TIDMCLIN
RNS Number : 9949E
Clinigen Group plc
13 July 2021
13 July 2021
Year End Trading Update
Clinigen Group plc (AIM: CLIN, 'Clinigen' or the 'Group'), the
global pharmaceutical Products and Services company, today provides
an unaudited trading update for the year ended 30 June 2021 . The
Group expects to publish its final results for the year ended 30
June 2021 on Thursday 16 September 2021.
Financial Highlights
-- Net revenue(1) expected to be GBP455m representing an
increase of 12% on a constant currency(2) and organic(3) basis.
Including the contribution from the UK Specials and Aseptics
compounding business (the "UK Compounding Business"), which was
divested on 30 June 2021, reported net revenue is expected to be
GBP495m.
-- Adjusted EBITDA(4) is expected to be GBP116m, in line with
guidance provided in June of GBP114-GBP117m, representing a decline
of 10% on a reported basis and 6% on a constant currency(2) and
organic(3) basis. Including the UK Compounding Business adjusted
EBITDA expected to be GBP117m.
-- Net debt of no more than GBP317m (excluding IFRS 16)
representing net debt leverage(5) of 2.8x, meaningfully below the
Group's temporary banking covenant of 3.5x.
-- Clinigen expects to achieve double digit EBITDA growth in
FY2022 and remains focused on debt paydown.
Operational Highlights
-- Reorganisation of Group into two divisions ("Products" and
"Services") and divestment of the UK Compounding Business
simplifies operational structure and aligns platform to end-market
customer. Post these changes a further review of the cost base has
begun to target new cost saving initiatives.
-- Strong new business activity in Services, with $100m of
business won in Clinical Services and net 30 Managed Access
Programs added. The Services business margin weakened in the period
due to a higher proportion of Sourcing wins and delays to key
contracts in Clinical that have now started.
-- In Products, demand for Proleukin and On-Demand products
remains weak due to the continued impact of COVID-19 on
hospital-based treatments, whilst the developed portfolio of
products performed strongly and the Erwinase global roll-out is
progressing ahead of plan.
Shaun Chilton, Chief Executive Officer of Clinigen, said:
"Like many other companies operating in the clinical trial and
hospital-based products area, Clinigen this year has seen an impact
on demand from COVID-19. Nevertheless, we anticipate a return to
double-digit growth in the next financial year driven by the
strength of our underlying business and activity levels across the
Group.
"We are seeing significant activity in Services, with strong
business wins across the division in both COVID and non-COVID
related areas that will fuel growth over the coming year. In
Products, the roll-out of Erwinase is ahead of expectations, and we
continue to add to our Partnered portfolio to support future
growth.
"More broadly, Clinigen's strong platform across the product
lifecycle and synergies across the business give us confidence in
our ability to deliver value for patients, customers and investors
in the coming year and beyond."
Financials
The positive cash generation seen in H1 2021 continued into the
second half, equating to cash conversion of over 85% for the full
year in spite of a GBP15m investment in working capital for
Erwinase onboarding.
In spite of the working capital investment in H2 2021, net debt
is expected to have decreased to GBP317m at end-June from GBP330m
at end December 2020 (excluding IFRS 16), with net debt leverage of
2.8x well within the Group's 3.5x net debt / adjusted EBITDA
temporary banking covenant.
With the Group having made a $89.5m deferred payment for CSM in
September 2020 there are no material deferred payments to make on
prior acquisitions. The Group aims to pay down debt to a leverage
ratio well below 2.5x on an ordinary basis by end of FY2022 and
within our stated target of below 2.0x within FY2023.
Simplified operations and a synergistic platform
Clinigen has simplified and streamlined the organization to
better align with customers by reorganizing the business into two
divisions and more recently (announced June 30) disposing of the
non-core, low margin UK Compounding Business which had two separate
facilities in the UK and 198 employees.
Clinigen is confident that this will help to deliver further
synergies across the platform, bringing clear benefit to our
customers, patients and ultimately to the Group.
During the year the Group's 'Join The Dots' initiative, focused
on driving referrals and collaboration across the two business
divisions, continued to show steady progress, with an increase in
cross divisional referrals from its 579 Pharma & Biotech client
list (10 business wins closed in the period, up from 4 in
FY2020).
Products
As previously announced, Proleukin was negatively impacted by
COVID-19 in H2 2021 with a significant reduction in US
prescriptions for on-label indications, resulting in a key order
from a US wholesaler not being placed in Q4. Management believe it
is prudent to expect this reduced level of demand for Proleukin to
remain until revitalisation efforts into new indications alongside
novel cell therapies are successful and normal Hospital and Cancer
Centre Services have resumed. Additional analysis on the
prescribing patterns in the US will be presented at the update
today and will be available online on the Clinigen website
afterwards. Management remains confident in the outlook for
Proleukin and the original investment case for revitalization into
new indications, either alongside novel cell therapies or as a
single agent in autoimmune diseases.
Outside of Proleukin, the Owned Products portfolio delivered a
robust performance thanks to growth from key developed assets
Glycopyrronium and Melatonin offsetting declines elsewhere with the
loss of Ethyol in the year due to previously disclosed
manufacturing difficulties. Foscavir performed well in spite of the
launch of generic versions in both the US and EU due to the
implementation of defensive strategies such as the launch of the
bag formulation.
The Partnered portfolio performed strongly whilst the onboarding
and roll-out of Erwinase is progressing ahead of plan, with sales
already initiated in the UK on a commercial basis and into ex-UK
markets on an unlicensed basis.
On-Demand revenues were materially impacted by COVID-19 with
hospitals prioritising treating patients more directly affected by
the pandemic.
Services
The impact of COVID-19 has continued to cause delays to clinical
trials and reduced hospital activity and, whilst activity levels
are not back to pre-pandemic levels they are beginning to increase.
In spite of the impact of COVID-19, net revenue increased strongly
in the year thanks to new Sourcing contract wins, albeit these were
at a lower overall margin.
The division also saw a strong period of new business wins, with
$100m worth of signings overall in Clinical Services and more
Managed Access Programs being won than in any prior year (30 net).
It is anticipated that these business wins, which are across the
higher margin Clinical and MA services, will help drive strong
EBITDA growth in FY2022.
Board update
Peter Allen, Independent Non-Executive Chairman ("Chairman")
will not stand for re-election to the Board at the AGM in November.
Peter has served as Chairman since the Group's IPO in September
2012, steering the Group through a period of exponential growth,
and Clinigen is enormously grateful to him for his leadership and
guidance. The Group is in advanced discussions with a potential
successor who would bring to Clinigen significant international
experience in pharmaceutical products and services, and will
provide an update in due course.
Outlook
As the Group heads into FY2022 and the market begins to slowly
recover from the pandemic, Clinigen sees evidence of strong
momentum in its Services business and progress in the Products
business laying the foundations for future growth. Clinigen is
confident that our simplified operating structure will deliver
further synergies across the platform, bringing clear benefit to
our customers, patients and ultimately to the Group .
Clinigen expects to achieve double digit EBITDA growth in
FY2022, with continued strong cash generation, and remains focused
on debt paydown.
(1) Net revenue evaluates the Group's revenue performance
excluding the impact of pass through revenue in the Managed Access
business which varies each period dependant on the mix of
programs.
(2) Constant currency evaluates growth by applying the prior
period's actual exchange rate to this period's result.
(3) Year on year comparisons referred to as 'organic' are a
measure of growth on a constant currency basis, excluding the
impact of acquisitions and disposals. There were no acquisitions
within the last 12 months of the reporting date and one disposal
relating to the UK Compounding Business. Organic growth is
presented to aid the reader's understanding of the underlying
performance of the business.
(4) Group results on an adjusted basis exclude amortization of
acquired intangibles and products and other non underlying
items.
(5) Bank covenant leverage is calculated by dividing adjusted
EBITDA of the Group for the last 12 months by net debt at the
period end, excluding the impact of IFRS 16. Adjusted EBITDA
excludes the EBITDA from businesses disposed of during the last 12
months.
Members of the management team at Clinigen will hold a webcast
for analysts and investors, followed by a live Q&A, at 9:00am
BST today. Please find a link to this webcast here . If you would
like to join the live Q&A, please register here .
- Ends -
For further information, please contact:
Clinigen Group plc +44 (0) 1283 495010
Shaun Chilton, Chief Executive Officer Investors@Clinigengroup.com
Nick Keher, Chief Financial Officer
Rob Fox, VP Investor Relations and Corporate
Development
Numis Securities Limited - Nominated Adviser Tel: +44 (0) 20 7260
& Joint Broker 1000
James Black / Garry Levin / Freddie Barnfield Clinigen@Numis.com
RBC Capital Markets - Joint Broker Tel: +44 (0) 20 7653
4000
Marcus Jackson / Elliot Thomas
Consilium Strategic Communications Tel: +44 (0) 20 3709
5700
Mary-Jane Elliott / Matthew Cole / Matthew
Neal Clinigen@consilium-comms.com
About Clinigen Group
Clinigen Group plc (AIM: CLIN) is a global, specialist
pharmaceutical services and products platform focused on providing
ethical access to medicines. Its' mission is to deliver the right
medicine to the right patient at the right time. The Group operates
from sites in North America, Europe, Africa and the Asia
Pacific.
Clinigen has more than 1,000 employees across five continents in
16 countries, with supply and distribution hubs and operational
centres of excellence in key long-term growth regions. The Group
works with 34 of the top 50 pharmaceutical companies; interacting
with over 5,000 hospitals across more than 115 countries.
For more information on Clinigen, please visit
http://www.clinigen.com
Cautionary statement
This announcement contains certain projections and other
forward-looking statements with respect to the financial condition,
results of operations, businesses and prospects of Clinigen Group
plc. These statements are based on current expectations and involve
risk and uncertainty because they relate to events and depend upon
circumstances that may or may not occur in the future. There are a
number of factors which could cause actual results or developments
to differ materially from those expressed or implied by these
forward-looking statements. Any of the assumptions underlying these
forward-looking statements could prove inaccurate or incorrect and
therefore any results contemplated in the forward-looking
statements may not actually be achieved. Recipients are cautioned
not to place undue reliance on any forward-looking statements
contained herein. Except as required by law, Clinigen undertakes no
obligation to update or revise (publicly or otherwise) any
forward-looking statement, whether as a result of new information,
future events or other circumstances.
The information contained in this statement has not been audited
and may be subject to further review.
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