Pharmaceutical products and services company Clinigen (CLIN:AIM) has warned that a stronger pound has created a headwind which will impact second half performance.

The company reported interim organic revenue growth of 4% to £231.9 million, while earnings before interest, tax, depreciation and amortisation (EBITDA) was 12% lower at £54.6 million.

Clinigen shares edged 0.2% higher to 760p with the company nudging up second half growth expectations, now steering for the upper half of the 5% to 10% medium-term range, driven primarily by the Services division and partnered products.

The ongoing impact from Covid-19 in the form of reduced hospital demand reduced first-half EBITDA by around 5% to 10% and is expected to continue until the pandemic alleviates.

STRONG CASH FLOW

Adjusted operating cash flow for the six months ended 31 December 2020 was £60.7 million compared with £10.1 million last year, representing a strong return to cash generation following investment in working capital.

Strong cash generation was offset by the payment of £67.9 million to CSM as part of the final settlement of the earn-out. This increased net debt by £39.6 million.

However, the company said net debt to EBITDA, or leverage as it is called, is expected to reduce from the period-end 2.8-times in the second half before reducing more ‘substantially’ thereafter . The company has a target below two-times within the first half of the 2022 fiscal year.

STREAMLINED STRUCTURE

Clinigen has simplified the group structure into two divisions as previously flagged. The Services division includes the provision of logistics, packaging and distribution (Clinical) and Managed Access, which enables pre-approved access to new medicines for the treatment of unmet needs. Service revenues grew 21% with EBITDA down 12%.

The Products division enables access to a portfolio of specialist medicines, split between owned, partnered and on-demand. Reduced demand for non-Covid-19 products, particularly in cancer saw revenues fall 9% to £131 million, leading to a 10% drop in EBITDA to £44.3 million.

Numis has cut its 2021 EBITDA forecast by 2.5% to £130 million but it left investors with positives to cling to, noting the company’s resilient top-line and building pipeline.

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Issue Date: 23 Feb 2021