For Catalent, the hits keep coming.
After an April communique warning of reduced sales and productivity issues at three separate plants, the CDMO juggernaut delayed the release of its earnings for the third fiscal quarter. The report was originally scheduled to roll out Tuesday. Catalent said in a release Monday it’s now angling to unveil is quarterly report on May 15.
Last month, Catalent said manufacturing hurdles at three major production sites—including two of the contract manufacturer’s largest—were expected to put a squeeze on third-quarter earnings and weigh on the company’s outlook for the entire fiscal year, which runs through the first half of 2023.
Now, in addition to those “operational challenges,” Catalent says it has “also since identified significant issues with its forecasts over the past year.”
With that mix of operational and productivity hangups, plus “prior forecasting challenges,” Catalent expects to “significantly reduce” both its 2023 revenue and EBITDA guidance by “more than $400 million each.”
Moreover, Catalent expects to incur a goodwill impairment in its consumer health business of more than $200 million, primarily tied to the CDMO’s buyout of Bettera Wellness in October.
“We are dissatisfied with our recent results and are taking the necessary steps to address the issues that negatively impacted our performance, which fell well short of our prior projections,” Alessandro Maselli, president and CEO of Catalent, said in a statement.
Last month, Catalent singled out productivity hurdles at its gene therapy manufacturing site in Harmans, Maryland, where plans to increase capacity to ramp up production for an undisclosed drug moved “slower than expected.” Amid the delays, operational challenges “significantly reduced the expected revenue in the third fiscal quarter associated with the site, and will also impact revenue previously expected in the fourth quarter,” Catalent explained at the time.
Attempts to sort out issues in Harmans were further stalled by regulatory inspections of the site. Catalent in April noted revenue from “unproduced batches” in Maryland won't be recouped in the company’s 2023 fiscal year.
Aside from its gene therapy woes in Maryland, Catalent also suffered productivity challenges and higher-than-expected costs at its drug product and drug substance plants in Bloomington, Indiana, and Brussels where it failed to hit anticipated productivity levels and associated revenues. The company blamed those shortfalls, in part, on improvements required in the wake of regulatory inspections earlier in the fiscal year.
Catalent recorded weaker-than-expected revenues in its second fiscal quarter, as well. All told, Catalent logged net revenues of $1.15 billion for the period, down 6% from the $1.22 billion reported over the same stretch in 2022. The CDMO juggernaut said in an earnings release that “a substantial decrease in COVID-19-related revenue quarter-over-quarter was partially offset by a substantial increase in our non-COVID revenue.”