BTG tumbles as 2019 guidance disappoints

Revenues in the year to 31 March improved 9% to £620.5m, or 10% at constant exchange rates as product sales rose 9% to £423.8m while licensing revenues grew 7% year-on-year to £196.7m.

Adjusted operating profit was ahead 18%, or 20% at constant currency, to £152.7m, although the company swung to an IFRS operating loss of £102.8m, from a profit of £57.5m in the 2017 financial year. Adjusted basic earnings per share surged 42% to 32.9p, beating the consensus forecast of 29.8p.

Free cash flow swelled 69% to £109.3m and net cash flow from operating activities rose 63% to £120.7m. Cash and cash equivalents at year-end stood at £210m, up from £155.5m at the end of the 2017 financial year.

“Over the past decade we have been transforming BTG from a royalties business into a product sales business with diverse, sustainable revenue streams,” said CEO Louise Makin.

“We have built the capabilities and infrastructure that support ongoing growth, by investing our strong cash flows to develop leading positions in selected Interventional Medicine markets and to maintain a strong pharmaceuticals business.”

Makin said the company was “well positioned” to continue generating around double-digit product sales growth through the anticipated royalty declines, and to deliver operating leverage over the medium term.

“By continuing to invest in product innovation, clinical data, geographic expansion and acquisitions, we are developing leading positions in attractive growth markets and creating significant long-term value for shareholders.”

Makin issued guidance for the new financial year of 13-15% sales growth at constant exchange rates in the interventional oncology and vascular business, a flat to single digit CER decline in pharmaceuticals and a flat to single digit decline in adjusted SG&A and R&D costs.

Noting that consensus expectations for 2019 revenue had been for around £620m, analysts at Shore Capital said that assuming a circa 20% fall in licensing revenues and a minimal contribution from early stage Interventional Medicine assets, "we would estimate guidance suggests a FY2019 revenue range of £595m-£600m, which hence looks light vs. consensus forecasts".