Concerns over falling operating profit and future growth rates hang heavily on healthcare firm BTG (BTG), dragging the share price 4.6% lower at 616.5p.
Operating profit slumped 34% in the six months to 30 September, from £44.2m to £29.1m, mainly due to settling a US government investigation over the marketing of LC Bead, which tracks blood flow during tumour-shrinking treatments.
BTG delivered double-digit revenue growth of 24%, from £229.6m to £285.4m, as sales from its interventional medicine division jumped by nearly two-fifths to £98.1m.
Broker Panmure & Gordon analyst Dr Julie Simmonds notes the in-line results and higher full-year guidance, but is cautious over the firm’s prescription medicine Varithena.
Simmonds says the product is still showing a limited contribution and believes significant growth is unlikely to emerge over the next two years.
BTG CEO Louise Makin disagrees, believing that Varithena is capable of filling a gap in the market for treatments of leg ulcers. She also points out that re-orders of the product are helping to seed growth.
Paul Cuddon, analyst at broker Numis, is also optimistic, recommending BTG as a 'buy' based partly on its strong cash generation.
BTG’s cash currently stands at £144m with debt facilities of up to £200 available, which he says will provide ‘significant firepower’ to make further bolt-on acquisitions in interventional medicine.
BTG has upgraded its revenue guidance range for the full year to £535m to £565m to reflect the effect of recent currency movements. The previous steer was for £510m to £540m of sales.
