""I'm predicting that we're going to hit a minimum of $70 million for the fiscal year ending March 2025."" - Nasrat Hakim
Elite Pharmaceuticals Inc (ELTP) QQ4 2024 Results: Record Revenue, Elite Label Transformation, and Expanding ANDA Pipeline
Executive Summary
Elite Pharmaceuticals reported a standout QQ4 2024 performance anchored by the transition to an Elite label-driven model and a rapidly expanding ANDA pipeline. For the year ended March 31, 2024, total revenues reached $56.6 million, up 65% year over year from $34.2 million, reflecting the monetization of previously licensed products as Elite brought more activities in-house. Operating income surged to approximately $10.8 million, a 192% YoY increase, as higher revenue dollars and improved margins accompanied the substantial upfront investments required to support an in-house marketing and distribution framework. The business generated a one-time, noncash tax benefit of about $19.6 million related to deferred tax assets (NOLs) that released reserves, contributing to net income materially above operating income. Net income for the period benefited from this tax treatment, helping drive a reported top-line improvement beyond operating performance. Balance sheet metrics improved markedly: working capital effectively doubled to roughly $28 million, equity more than doubled to about $57.6 million, and debt remained low at roughly $11.7 million with net debt around $4.6 million. The company added four approved ANDAs after March 31, including methotrexate, and executed a strategic shift toward direct Elite label sales, supported by a new packaging line and a 34,000 square foot facility expansion. Management projects continued growth through four additional FDA-reviewed ANDAs and a target to achieve a minimum of $70 million in revenue for the fiscal year ending March 2025, signaling a constructive multi-year trajectory. The quarter also featured management emphasis on risk management (regulatory, pricing, and DEA quota considerations) and an ongoing focus on capital-efficient growth, with a pipeline designed to sustain profitability as scale accelerates.
Key Performance Indicators
Revenue
17.95M
QoQ: 15.51% | YoY:107.71%
Gross Profit
7.74M
43.11% margin
QoQ: 15.53% | YoY:124.84%
Operating Income
3.73M
QoQ: 5.55% | YoY:1 063.71%
Net Income
3.33M
QoQ: 370.85% | YoY:370.56%
EPS
0.00
QoQ: 371.43% | YoY:375.00%
Revenue Trend
Margin Analysis
Key Insights
Revenue: Q4 2024 revenue was $17.95 million; full-year revenue $56.6 million, up 65% YoY from $34.2 million (YoY metric cited by management).
Gross margin: 43.1% in the quarter (grossProfitMargin 0.431). Full-year gross margin consistent with mid-40s range typical for generic manufacturing with in-house distribution.
EBITDA: Q4 2024 EBITDA of $4.06 million (EBITDA 4,056,966; EBITDARatio 0.226 or 22.6% in Q4).
Operating income: Q4 2024 operating income of $3.73 million; full-year operating income reported at approximately $10.8 million (YoY increase of ~192%).
Net income: Q4 2024 net income of $3.33 million; full-year net income benefited from a one-time $19.6 million noncash income tax benefit related to the deferred tax asset, elevating annual net income well above operating income (net income margin for the period 18.5% in Q4; annual net income benefited from tax treatment).
Financial Highlights
Key quantitative highlights (Q4 2024 context; fiscal year-end metrics):
- Revenue: Q4 2024 revenue was $17.95 million; full-year revenue $56.6 million, up 65% YoY from $34.2 million (YoY metric cited by management).
- Gross margin: 43.1% in the quarter (grossProfitMargin 0.431). Full-year gross margin consistent with mid-40s range typical for generic manufacturing with in-house distribution.
- EBITDA: Q4 2024 EBITDA of $4.06 million (EBITDA 4,056,966; EBITDARatio 0.226 or 22.6% in Q4).
- Operating income: Q4 2024 operating income of $3.73 million; full-year operating income reported at approximately $10.8 million (YoY increase of ~192%).
- Net income: Q4 2024 net income of $3.33 million; full-year net income benefited from a one-time $19.6 million noncash income tax benefit related to the deferred tax asset, elevating annual net income well above operating income (net income margin for the period 18.5% in Q4; annual net income benefited from tax treatment).
- EPS: Q4 2024 basic EPS of $0.0033 and diluted EPS of $0.0032; annualized earnings per share uplift expected from NOL utilization.
- Cash flow: Net cash provided by operating activities of $2.06 million; free cash flow of $1.66 million; net change in cash $1.29 million; cash at end of period $7.11 million.
- Balance sheet and liquidity: Current ratio 3.07, quick ratio 2.08; total assets $83.65 million; total liabilities $26.07 million; total stockholders’ equity $57.58 million; long-term debt $6.72 million and current debt $5.02 million; total debt to capitalization 16.9%; cash and equivalents $7.11 million.
- Working capital and leverage: Working capital approximately $27-28 million (current assets ~ $40.01 million minus current liabilities ~$13.05 million). Debt remains modest, with net debt around $4.63 million, and equity remains strong due to profitability and capital management.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
17.95M
107.71%
15.51%
Gross Profit
7.74M
124.84%
15.53%
Operating Income
3.73M
1 063.71%
5.55%
Net Income
3.33M
370.56%
370.85%
EPS
0.00
375.00%
371.43%
Key Financial Ratios
currentRatio
3.07
grossProfitMargin
43.1%
operatingProfitMargin
20.8%
netProfitMargin
18.5%
returnOnAssets
3.98%
returnOnEquity
5.78%
debtEquityRatio
0.2
operatingCashFlowPerShare
$0
freeCashFlowPerShare
$0
priceToBookRatio
2.71
priceEarningsRatio
11.75
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management insights from the earnings call (themes and selected quotes):
- Strategy and business model shift: Nasrat Hakim emphasized the pivot from a license-driven model to a direct Elite-label distribution model, stating, "Elite has successfully transitioned from a CMO private label model to a national distributor with the Elite label. The transition to direct sales with the Elite label has been a great success." (Nasrat Hakim)
- Near-term revenue guidance and pipeline: Hakim signaled a constructive outlook, stating, "I'm predicting that we're going to hit a minimum of $70 million for the fiscal year ending March 2025" as part of the ongoing execution plan and run-rate growth.
- Product and regulatory progress: The call highlighted management’s focus on pipeline expansion, noting the approval of methotrexate and the acquisition of three approved ANDAs for commercial launch; a new 34,000 sq ft facility and a state-of-the-art packaging line were described as capacity multipliers (
- Operational and capital discipline: CFO Carter Ward explained that the higher absolute dollars reflect upfront working capital needs associated with rapid growth, not a deterioration in margins; he also noted that stock-based liabilities were settled by 3/31/2024 and that the remaining derivative liabilities (warrant derivatives) persist on the books.
"I'm predicting that we're going to hit a minimum of $70 million for the fiscal year ending March 2025."
— Nasrat Hakim
"Elite has successfully transitioned from a CMO private label model to a national distributor with the Elite label. The transition to direct sales with the Elite label has been a great success."
— Nasrat Hakim
Forward Guidance
Forward-looking assessment based on management commentary and industry dynamics:
- Management has signaled a persistent growth trajectory with a minimum revenue target of $70 million for the FY2025, reflecting the ongoing success of Elite’s direct-sell Elite-label strategy, expanded manufacturing and packaging capacity, and a robust product pipeline. The company expects four newly approved/added ANDAs to contribute meaningfully to revenue and margin expansion as market adoption occurs.
- The pipeline includes methotrexate (FDA-approved and commercially launch-ready) and other generic pain-management products, with three additional ANDAs reacquired (e.g., methadone, oxycodone/APAP, hydrocodone/acetaminophen) and a broader portfolio for expansion. This suggests a broader and more durable revenue base beyond a single product line.
- Capacity expansion: The 34,000 sq ft expansion next to the existing facilities, plus a new packaging line with triple capacity (and potential quadruple capacity when fully integrated), should support higher volumes and better absorption of fixed overheads. The company plans a staged qualification process with the FDA/DEA, which introduces execution risk and potential near-term delays but otherwise supports a step-change in capability.
- Risks and monitoring: Key risk factors include DEA quota constraints, price pressures in a competitive generics market, regulatory approvals/timelines (FDA/DEA inspections), and the pace of adoption of new products by distributors. Investors should monitor the status of the new facility approvals, the pace of new ANDA launches, and the evolution of working capital needs during the ramp period.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
ELTP Focus
43.11%
20.80%
5.78%
11.75%
IGXT
-69.00%
-4.63%
11.30%
-4.37%
ONCS
0.00%
0.00%
-1.34%
-88.50%
IMUC
0.00%
0.00%
-9.28%
-6.91%
CTSO
61.30%
-1.06%
-25.10%
-2.31%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, the investment thesis for ELTP appears constructive in the near-to-mid term. The combination of a successful transition to Elite-label direct distribution, a diversified and growing ANDA pipeline, and significant capacity expansion provides a credible path to higher revenue and improved margins. The one-time deferred tax asset benefit boosted net income in the latest period, but the sustainability of earnings hinges on continued operating profitability and cash flow generation from core activities. With a target of at least $70 million in FY2025 revenue and a pipeline designed to produce multiple needle movers, ELTP presents a compelling growth story within the healthcare/generic pharmaceutical space, subject to regulatory timing and competitive dynamics. Investors should monitor regulatory milestones (FDA/DEA approvals), the pace of new product introductions, and the evolution of working capital as the company scales its Elite-label operations.
Key Investment Factors
Growth Potential
Four post-year-end ANDAs approved and a multi-product pipeline (including methotrexate and other generic pain-management products) create an expandable revenue base. The Elite-label direct-sales model, a newly acquired packaging line with significantly higher capacity, and a new 34k sq ft facility position Elite to scale. Management’s target of at least $70 million in FY2025 implies a clear growth trajectory if execution remains on track and regulatory approvals proceed without material delays.
Profitability Risk
Regulatory and market risk remains material: DEA quota constraints, FDA/DEA inspection timing for the new facility, and the risk of delays in obtaining approvals for new ANDAs. The business is susceptible to generic pricing pressure and competition in a highly commoditized segment. The stock has noncash accounting items (derivative liabilities) that may introduce volatility in reported earnings but do not affect cash flow; ongoing dilution risk from equity-related instruments may continue if financing is pursued.
Financial Position
Solid liquidity and balance sheet strength with total equity of about $57.6 million and low net debt (~$4.6 million) support capital-intensive growth. Working capital approx $28 million demonstrates operational scalability. A one-time noncash tax benefit of $19.6 million supports near-term earnings, but the sustainability of earnings relies on ongoing profitability and cash generation from core operations.
SWOT Analysis
Strengths
In-house Elite label and direct-sales capabilities driving higher absolute revenue and margin dollars
Expanded ANDA pipeline with four approvals post-year-end and ongoing FDA review for three additional candidates
Robust cash generation and a strong balance sheet with low net debt
Strategic packaging and facility expansion enabling scalable production
Long-standing partnerships (Prasco, Precision Dose) that support channel reach and product mix
Weaknesses
OTC quotation-based capital structure and a sizable number of shares outstanding historically; potential dilution risk in future financing
Reliance on regulated products (amphetamines) subject to DEA quota and regulatory oversight
Short-cycle, regulatory-driven product approvals can create execution risk and revenue timing variability
Opportunities
Methotrexate and other newly approved/ reacquired ANDAs offer material upside in 2025 and beyond
Capacity expansion could enable entry into additional generic pain-management and CNS products
AI-enabled optimization across formulation development, manufacturing, and quality may reduce cycle times and costs
Expanded distribution and Elite-label branding could improve margins and market share
Threats
DEA quota constraints and regulatory inspections could delay launches
Competitive pressure in generic space could compress margins over time
Regulatory and litigation risks inherent to the generic/pharma sector could impact timelines and profitability
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