By Joan Faus
BARCELONA (Reuters) – Spanish drugmaker Grifols swung to a first-quarter net profit of 21 million euros ($23 million) from a year-ago loss, and said on Tuesday it was on track to meet its 2024 outlook, including cutting debt.
Grifols, which has been battling a plunge in its share price this year, said divestments and an increase in adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA), among other measures, will allow it to further reduce debt.
The company’s leverage ratio fell to 7.9 times EBITDA from 8.4 times at the end of 2023.
Grifols is reviewing its strategic assets portfolio, but is not expecting any other asset sale this year besides its 20% stake in Shanghai RAAS, which will close in June, Grifols’ executives said on an analyst call.
Revenue reached 1.6 billion euros in the first quarter, while adjusted EBITDA rose to 350 million euros, representing a 21.6% margin, up from 19.3% a year ago.
The company’s 2024 guidance forecasts full-year revenue over 7 billion euros, an adjusted EBITDA above 1.8 billion euros and positive free cash flow of 5 million euros.
Grifols posted first-quarter negative free cash flow of 253 million euro, compared with negative 109 million euros in the same period of last year, which it attributed to non-recurring impacts, such as a delayed $150m commercial payment.
Improving free cash flow and reducing debt are Grifols’ top priorities, Chief Executive Nacho Abia told analysts.Since early January, short-sheller fund Gotham City Research has released several reports accusing Grifols of overstating earnings and understating debt. Grifols’ market value has shed several billion euros since then.
Earlier on Tuesday, Gotham City questioned the accounting treatment of loans worth 266 million euros ($287 million) involving Scranton Enterprises, an entity tied to the Grifols family, and Grifols units.
Asked about that allegation, Grifols’ chairman, Thomas Glanzmann, called the hedge fund’s reports “misleading” and said he “had nothing else to add” as Grifols’ financial statements had been verified by regulators and auditors.
Following Gotham City’s reports, Grifols announced governance changes and revised its reported leverage higher after market supervisor CNMV required that it change its calculations.
An investigation by the CNMV found no significant errors in the amounts Grifols reported, but identified “deficiencies in the detail and accuracy of breakdowns” in some years.
($1 = 0.9246 euros)
(Reporting by Joan Faus; Editing by Andrei Khalip, Emelia Sithole-Matarise and Leslie Adler)
Comments