After pushing back its quarterly earnings report twice, beleaguered CDMO giant Catalent told investors that it still needs more time to get its finances in order.
“This is not at all the call that we expected,” Catalent’s CEO Alessandro Maselli said on a conference call Friday.
“Our financial performance and operational execution have all fallen significantly short of our expectations and our primary focus,” he added, noting, “we accept responsibility for disappointing you.”
Catalent has now delayed earnings three times after revealing last month that it was struggling with “productivity issues” and high costs at three major production sites—including two of its largest. The sites include Catalent’s gene therapy manufacturing site in Harmans, Maryland, as well as its drug product and drug substance plants in Bloomington, Indiana, and Brussels, Belgium.
Now, as Catalent works to get its results for the third fiscal quarter over the finish line, the company says it expects to bring home revenues for its 2023 fiscal year in the range of $4.25 billion and $4.35 billion. Previously, the company thought it could generate sales between $4.62 billion and $4.87 billion this year.
In a presentation unveiled Friday, the contract manufacturer blamed that lowered forecast on operational challenges, higher-than-expected costs and a “more rigorous and disciplined” forecasting process.
Still, Masellli is optimistic Catalent can turn things around.
“We believe that the operational challenges behind this quarter’s disappointing performance and revised outlook are temporary and addressable,” the helmsman said.
Maselli also sought to reassure investors, noting the company hadn’t run into any manufacturing compliance issues or lost customer contracts.
“Our customer supply situation remains healthy and we believe we can sufficiently service their demand,” Maselli said.
He pointed to Catalent’s continued generation of new business, too, singling out extensions of long-term contracts with Novo Nordisk and Samsung Bioepis.
As for Catalent’s operational challenges, Maselli pointed to “productivity issues” in Indiana and Belgium and the need to make manufacturing changes following a regulatory inspection.
Meanwhile, Catalent has been bracing for a significant revenue decline as COVID-19 work dries up—something that has occurred “much faster than expected or forecasted,” Maselli said.
Catalent expects its COVID-19 revenues for fiscal year 2023 to drop roughly 50% versus 2022, the CEO said.
Much of the problem, to hear Maselli tell it, is that Catalent entered fiscal year 2023 “overly optimistic about our current growth.”
Given the company’s tardiness with its earnings report, Catalent on Friday revealed it had received a delisting notice from the New York Stock Exchange.