Alliance Pharma profits improve as it acquires Biogix

Alliance Pharma said on Wednesday that its see-through revenues for 2020 were down 5% on the prior year at £137.5m, as expected, both on a reported and a constant currency basis, reflecting the impact of Covid-19.

The AIM-traded firm said underlying profit before tax for the year was expected to be “marginally ahead” of market expectations.

It explained that, notwithstanding the challenges of the pandemic, its consumer healthcare brands continued to perform “strongl”y, with total division revenues up 1% to £93m.

Revenues for ‘Kelo-cote’ were up 12% to £34.7m, and ‘Nizoral’ turnover was 4% firmer at £21m.

The company’s revenues from its prescription medicines were £44.5m, down 14% year-on-year, which the board said reflected the negative impact of Covid-19 on the delivery of routine treatments for a large part of the year.

Free cash flow for the year remained “very strong” at £34.1m, compared to £29.1m in 2019, with second half cash flows being “significantly stronger” than the first half, bolstered by favourable movements in net working capital.

Following the drawdown of $110m from its existing £165m revolving credit facility to fund the acquisition of Biogix, announced in late December, net debt stood at £109.4m at year-end, widening from £59.2m a year earlier.

As a result of the acquisition, group leverage increased to 2.43x as at 31 December, compared to 1.48x a year earlier, and was expected to decrease progressively throughout 2021 to below 2.0x by the end of the year.

The acquisition of Biogix had brought ‘Amberen’ into the group, which the board described as a “highly successful and fast-growing” brand for the relief of menopause symptoms.

It said the acquisition created scale in its business in the United States, and was expected to be earnings enhancing in 2021 and “significantly” earnings enhancing from 2022.

“The group continued to deliver a robust operational and financial performance in the second half of 2020, despite the ongoing challenges of the pandemic,” said chief executive officer Peter Butterfield.

“Whilst top line revenue growth has been constrained overall, our consumer healthcare business has performed well given the market backdrop and we have seen some strong performances from a number of our brands, in particular Kelo-cote.

“Our free cash flow has remained very strong, enabling us to pay down more of our debt ahead of completing the Biogix acquisition close to the end of the year.”

Butterfield said the board was “particularly pleased” that the company managed to complete “such a large and strategically-significant” acquisition at the end of 2020, in addition to maintaining its base business performance as it navigated the challenges of Covid-19.

“As we progress into 2021, we look forward to regaining the strong momentum and revenue growth of recent years, and to benefiting from the additional growth opportunities that Amberen brings into the group.”

At 0905 GMT, shares in Alliance Pharma were up 0.85% at 87.94p.