Net Revenues Increased 5% in 9M23
Year-over-Year on a Constant Currency Basis, Driven by 13% RX
Growth
Procaps Group, S.A. (NASDAQ: PROC) (“Procaps” or the “Company”),
a leading integrated international healthcare and pharmaceutical
services company, today announced its financial results for the
three months ended September 30, 2023 (“3Q23”) and the nine months
ended September 30, 2023 ("9M23”).
Financial Highlights 3Q23 & 9M23
- Net revenues totaled $118 million for 3Q23, positively impacted
by the performance of RX and OTC portfolios, offset by lower CDMO
revenues. On a constant currency basis, net revenues increased by
2% in 3Q23. For 9M23, net revenues totaled $313 million, an
increase of 5% on a constant currency basis.
- Gross profit for 3Q23 totaled $68 million with a 58% gross
margin and totaled $176 million for 9M23 with a 56% gross margin,
mainly impacted by higher costs and mix of products sold.
- Adjusted EBITDA was $22 million in 3Q23, with an Adjusted
EBITDA margin of 19%. For 9M23, Adjusted EBITDA was $51
million.
U$ million
3Q23
3Q22
Δ%
9M23
9M22
Δ%
Net Revenues
118
110
7%
313
308
1.4%
FX Impact on Net Revenues
6
-
(12)
-
Constant Currency Net Revenues
112.9
110
2%
325
308
5%
Gross profit
68
68
1%
176
187
-6%
Gross margin
58%
61%
-343 bps
56%
61%
-454 bps
Adjusted EBITDA
22
23
-4%
51
60
-14%
FX Impact on Adjusted EBITDA
1
-
(2)
-
Constant Currency Adjusted
EBITDA
21
23
-9%
53
60
-11%
Adj. EBITDA margin
19%
21%
-212 bps
16%
19%
-291 bps
Management Commentary
Procaps Chief Executive Officer, Ruben Minski, commented:
“The third quarter of 2023 showed signs of improvement after a
challenging first half of the year. We are encouraged by our strong
operational execution and refinement of our strategic plan to
ensure a stronger, more resilient organization that thrives beyond
short-term hurdles.
“Multiple macroeconomic factors continued to challenge the
industry in our region, impacting our revenues. We continue to
adapt our strategies to navigate this dynamic landscape and protect
our profitability and are seeing positive trends materializing in
4Q23 which we expect will lead to improved results over 4Q22.
“During the quarter we announced an agreement with BDR
Pharmaceuticals for 27 oncology molecules for Latin America,
including 20 TKIs (Tirosyne Kinase Inhibitors). Under the
agreement, Procaps is responsible for registration, branding,
marketing and commercialization throughout Latin America. We are
very excited to expand our oncology portfolio in the region and add
more partner companies and potentially broaden cancer treatment
options with several new molecules to better serve more patients
and physicians.
“To support increased U.S. demand of our advanced gummy
technologies for the global nutraceutical industry capacity
expansion in the U.S. continue as planned with the ongoing
construction of a new gummy manufacturing facility in Florida. We
expect operations to commence in 1Q24 with revenues following later
in the quarter. Also in the U.S. we are exploring new products,
especially high potency compounds, to take advantage of the West
Palm Beach facility which has production capacity of approximately
1.8 billion softgel capsules per year for our iCDMO business
unit.
“During the quarter we participated as one of the five
sustainable sponsors at CPHI Barcelona 2023 and welcomed over 300
business partners, current and new, at our booth. We were very
pleased with the level of interest across the global pharma
community of attendees.
“As we continue to focus on growth, and after months of
considering how to best serve the Company, earlier this year I
announced that leading the Company on important strategic
initiatives rather than on day-to-day matters would be of better
value to the Company. We have in place the necessary capabilities
to position the Company for long-term success and as announced, I
will transition to Executive Chairman of the Company on January 15,
with the announcement of Jose Antonio Vieira as the new CEO,”
concluded Minski.
Guidance Update
Given the slowdown in growth in some markets, especially during
the month of September and October and the current macroeconomic
environment, we are revising our guidance for the full year.
The impact of the macroeconomic conditions that the industry has
experienced through the year, followed the same pattern in the
third and fourth quarter - order phasing from CDMO partners, OTC
taking longer to recover, launches delays due to delay in
registration approvals, and sales of brands that were
postponed.
The Company now expects full year 2023 net revenues growth of
approximately 6% on a constant currency basis, and an adjusted
EBITDA in the range of $77M - $82M.
This short-term scenario does not change our medium and
long-term expectations for the Latin American market. We believe
this market slowdown is only temporary and in the next years the
market will continue to benefit from the aging of the population,
greater market access and increase in health coverage.
Please check Procaps investor relations website for full Earning
Release details, at:
https://investor.procapsgroup.com/financials/quarterly-reports
Conference Call Information:
The Company will host a conference call and webcast in late
January 2024, after the arrival of the new CEO. The Company will
inform the market about the date and time during the month of
January.
Forward-Looking Statements
This press release includes "forward-looking statements."
Forward-looking statements may be identified by the use of words
such as "forecast," "intend," "seek," "target," "anticipate,"
"believe," "expect," "estimate," "plan," "outlook," and "project"
and other similar expressions that predict or indicate future
events or trends or that are not statements of historical matters.
Such forward-looking statements include projected financial
information. Such forward-looking statements with respect to
revenues, earnings, performance, strategies, synergies, prospects,
and other aspects of the businesses of Procaps are based on current
expectations that are subject to risks and uncertainties. A number
of factors could cause actual results or outcomes to differ
materially from those indicated by such forward-looking statements.
These factors include, but are not limited to: (1) the inability to
successfully retain or recruits officers, key employees, or
directors; (2) effects on Procaps' public securities' liquidity and
trading; (3) the lack of a market for Procaps' securities; (4)
changes in applicable laws or regulations; (5) the possibility that
Procaps may be adversely affected by other economic, business,
and/or competitive factors; (6) the Company’s inability to achieve
its cost saving goals and value creating initiatives, (7) our
ability to remediate our disclosed material weaknesses within
certain time frames, if at all and (8) other risks and
uncertainties indicated from time to time in documents filed or to
be filed with the Securities and Exchange Commission ("SEC") by
Procaps. Accordingly, forward-looking statements, including any
projections or analysis, should not be viewed as factual and should
not be relied upon as an accurate prediction of future results. The
forward-looking statements contained in this press release are
based on our current expectations and beliefs concerning future
developments and their potential effects on Procaps. These
forward-looking statements involve a number of risks, uncertainties
(some of which are beyond our control), or other assumptions that
may cause actual results or performance to be materially different
from those expressed or implied by these forward-looking
statements. These risks and uncertainties include, but are not
limited to, the ability to recognize the anticipated benefits of
any acquisitions contemplated or pursued by the Company, the impact
of COVID-19 on Procaps' business, changes in applicable laws or
regulations, the possibility that Procaps may be adversely affected
by other economic, business, and/or competitive factors, and other
risks and uncertainties, including those included under the header
"Risk Factors" in Procaps' annual report on Form 20-F filed with
the SEC, as well as Procaps' other filings with the SEC. Should one
or more of these risks or uncertainties materialize, or should any
of our assumptions prove incorrect, actual results may vary in
material respects from those projected in these forward-looking
statements. We undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required under
applicable securities laws. Accordingly, you should not put undue
reliance on these statements.
Important Note Regarding Unaudited Estimates and Non-IFRS
Measures
The Company is not able to reconcile its forward-looking
non-IFRS estimates of Adjusted EBITDA presented in this press
release for the year ending December 31, 2023 without unreasonable
effort because of the inherent difficulty of accurately forecasting
the occurrence and financial impact of the various adjusting items
necessary for such reconciliation that have not yet occurred, are
out of our control, or cannot be reasonably predicted, which could
have a material impact on its future IFRS financial results.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231226910930/en/
Investor Contact: Melissa Angelini IR Director - Procaps
Group ir@procapsgroup.com investor.procapsgroup.com
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