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.
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.”
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 £8m 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.
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.
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 £312m (£289m excluding the previously highlighted IFRS 16 adjustment), with bank covenant leverage4 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 constant 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.
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.
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.
Issued for and on behalf of Clinigen by Instinctif Partners.
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Melanie Toyne-SewellManaging Partner