Alliance Pharma set to top underlying profit expectations

Alliance Pharma reported “strong” full-year growth in a trading update on Tuesday, with see-through revenue rising 23%, or 27% on a constant currency basis, to £169.6m.

The AIM-traded firm said that, excluding the impact of ‘Amberen’, which was acquired in December 2020, like-for-like see-through revenue grew 12% on a constant currency basis in the 12 months ended 31 December.

Due to an outperformance in ‘Kelo-Cote’, underlying profit before tax for the year was now expected to be “comfortably ahead” of market expectations.

The company said its consumer healthcare business continued to perform well, underpinned by increased e-commerce activity, driving total net revenues up 31% to £121.8m.

Like-for-like consumer revenues rose 14% on a constant currency basis.

Kelo-Cote delivered an “excellent” performance, particularly in the Asia-Pacific region, with net revenues of £48.8m - up 47% adjusted for currency and up 41% on a reported basis.

In the United States, Amberen generated net revenues of $26.5m (£19.2m) in its first full year under group ownership, with second half revenues up 12% year-on-year at constant exchange rates.

Full year revenues grew 3% on a constant currency basis, with growth expected to accelerate in 2022.

Following a period of investment to expand its local operating capabilities, the US business now had an “enhanced platform” from which to generate strong growth in Amberen and other existing brands, the board said, and to scale up further when suitable acquisitions were identified.

‘Nizoral’ revenues started to recover in the second half of 2021, generating sales of £11.8m in the six month period, up from £9.0m in the first half and £11.2m a year earlier, as the “challenging” regional trading conditions affecting both supply and demand eased.

As a result, net revenues of £20.6m for the year represented 1% growth on a constant currency basis, but a 2% decline on a reported basis.

“We expect further improvement in 2022, as the pandemic recedes, and as Alliance takes full control of the supply chain following the end of the transition period with Johnson & Johnson,” the board said in its statement.

The prescription medicines business delivered “robust” revenues of £47.8m, up 8% on the prior year, which Alliance put down to a partial return to the delivery of routine treatments and the normalisation of daily life compared with the early stages of the pandemic in 2020.

Free cash flow remained “strong” at £30.1m, down from £34.1m year-on-year, while net debt narrowed by £22.3m to £87.1m at year-end.

That reduced the group’s leverage below 2.0x, in line with its previous guidance.

In the absence of further acquisitions, group leverage was expected to fall below 1.5x in 2022, reflecting the firm’s continuing strong cash generation.

“I'm delighted with the organic double-digit revenue growth delivered by the group in 2021, despite the challenging operating environment,” said chief executive officer Peter Butterfield.

“Our consumer healthcare business continued to perform well, with Kelo-Cote enjoying another excellent year of growth as we capitalised on the opportunities identified for the brand.

“As we move into 2022, with Amberen now fully integrated into our enlarged US operations, we expect to accelerate growth as we realise the benefits of the additional revenue opportunities that the brand has brought into the group.”

Butterfield said the company’s free cash flow remained robust, enabling it to continue to reduce both net debt and leverage in 2021.

“This places the Group in a strong position to participate in complementary acquisitions focused on the consumer healthcare space.”

Alliance Pharma said it would announce its audited results for the year ended 31 December on 22 March.

At 1250 GMT, shares in Alliance Pharma were up 6.61% at 109.6p.