Full Press Release Details
Reports Second Quarter and First Half 2022 Results
Net Revenues Increased
14% year-over-year in the Second Quarter, with Adjusted EBITDA Margin of 24%
Constant currency Net
Revenues Increased by 18% year-over-year in the First Half,
signaling a strong demand across our businesses
MIAMI, USA - BARRANQUILLA, COL -
August 30, 2022 - Procaps Group S.A. (NASDAQ: PROC) ("Procaps"), a leading integrated LatAm healthcare and pharmaceutical
conglomerate, today announced its financial results for the three months ended June 30, 2022 ("2Q22") and the six months ended
June 30, 2022 ("1H22").
"The second quarter and first half of
2022 continued our previous year's momentum with healthy demand across most of our business units supported by the ongoing rollout
of new product launches and an important announcement on Procaps entering into definitive agreements to acquire Grupo Somar1
, which we believe will provide us an important presence in Mexico, the region's second largest market, and further strengthen
our future outlook," said Rub n Minski, CEO of Procaps.
Highlights 1H22 & 2Q22
Product Development & Market
Financial Highlights
Management Commentary
Procaps Chief Executive Officer, Ruben Minski,
"We continued to make progress in executing
our strategy of building an integrated healthcare organization in the second quarter of 2022. In May 2022, we announced another milestone
in this journey: a definitive agreement to acquire Grupo Somar2 from Advent International.
"Grupo Somar is an integrated pharmaceutical
company focused on developing, manufacturing, and marketing high-quality branded generic, private label and OTC products targeted to the
private market and offering CDMO services across key market segments in Mexico. We believe Grupo Somar offers a diversified portfolio
of products across key categories and has strong R&D and manufacturing capabilities, operating six modern production facilities in
Mexico, including three FDA-approved plants with the ability to export to the U.S., and two of which manufacture Softgel capsules.
"We are thrilled to have executed an important
milestone on our long-planned roll-up strategy with an ideal acquisition target for Procaps, which we believe will help accelerate Procaps
top and bottom-line growth into the near future in an accretive manner. With this acquisition, Procaps continues to diversify its products
and geographies and we believe solidifies its position as a leader in innovative oral delivery systems.
"The transaction is expected to close by
the end of the year and will represent a significant step forward for our regional consolidation strategy, expanding our reach in Mexico,
which we anticipate will represent approximately 30% of the total revenues of the combined companies, with the expectation for additional
"During the quarter we continued the pace
of new product launches and product rollouts to new regions, which combined to deliver 14% revenue growth when compared to 2Q21, and 12%
in 1H22 when compared to 1H21, despite currency depreciations in some countries in the region where we operate and certain specific challenges,
we have observed in supply chain worldwide. On a constant currency basis, top line grew 18% in 1H22 when compared to 1H21.
"An especially important aspect that is
an essential backbone of our strategy is continuous innovation, which is at the heart of our portfolio. We have registered over 120 products
during 1H22 and have over 170 products under the registration process.
"Additionally, our West Palm Beach facility
commenced operations in May this year. The pipeline of RX product development has been growing as expected, and we have a positive perspective
for the next twelve months.
"Looking ahead into 2022, we will continue
to focus on our roll-up strategy including Grupo Somar s integration and a multi-prong growth strategy of innovative pharmaceutical
solutions and new expansion initiatives. Together, we are executing on our commitment to deliver better health and nutrition to the world
through innovative oral delivery systems and building long-term value for our shareholders, " said Minski.
Procaps Chief Financial Officer, Patricio Vargas,
"We ended the second quarter of 2022 and
the first half of the year delivering a robust performance - reaching a quarterly revenue of $112 million, an increase of 14% over the
same period of the previous year, driven by multiple therapeutic areas across the company. We achieved Adjusted EBITDA of $28 million
in 2Q22 (12% higher than 2Q21) and Adjusted EBITDA margin of 24%, despite the negative impact of macroeconomic headwinds including the
depreciation of local currencies in some countries where we operate.
"These results arise from the combination
of discipline in the execution of our growth strategy with the soundness of our core business operations.
"We continue to prioritize high value uses
for our capital, with an emphasis on reinvesting in our business by funding our internal R&D and innovation initiatives.
"Our strategy going forward is supported
by our substantial efforts in 2021 to establish the necessary building blocks for growth, and our recent acquisition announcement. I m
confident that we are well positioned to tackle the integration process with Grupo Somar to achieve our near and long-term goals.
Looking ahead into the 3Q22 and the remainder
of the year, we see challenges that we must continue to monitor. World uncertainties, such as a possible recession in the United States
and Europe, supply chain disruptions, and the continued depreciation of the currencies in the markets where we operate. We believe the
diversified nature of our businesses offers natural protection against most challenges, but we are closely monitoring possible impacts,"
Innovation & Launches
Total R&D expenses, including the amount capitalized
as intangible assets, totaled $9 million in 2Q22, 5% of total net revenues in the period.
Our renewal rate (% of net revenues from new products
launched in the last 36 months) came to 21%. Launches depend on registration approval from regulatory agencies, and we could have phasing
from quarter to quarter, depending on the time of the approval. Our goal continues to be at 25%.
The Farma Procaps business unit launched the first
exclusive combination of vitamin D with vitamin K2 - DEFEROL K in Colombia. Vitamin D stimulates the intestinal absorption of calcium,
and when associated with a vitamin K2, the calcium is directed to the bones, optimizing bone health as well as lowering the risk of cardiovascular
diseases by avoiding the unwanted deposition of calcium in the blood vessel walls. We have also developed a gummy version for this product
which has contributed to its acceptance for pediatric patients.
Other launches in Colombia during the period include:
AZEC - a novelty nasal spray combination of Fluticasone Propionate + Azelastine Hydrochloride - indicated for the relief of moderate
to severe symptoms of seasonal or chronic allergic rhinitis when monotherapy with antihistamines or nasal glucocorticoids alone is not
considered sufficient; and MENTSI - the first oral pharmaceutical mint oil used for stomach/intestinal disorders, such as irritable
The Clinical Specialties business unit launched
our oncology line with ALUDEL (enzalutamide) - indicated as first-line therapy for men with prostate cancer that no longer responds
to hormone therapy or surgical treatment.
The VitalCare business unit continued to strengthen
its portfolio with a wide range of analgesic products with our oral delivery system technologies, line extensions of our DOLOFEN brand,
and the launch of DOLOFEN FLU.
Procaps s portfolio is comprised by 5 business
lines: Nextgel, Diabetrics, Farma Procaps, Clinical Specialties, and Vital Care.
Nextgel is the iCDMO (integral contract development
and manufacturing organization) arm of Procaps. We develop and manufacture proprietary Softgel technology, such as Unigel, Versagel, Chewgel,
G-tabs and specialized gummies. We export to over 50 countries and partner with global and regional pharmas. This is exclusively a B2B
Diabetrics is a health solution for diabetes patients.
It is a patient-centric solution, offering a comprehensive portfolio of products and differentiated services. This solution is offered
in Colombia, and we expect to launch in Central America and Mexico beginning in 2023.
Farma Procaps formulates, manufactures and markets
branded prescription drugs. It represents a high-growth portfolio that focuses on nine therapeutic areas: feminine care products, pain
relief, skin care, digestive health, growth and development, cardiology, vision care, central nervous system and respiratory.
Clinical Specialties
Clinical Specialties business line develops, manufactures,