Dispatches from the NYSE

Catalent sees growth strengthened by international softgel markets

Catalent bringing in the closing of the New York Stock Exchange on Monday.

CDMO (contract development and manufacturing organization) Catalent saw Q4 revenue rise 3% and income rise 66% thanks in part to an increase in its oral technologies segment.

The growth in the oral technologies segment was primarily led by the company’s flagship softgel business in international markets. Growth was partially offset by volume declines in the softgel business in North America and by the company’s exit from its remaining non-core third-party commercial packaging business. The total adverse impact on Q4 revenue from the packaging business exit was $8m (EUR6.2m).

Scott Houlton, president of development and clinical services at Catalent, told Outsourcing-pharma.com the company left its packaging business behind because it’s looking to focus more on technology and less on filling capacity. He noted the company is seeing more bioavailability challenges than in the past and that all recent expansions, including into China, were spurred by customer demand for a “long-term, safe and viable supplier.”

IPO

The announcement of growth comes as the company raised about $872m through an IPO from July. The company’s shares have risen about 10% since the IPO.

President and CEO John Chiminski told us the IPO helped the company pay down “a lot of debt,” improve its leverage ration, and to invest in new technology.

FY2014 revenue of $1.83bn increased 2% from the prior year, and for FY2015, the company expects its revenue to rise slightly into the range of $1.89bn to $1.92bn, with capital expenditures to be in the range of $115m to $125m.

Chiminski added that the industry is “ripe for consolidation” and that Catalent has a couple of M&A deals that may close in the next quarter. One such acquisition may be in the API business, which Chiminski said “is in our sites,” though the company is looking for a “good specialty business” rather than a “race to sell off capacity.”

Breakdown

Despite the growth in oral technologies, revenue from the Development and Clinical Services segment decreased 1% to $105.4m primarily due to lower comparator sales.

Revenue from the Medication Delivery Solutions segment was $68.9m, an increase of 1% over Q4 a year ago. This decline was primarily due to lower sales within the Company’s European sterile injectables business, which Houlton told us was more of a product of the “peaks and troughs” such businesses see.

"We are pleased with our fourth quarter results,” Chiminski said. “Our performance was highlighted by double-digit EBITDA growth within all three of our reporting segments. We continue to execute and to make strategic investments to position Catalent for organic growth and further market expansion, as evidenced by the launch of our ADVASEPT technology and the upcoming expansion plans in Japan.”

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