Karo Pharma Doubles Sales and Earnings in the First Quarter
HUDDINGE, Sweden, April 26, 2018 /PRNewswire/ --
INTERIM REPORT JANUARY – MARCH 2018
- Net sales amounted to MSEK 267.1 (139.3), equivalent to an increase of 91.7%. Growth was mainly due to acquisitions.
- Organic growth was +10.7%, whereof pharmaceuticals +18.8% and other products +4%
- The gross margin was 56.8% (53.7%) for the period.
- EBITDA amounted to MSEK 88.7 (43.7), which corresponds to a margin of 33.3% (31.4%)
- Earnings per share was SEK 0.45 (0.27)
- Cash and other short-term investments amounted to MSEK 295.2 (166.1) at the end of the period.
- A rights issue to partly finance the acquisition of Weifa was completed during January.
EVENTS AFTER THE FIRST QUARTER
- Karo Pharma completed the acquisition of the LEO operations from the Danish pharmaceutical company LEO Pharma A/S for MEUR 260, effective from 4 of April 2018.
- The product portfolio has had a stable sales and profitability. The operations from LEO Pharma had a turnover in 2017 of 679 MSEK, whereof 49 percent in the Nordic region, 42 percent in other Europe and 9 percent in the rest of the world.
- The products may improve the company's total gross margin by approximately ten percentage points
- LEO has committed to manage the portfolio for a commission at market rate until Karo Pharma has taken over the products
- The LEO operations is an asset purchase transaction, that includes products and platform for further development. This means that Karo Pharma can utilize existing tax losses (SEK 2.6 billion) from its period as a research company and thereby reduce the Company's tax.
- Karo Pharma's Board of Directors resolved on a fully underwritten rights issue, subject to AGM approval
- The rights issue proposed by the Board is subject approval by the AGM on 3 May 2018. The rights issue is fully covered by subscriptions and underwriting commitments from existing shareholders and is expected to raise approx. SEK 1.3 billion before transaction costs. The terms of the rights issue will be published on 30 April.
AUDIOCAST TODAY AT 11.00 A.M. CET
A presentation of the report (in Swedish) will take place today at 11 a.m. The presentation can be attended through the corporate website www.karopharma.se or by telephone +46-8-505-564-74. Questions may be submitted over the internet or by the telephone.
COMMENT ON OPERATIONS
We have changed the focus of Karo Pharma into becoming a Specialty Pharma company. During the first quarter of 2018, operations continued to develop positively, with sales and profitability almost doubling. Organic growth was double-digit, which is beyond expectations. We have been working intensively to integrate Weifa as well as to begin working on integrating the acquisition of the LEO operations. The acquired product portfolio strengthens Karo Pharma's existing operations very well and consists of ten prescription and non-prescription drugs with strong brand names. The acquisition is an important step towards becoming a pure Specialty Pharma company. Due to our increased focus on pharmaceuticals, which will represent more than 80 percent of the Company's sales, the Company has good potential to further improve profitability. In addition to Karo Pharma's strong position in the Nordic region, the company can now also expand into Europe. The acquisition of Leo Operations includes a number of products well established in the European market, enabling the company to profitably establish itself in key European markets. After the acquisition the organization will hence be strengthened in both the pharmaceutical and geographic areas. The acquisition will positively impact sales and profitability from the second quarter of this year.
Through its nature of being an asset purchase transaction, future tax burden will be reduced. This means that the company will be able to utilize existing tax losses from the time as a research company and thereby reduce its tax.
We are in a positive situation with our product portfolio with several new products. This requires creative thinking as well as a strict and correct prioritization in the marketing of the products. An interesting new product from the acquisition of Weifa AS is the drug combination of paracetamol and ibuprofen for the treatment of moderate pain. The drug is approved in the Nordic countries and will be launched in 2018.
With the aim to strengthen the Company's financial and operational capacity as well as to partly finance the acquisition of the operations, the Board has decided to implement a rights issue.
Karo Pharma is an interesting option for shareholders who want to invest in a leading Specialty Pharma company. We have a long-term perspective in a business that is not cyclical. We follow our plan and look forward to a very interesting future for the company's shareholders.
Anders Lönner
Chairman
FOR FURTHER INFORMATION, PLEASE CONTACT
Peter Blom
CEO
+46-70-655-56-98
peter.blom@karopharma.se
ABOUT KARO PHARMA
Karo Pharma is a specialty pharma company that develops and markets products to pharmacies and directly to healthcare providers. The share is listed on Nasdaq Stockholm in the Mid Cap segment.
The information in this report is such that Karo Pharma is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, on 26 April 2018 at 8.00 a.m. CET.
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The following files are available for download:
| INTERIM REPORT JANUARY â€" MARCH 2018 (PDF) |
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