Haleon ups full-year guidance after rocky spinoff from GSK

10 Nov 2022
endpts.com
Acquisition
After getting off to a rather rocky start in July, GSK’s consumer health spinoff Haleon is upping its full-year sales guidance on the heels of what CEO Brian McNamara called a “strong quarter of growth.” The spinout is now expecting an 8% to 8.5% growth in revenue this year, as opposed to a previously anticipated 6% to 8%. That’s due to a roughly 12% uptick in oral health sales and solid respiratory figures as we enter cold and flu — and likely Covid — season. In North America, Haleon noted a dip in Sensodyne sales due to advance purchases made in Q3 2021 ahead of Q4 price increases, as well as vitamins, minerals and supplement sales caused by slower growth of Centrum and Emergen-C. “This was as expected given last year’s particularly strong comparatives as a result of successful innovations and improved capacity in the US, that allowed restocking for retailers,” the company said. After years of deliberation — and punting multiple unsolicited offers from Unilever — GSK CEO Emma Walmsley made the tough decision to part ways with the company’s consumer health unit, which boasts popular brands such as Theraflu, Advil painkillers and Robitussin cough medicine. The portfolio contains consumer health drugs from both Novartis and Pfizer as a result of deals from 2017 and 2019, respectively. GSK called the demerger “the most significant corporate change” for the pharma giant in the last 20 years. The company’s name is a mashup of the words “hale,” meaning “in good health,” and “leon,” which is associated with strength. GSK’s board claimed Unilever’s offers “fundamentally undervalued” Haleon — but when the company launched on the London Stock Exchange in July, it did so at a valuation more than $30 billion lower than Unilever’s $68 billion bid. It also had more than $12 billion of debt in tow. CFO Tobias Hestler told analysts and investors on a Q3 call on Thursday that Haleon had repaid £750 million of a £1.5 billion term loan by the end of last quarter, with another £250 million repaid in October. However, due to “significant volatility of Sterling,” the “resulting adverse impact of FX have offset the repayments of the term loan.” Current net debt sits at about £10.8 billion, or $12.6 billion. “Whilst macroeconomic conditions remain volatile and uncertain, we remain confident that the quality of our portfolio, disciplined execution of our strategy, and continued investment will enable Haleon to deliver on medium term guidance,” McNamara said in a statement. Haleon’s stock $HLN was up less than 1% on Thursday afternoon, pricing at around $6.46 per share.
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