Mayne Pharma (ASX:MYX) share price slides on 38% EBITDA slump

We take a look at the pharmaceutical company's half-year results.

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Key points

  • Mayne Pharma released its half-yearly earnings today 
  • It was a mixed set of results, with international markets performing well but overall earnings taking a step back on the same time last year
  • In the last 12 months, the Mayne Pharma share price has collapsed by more than 14%

The Mayne Pharma Group Ltd (ASX: MYX) share price finished in the red today after the company released its interim report and financial results for the half-year ended 31 December 2021.

At the closing bell, the Mayne Pharma share price was 2% down at 24.5 cents.

Mayne Pharma share price tanks as earnings hit hard

Key takeouts from the pharmaceutical company's 1H FY22 earnings results today include:

  • Reported revenues of $196.4 million, down 6% year on year (YoY)
  • Reported earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $48.8 million, up 20% YoY from a non-cash deferred consideration reassessment due to COVID
  • Reported net loss after tax of $50.4 million driven by intangible asset impairment
  • Underlying EBITDA of $23.7 million, down 38% on 1H FY21
  • International division delivered 29% revenue growth on the previous year
  • Entered into five new supply agreements during the half with leading pharmaceutical companies.

What else happened this half for Mayne Pharma?

Drilling down into its individual components, Mayne reports that its Metrics business outperformed other sections of the portfolio with revenues up 20% YoY to $46 million.

This carried through to a 33% gain in gross profit while direct contribution was also up 37% to $22.1 million in response.

Perhaps most of the strength was seen in the company's international operating segment, which contributed almost $28 million to the top line. This was a growth of almost 30% on the prior corresponding period (pcp).

In fact, all of Mayne's business lines delivered double-digit growth. Its Australian product revenues were up 15% to $10 million due to the launch of Solarize (diclofenac) gel to treat "actinic keratoses".

Contract development and manufacturing organisation (CDMO) turnover also widened by 39%. This was helped by new development contracts and growing sales of the Kapanol label in Canada and Switzerland.

Taking a more broader view of the company's earnings, there was a slowdown in the pace of growth this half. Reported revenue was 6% behind last year whereas the company's net loss after tax came in at over $50 million.

Mayne ended the half with net debt of $272.6 million bolstered by cash of $114.7 million on the balance sheet at 31 December 2021. It also had another $387.3 million in available liquidity from borrowings and has more than 7x cover over the interest on its debt.

Management commentary

Speaking on the results that might have impacted the Mayne Pharma share price today, CEO Scott Scott Richards said:

At a group level, our underlying results this half have incorporated our significant investment in commercial infrastructure to support the launch of NEXTSTELLIS. Pleasingly, excluding our NEXTSTELLIS investment, underlying EBITDA was up 11% on the 1H FY21 and up 35% on the 2H FY21 despite our retail generics business segment continuing to erode as a result of the sustained competitive pricing environment.

Encouragingly, Metrics Contract Services, International and our dermatology portfolio delivered double-digit earnings growth versus pcp. At the bottom line, we reported a net loss after tax which was impacted by a non-cash intangible asset impairment of the generic portfolio.

What's next for Mayne Pharma?

The company touts its upcoming catalysts as "growth in the dermatology portfolio from recent product launches, the launch of a number of new products in international markets, the potential launch of a generic version of Nuvaring and further growth of Metrics Contract Services".

Aside from it, management is most excited about the Nextstellis segment, in which the company is seeking to enter the "US$3.4 billion short-acting combined hormonal contraceptive market with nearly 10 million American women using CHCs for their contraceptive needs".

Mayne Pharma share price summary

In the last 12 months the Mayne Pharma share price has collapsed by more than 14%. It is also down 17% this year to date. In fact, Mayne is down in the red across all major time frames.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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