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Catalent shares gain as long-delayed results clear ‘low bar’

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By Bhanvi Satija

(Reuters) -Contract drug manufacturer Catalent slashed its annual revenue forecast for the second time after production challenges at its major plants caused a larger-than-expected quarterly loss.

Its shares still rose 3.1% in premarket trading on Monday, as the company beat estimates for third-quarter sales thanks to strength in its biologics unit.

Catalent’s “results cleared an admittedly low bar”, Stephens analyst Jacob Johnson said in a note.

The company will also amend its 2022 results filing with a $26 million deduction caused by a revenue recognition error.

Catalent had delayed its quarterly results report thrice in less than a month, hit by production issues at key facilities such as its Bloomington, Indiana plant, where it does fill-and-finish for Novo Nordisk’s obesity drug Wegovy.

It reported a third-quarter loss of $17 million, or 9 cents per share, compared with Wall Street estimates for a loss of 3 cents, according to IBES data from Refinitiv.

In May, Catalent said production snags at three of its facilities – Maryland, Indiana and Brussels – had driven up costs. Its cost-cutting plans have also been hampered by regulatory inspections and subsequent corrective actions.

The company has since changed the financial directors at its locations facing the biggest challenges, and named a new interim CFO in April.

The contract drug manufacturer cut its revenue forecast for fiscal 2024 to a range of $4.23 billion to $4.33 billion.

Quarterly sales fell 18.5% to $1.04 billion, but came in above estimates of $952.7 million.

(Reporting by Bhanvi Satija and Sriparna Roy in Bengaluru; Editing by Devika Syamnath)

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