative expense; if it goes down, we record derivative income. Same warrants, same options, just different accounting treatment. On the outstanding warrants — they have been outstanding for 9 years; they are 10-year warrants. Every cap chart I have prepared over the last 9 years and every discussion with investment bankers has included them as part of Elite's capital structure. They expire next year — they will either be exercised or expire. There is a cash exercise option being discussed with Mr. Hakim, the holder, which would be a positive cash effect for the company. There is also a cashless exercise option with no effect on cash and lower dilution. In all cases, there is no strain on cash flow and no additional dilution in play. On our filer status — we will continue as a non-accelerated filer and smaller reporting company through the end of fiscal year March 31, 2027. The next assessment will be based on our market float on September 30, 2026, with any changes taking effect during the year ended March 2028. On the chargeback reserve as a critical audit matter — chargebacks are related to indirect sales, specifically the difference between the price the wholesaler pays and the price the end customer pays. It's standard in the generic business. GAAP requires we estimate the amount of chargebacks we'll receive after March 31 that relate to shipments delivered on or before March 31. Because the amounts can be large, the auditors consider it a critical matter and spend extensive time vetting all aspects of the underlying resource documents, assumptions and data. It's standard audit procedure and very common to all generic companies.
To sum up: record-breaking streak continues. Revenue up 77%, profit up 151%, operating cash flows more than tripled, balance sheet continues to strengthen with record high working capital and long-term debt continuing to drop. The pipeline is strong and continued growth potential is there. The company is stronger than ever and an attractive investment. We're also ready for the NASDAQ — that option is definitely on the table. Our next scheduled report is the 10-Q for Q1 fiscal 2027. Today, June 30, is the end of that quarter, and the 10-Q is due in August. I look forward to speaking with everyone then. And now I'd like to introduce our Chairman and CEO, Mr. Nasrat Hakim.
Nasrat Hakim: Thank you, Carter, for these outstanding numbers. You should have downplayed it a little. Every time we have good news, the stock price goes down. So let's hope this is an exception.
Carter Ward: I did downplay it a little bit.
Nasrat Hakim: The revenues for this fiscal year are $149 million — 77% increase over last year. Any other company on NASDAQ hits these numbers and the stock will explode. Looking back at the last 5 years, we've increased revenues on the average by 40% per year. This is not the only year we're doing it. This is not an exception. Operating income for this fiscal year is $49 million, a 151% increase over the previous year. Looking back at 5 years, that's an increase of about 80% each year. The working capital is at $94.7 million. About three years ago, Elite didn't have enough money to launch products and Dave, one of our board members, and I had to loan the company $3 million to get through launching new products. Today, Elite has almost $100 million in working capital. Over the past 5 years, we have transitioned into a solid midsized generic company with all the facets of a pharmaceutical company, including our own sales and marketing. 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. We still have the option of licensing and acquiring products from other companies if the opportunity arises and is advantageous to Elite, and we will consider it further in the future. We are an established pharmaceutical company with strong fundamentals and very low debt. Our product mix is the key to our success. Our sales and operation team have effectively defended and grown the market shares of our key products while maintaining good margins. On Listdex — the generic Vyvanse launched about a year ago. We now have about 10% market share with minimal disruption to the overall market. The Listdex overall market grew about 20% during each of the last two years. The brand-to-generic conversion is almost fully matured now — last year 35% of volume was with the brand, this year about 15%. Amphetamine IR, the generic Adderall — IQVIA shows our current market share at about 14%. The market has grown 6% to 12% per year in the past few years. Amphetamine ER — IQVIA reports we have about 12% market share, growing 8% to 12% per year in the last few years. Naltrexone — now that we're selling it directly, we are at about 12% market share and it's growing. Isradipine and Trimipramine are small markets, each with only one competitor, with healthy margins. Phendimetrazine has only one primary competitor and we hold about 30% market share with good margins. Phentermine is another old product that has been with us for a very long time. We've recently launched Codeine with acetaminophen, Oxy/APAP, hydro APAP, methadone and methotrexate. Next month, we will be launching Ropinirole and Ropinirole ER — the market cap for this is about $12 million, and we always target 5% to 10% of the market and usually exceed that on products that are really good. Our partner Dexcel is doing well selling Amphetamine IR in Israel and is talking to us about potentially adding other Elite products to their portfolio. In the pipeline, we have two ANDAs pending with FDA. First, an ANDA for OxyContin ER. From a patent perspective, we are in good shape — we went into litigation with Purdue for under $100,000 of spending and reached a favorable conclusion where we can launch pending FDA issues in August of next year. There is an ongoing lab issue related to in vitro anti-abuse studies that needs to be resolved before moving forward, but barring that, there are no other FDA issues as of now. Second, we have submitted an ANDA for an undisclosed anticoagulant generic. The brand has unexpired patents, so timing of approval and launch will depend on FDA approval and patent disposition. We also recently announced the passing of a BE study for a seizure medication or anticonvulsant — we will issue a press release when the ANDA is filed. We have several other products in development stage and will make announcements when material events occur. On our facility expansion — we have a new facility at 144 Ludlow Avenue in Northvale, New Jersey, with packaging, inventory and warehouse space. This allowed us to triple our DEA storage vault space, which is critical for a company that manufactures a lot of controlled substances. It dramatically improved packaging capabilities and allows for potential growth for the next 5-plus years. It also created three additional manufacturing suites by freeing up the space where the packaging line was previously. For packaging, we are making about 0.75 billion units total on one shift. We can double that easily, triple that by going to two shifts, and even more on weekends, all without adding another packaging line. On M&A — we are always considering ways to bring value to our shareholders. The options are to leave things as they are and stay on OTC, which is not something we're going to do; to sell the company, merge, acquire or be acquired, for which we have hired a bank; or to go to NASDAQ. We have had companies find us too large for their balance sheet. One company wanted to buy our products — we said no. Another pharmaceutical company offered us to buy their company at a price we considered too high. We have not been presented with what I consider to be an adequate opportunity to move forward. We will not rush into this and will not accept substandard pricing. Our M&A agent tells us there is another large company interested right now — we will accommodate them and see what happens. We prefer to go to NASDAQ because we have outgrown the OTC. Going to NASDAQ is an option we can pursue alone or in combination with a transaction. At all times, all of this does not distract from the business. We continue to operate with our long-term values in mind, growing our product lines and our pipeline. Now let's go to Q&A.
Nasrat Hakim: There were a lot of questions, many of them redundant, grouped around the Purdue case, the anticoagulant, the anticonvulsant, M&A and some general questions. First, on the anticonvulsant and fast-tracking — to the best of my knowledge, no fast-tracking is available for this product. We will issue a press release when the ANDA is filed. We do not release product names until products are approved, for competitive reasons. In general, it takes a few months to put the ANDA together, six months for stability, FDA takes about 10 months to review, often pausing to ask questions before restarting the clock. There can also be patent issues. On manufacturing shifts — we run a single shift on two lines and that takes care of our needs. Huge opportunity for growth if we double or triple capacity. On additional manufacturing space — we have identified a facility we may be interested in. We are doing the study to figure out which products could go there, cost to lease and retrofit, expected revenues, and return on investment. We may pull the trigger once that's complete. On the Purdue settlement — Elite is not treated as a new filer. The six-month exclusivity goes to whoever filed first with the FDA — winning court battles is not relevant to the FDA. Whether we can sell during a court-designated exclusivity period depends on the specific settlement terms, and we need to review this more closely with our patent attorneys. We didn't issue a press release because of the uncertainty around timing of tentative approval. On the anticoagulant ANDA — this is not a first-to-file; several companies filed before us. It's an excellent opportunity, just not first-to-file. We filed it as a Paragraph III for now. The FDA acknowledged receipt. It usually takes about 10 months of review with pauses for questions. We delayed the filing originally because we were working to circumvent some patents to reduce the timeline, but that took too long, so we proceeded with the filing while continuing to work on patent challenges. On whether another positive BE trial result is likely before year-end — yes, it is, and when it happens, we will issue a press release. On NDAs — they cost a lot of money and our finances are not NDA-stable. We already have SequestOx still active without additional investment. We would consider an NDA only if a partner financed it and we did the work. No NDAs are under active consideration at this time. On Listdex market share and margin protection — we have 10% of the market. Market prices did fall from where they started, which is normal. Volume increase and brand-to-generic conversion have more than compensated. We defend our market share through good relationships and high reliability. The DEA has provided sufficient quota to maintain our market share. On unit sales — we don't release unit sales for competitive reasons. On methadone — it's a competitive market with low profit margins. It will mature in time, but there are bigger priorities right now. It's a good product that will pay the electric bills, but it doesn't deserve a lot more attention than that. On API suppliers — we source a minimum of 2 API suppliers for every product, completing all analytical work and filing with the FDA for each. On international expansion beyond Dexcel — new international opportunities come in from time to time and are evaluated. Dexcel is the primary international opportunity currently, with interest in adding more Elite products to their Israel portfolio. On doxycycline — we are not considering purchasing it. It's a high-volume, low-profit molecule with too much headache for now. Maybe with a new facility in the future. On the anticoagulant patent question and BMS — filed as Paragraph III for now, and no, we have not been sued by BMS yet. On pharmaceutical tariffs — our APIs have been exempt from tariffs both before and during the Trump administration. No impact on our operations or M&A discussions. On FDA tier thresholds — yes, we are approaching the larger tier of more than 19 approved ANDAs with higher FDA fees. We do have a couple of discontinued or duplicate applications we will address when the time comes to stay under the threshold for another year or two. On marketing generic opioids in New York — we currently market in all states, but that may change for New York and several other states because of the treatment and fees. On European market opportunities — we have not disclosed or discussed any specific product with anyone in Europe. There will be a time, not now, when we could consider marketing our products in Europe. On M&A and NASDAQ — all three options remain in play. The bank we hired is one of the best in the world. Going to NASDAQ is also an option we can pursue on our own. All of this M&A work does not distract from the business. We continue to operate the company with our long-term values in mind, growing our product lines and our pipeline. This concludes our meeting today. Thank you, ladies and gentlemen. Looking forward to speaking to you in August.
Operator: Thank you everyone. This concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.