The share price of S&P/ASX 300 Index (ASX: XKO) stock Mayne Pharma Group Ltd (ASX: MYX) has soared since the company dropped its half-year earnings on Tuesday morning.
Right now, the pharmaceutical manufacturer's stock is trading at $4 – 27% higher than it was before it broke a trading halt with news of its results, a divestment, and its capital return.
Let's take a closer look at what's been going right for the ASX 300 share this week.
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ASX 300 share Mayne Pharma rockets 27% in 2 sessions
Here are the key takeaways from Mayne Pharma's first-half earnings:
- $101.2 million of revenue excluding discontinued segments – a 33% drop on that of the prior comparable period (pcp)
- Earnings before interest, tax, depreciation, and amortisation (EBITDA) came to a $99.2 million loss
- $129.2 million net loss after tax – down from a $66.3 million loss in the pcp
- Basic earnings per share (EPS) came in at 17.6 cents
- No dividend declared
The company's earnings were dinted by lower revenues, driven by higher inventory levels, discontinued products, and foreign exchange losses.
The company's branded products division saw revenue more than triple to $13.4 million last half amid strong growth in NEXSTELIS sales. Its portfolio products division saw revenue fall 49% to $60.1 million. Finally, its international segment's revenue was flat at $27.6 million.
What else did the company announce this week?
The Mayne Pharma share price was put into a trading halt on Monday morning, returning to trade on Tuesday, as the ASX 300 company prepared to release news of a material divestment and its capital management.
Later that day, it announced the sale of its US retail generics portfolio business for up to US$90 million cash and up to US$15 million of contingent milestone payments.
The move supports the company's aim to transform into a speciality pharmaceutical company with leading positions in women's health and dermatology.
It also announced the cancellation of its $113 million capital return on Tuesday. It said the return was no longer in the company's best interests.
What did management say?
Mayne Pharma CEO Shawn Patrick O'Brien commented on the news seemingly driving the ASX 300 share sky-high in recent sessions, saying:
We have taken decisive action this half to address the issues that have created the disappointing results in both our PPD and International businesses.
We are creating a leaner company with strong commercial and sales execution capabilities and [with the sale of the US retail generics business] we move a step closer to achieving our goal of generating operating cash and returning the business to profitability.
The board is supportive of our strategy and ambition, and the cancellation of the capital return is a prudent step to retain balance sheet flexibility whilst we drive improved operating performance, and the board considers the appropriate capital structure to support profitable growth and a restoration of shareholder value.
What's next?
The company heralded an encouraging start to the second half. It flagged improvement in its dermatology segment and positive impacts from the scaling up of its US women's health business.
The latter is on track to exit financial year 2023 with a positive run rate contribution. Meanwhile, the newly acquired TherapeuticsMD portfolio is expected to deliver positive earnings in the second half.
At the same time, launches of various products are expected to drive growth across the company.
Maybe Pharma share price underperforms the ASX 300
Despite this week's surge, the Mayne Pharma share price is still in the longer-term red.
It has fallen 5% so far this year and 13% over the last 12 months.
For comparison, the ASX 300 has gained 4% year to date and 2% over the last 12 months.
