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Highlights:
- Mayne Pharma Group Limited (ASX:MYX) declared a 33% decline in revenue YoY in H1FY23.
- It has closed its Metrics Contract Services (MCS) sale transaction and announced selling its US retail generics business to Dr Reddy's Laboratories SA to focus on the US women's health portfolio, US dermatology and the international business segment.
- The board cancelled the proposed pro-rata capital return to retain flexibility and support the business.
Mayne Pharma Group Limited (ASX:MYX) shares surged around 28% in five days. On Wednesday, 01 March 2023, the share closed at AU$3.940 with a 18.674% gain.
The pharmaceutical company operates through three segments--Branded Products Division (BPD), Portfolio Product Division (PPD), and International. It is focused on developing and commercializing generic pharmaceuticals.
In its first half FY23 results announcement on 28 February, Mayne declared a 33% decline in revenue for H1FY23 to AU$101.2 million.
Its BPD segment generated 220% growth in revenue to AU$13.4 million compared to the corresponding half of the previous financial year. The PPD segment revenue declined around 49% YoY in H1FY23 to AU$60.1 million, and the International segment revenue remained almost the same as the previous year in H1FY23 at AU$27.6 million.
On 04 October 2022, the company closed its Metrics Contract Services (MCS) sale transaction for approximately AU$722.5 million of gross proceeds. Including gains from the sale of MCS business, its total comprehensive income came in at AU$293 million in H1FY23 against the loss of AU$25.8 million the previous year.
In the earnings declaration, it also announced selling its US retail generics business to Dr Reddy's Laboratories SA for a cash consideration of US$90 million and acquired a portfolio of branded women's healthcare products.
After this transaction, the company plans to focus completely on its US women's health portfolio, US dermatology and the International business segment.
The CEO opines that the company has added quality and high-demand products in the portfolio to offer the best to the patients and partners and, at the same time, improve returns for the shareholders.
Meanwhile, on 27 January, Mayne Pharma paid a special dividend of 2.72 cents per share. However, in the half-yearly earnings announcement, the board declared to cancel the proposed pro-rata capital return to retain flexibility, maintain an appropriate balance sheet and provide support to the business.
To put it in context, on 12 January, the company revised the timetable associated with its capital management initiatives announced in October 2022. The capital management initiatives package included a special dividend of approximately AU$47.3 million, pro-rate capital return of up to AU$65.5 million and a share consolidation of 20 shares for one with any fraction to be rounded to the nearest whole number.
MYX shares which closed with around 5% gain on 28 February, further jumped nearly 19% on Wednesday, indicating the market has given a green signal to the company’s change of strategy.
