TIDMCLIN
RNS Number : 8766S
Clinigen Group plc
14 July 2020
14 July 2020
Year end trading update
Clinigen Group plc (AIM: CLIN, 'Clinigen' or the 'Group'), the
global pharmaceutical and services company, today provides an
unaudited trading update for the year ended 30 June 2020 .
Highlights
-- Revenues are expected to increase by at least 17% on a net
constant currency basis(1) and at least 13% on a gross reported
basis
-- Gross profit is expected to increase by at least 20% on both
reported and constant currency basis(2) and at least 9% on organic
basis(3)
-- Adjusted EBITDA growth of at least 29% with organic EBITDA
growth ahead of organic gross profit growth
-- Cash conversion returned to normal levels in the H2 with net
debt at GBP312m, with bank covenant leverage(4) at 2.3x EBITDA
-- Reiterate medium term organic gross profit growth guidance of
5% - 10% - with FY21 to be at the lower end due to the impact of
COVID-19 and an expected launch of a generic Foscavir in the EU
Shaun Chilton, Group Chief Executive Officer of Clinigen,
said:
"We have delivered a robust performance, showing strong organic
growth despite the difficult trading conditions in the last few
months of the financial year and in line with our previous
guidance.
"Our international platform and balanced portfolio of
complementary services and products have shown real resilience.
Cash generation also improved meaningfully in the H2, reverting
back to historical levels.
"We continue to see organic growth in line with our medium term
guidance at this early stage of the new financial year, despite
COVID-19 and expected competitive pressure to Foscavir. As we look
beyond FY21, we see growth significantly accelerating as we onboard
new asset Erwinase and we continue to gain share in the end-markets
we serve."
COVID-19
During the COVID-19 pandemic, Clinigen has implemented a range
of measures to prioritise keeping its employees safe, including
extensive home working. The Group has worked closely with its
pharmaceutical clients as well as its hospital pharmacist customers
to ensure that the supply of critical medicines to patients on a
global basis continues uninterrupted.
During the fourth quarter, the Group experienced more meaningful
disruption to its activities from COVID-19, but continued to
deliver good progress overall. Clinical Services was impacted by
clinical trials being delayed or cancelled, whilst both Commercial
Medicines and Unlicensed Medicines saw reduced volume demand as
treatments in the hospital setting, particularly for oncology,
slowed. However, the Group quickly pivoted activities to support
efforts against the pandemic, resulting in material contract wins,
whilst containing costs to lessen the impact from a lower top line
performance.
Clinigen estimates that the impact of COVID-19 was at least
GBP8m to EBITDA in FY20, with this primarily related to Proleukin.
These headwinds are expected to continue into at least the first
quarter of the current financial year, albeit the Group has already
seen signs of recovery in territories that have begun to relax
restrictions related to the pandemic.
Operations
In Commercial Medicines, there were good performances across the
portfolio, albeit growth in the final quarter was impacted due to
COVID-19 disruption. Foscavir performed well in spite of increased
competition from a novel product. The Group is now aware of a
generic approval in the EU, but has not seen any formal product
launch.
It is not possible to quantify precisely the financial impact
that the launch of a generic alternative to Foscavir will have on
Clinigen's revenues generated from Foscavir, or how quickly such an
impact would take effect. However, the Board has long anticipated
the generic threat and are enacting its strategy to mitigate loss
and expect the impact to be captured within its medium term organic
gross profit guidance. The signing of Erwinase in April 2020 adds
another material product to the division and onboarding continues
to plan with sales expected from the beginning of FY22.
Within Unlicensed Medicines, Global Access performed well even
though there were continuing headwinds in the UK Specials business.
Contracting for exclusive supply agreements was delayed by the
pandemic, but the Group expects this to improve materially in FY21
with a pipeline of near-term opportunities under evaluation. In
Managed Access, as highlighted in the half year results, the
performance was weaker despite an improved second half that was
boosted by a material number of program wins - the highest in the
Group's history.
Within Clinical Services, whilst the pandemic led to a reduction
in activity with clinical trials being delayed or cancelled, the
performance of both CTS and CSM was encouraging with both broadly
flat in organic terms against a market backdrop that the Group
believes was c.30-50% down in Q4. Within CSM in particular, the
direct to patient model was a clear differentiator against
competitors. More COVID-19 related work has been won than has been
delayed or cancelled due to the pandemic with notable large
contract wins in the final months of the financial year.
Outside of the divisions, good progress was made with the
Group's ERP project, ClinigenOne, with digitization expected in
FY21 and further steps on integration across the broader Group
thereafter.
Financials
As expected, the positive cash generation of the Group reverted
back to historical levels in H2. Clinigen continues to expect an
unwind of the temporary working capital headwinds seen in H1 over
FY21. The contingent consideration of up to $90m, payable for CSM
is now expected to be paid in H1 of FY21.
Net debt has marginally decreased relative to the H1, at GBP312m
(GBP289m excluding the previously highlighted IFRS 16 adjustment),
with bank covenant leverage(4) at 2.3x, well within the Group's
3.0x net debt / adjusted EBITDA covenant limit.
The Group reiterates its aim to paydown and maintain net debt
within a range of 1.0x to 2.0x EBITDA on an ordinary basis within
12-18 months.
Year end results
The Group expects to publish its final results for the year
ended 30 June 2020 on Thursday 17 September 2020.
(1) Net revenues on a c onstant currency basis evaluates the
Group's revenue performance by applying the prior period's actual
exchange rate to this period's result excluding the impact of pass
through costs in the Managed Access business.
(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 business and product acquisitions. Acquisitions completed
in the previous financial year are included on a like for like
basis including the results for the acquisition where it is
included in the comparable historical period. Organic growth is
presented to aid the reader's understanding of the underlying
performance of the business. On a proforma basis the best estimate
is at least 8% for organic gross profit growth.
(4) Bank covenant leverage is calculated by dividing adjusted
EBITDA of the Group for the last 12 months, excluding the impact of
IFRS 16, by net debt at the period end. Adjusted EBITDA includes
the EBITDA from the businesses and assets acquired during the last
12 months, including on a pro forma basis the year prior to it
becoming a member of the Group.
- Ends -
For further information, please contact:
Clinigen Group plc Tel: +44 (0) 1283 495
010
Shaun Chilton, Group Chief Executive Officer
Nick Keher, Group Chief Financial Officer
Matt Parrish, Head of Investor Relations
J.P.Morgan Cazenove - Nominated Adviser & Tel: +44 (0)20 7742 4000
Joint Broker
James Mitford / Hemant Kapoor
RBC Capital Markets - Joint Broker Tel: +44 (0)20 7653 4000
Marcus Jackson / Elliot Thomas
Instinctif Partners Tel: +44 (0)20 7457 2020
Adrian Duffield / Melanie Toyne Sewell / Phillip Email: clinigen@instinctif.com
Marriage
About Clinigen Group
Clinigen Group plc (AIM: CLIN) is a global pharmaceutical and
services company with a unique combination of businesses focused on
providing ethical access to medicines. Its mission is to deliver
the right medicine to the right patient at the right time through
three areas of global medicine supply; clinical trial, unlicensed
and licensed medicines. The Group has sites in North America,
Europe, Africa and Asia Pacific.
Clinigen now has over 1,100 employees across five continents in
14 countries, with supply and distribution hubs and operational
centres of excellence in key long-term growth regions. The Group
works with 22 of the top 25 pharmaceutical companies; interacting
with over 15,000 registered users across over 100 countries,
shipping approximately 6.4 million units in the year.
For more information on Clinigen, please visit
www.clinigengroup.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.
This information is provided by RNS, the news service of the
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END
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