CIBC While we wait...What's The Event
Concordia reports Q1/16 results on the morning of Friday, May 13th, followed by a conference call at 8:30 a.m. ET. Dial-in: (647) 427- 7450 or (888) 237-8191; Reference Number: 87616030.
Q1/16 will be the first quarter where we see a full quarter of financial impact from the AMCo transaction which closed in midOctober 2015. The US business will likely be relatively weak in Q1, reflecting light Donnatal sales, and the continued challenges in the US market for legacy drugs.
* We forecast Q1 revenue of $224.4 million ($146 million from AMCo and $76.4 million from Legacy) vs. consensus $226.7 million.
* Our Adjusted EBITDA estimate is $138.1 million ($81 million from AMCo and $61 million from Legacy) vs. consensus $138.7 million.
While the FT article last week placed a spotlight on the pricing of Concordia's products in the UK, this should not come as a surprise to investors, notwithstanding the relatively large increase in Fucithalmic. We remind investors that AMCo has previously admitted that its growth came through price increases, acquisitions and product launches. Although we don't expect major backlash from past pricing practices, the newly publicized scrutiny over pricing in the UK may have a moderating effect on Concordia's ability to take future price increases in that jurisdiction, and will likely be monitored closely. This could also impact any strategic review process that may be ongoing.
On the call, we will look for any update on 2016 guidance, progress on debt repayment, more details on the performance of AMCo and future product launches, as well as commentary on the pricing and reimbursement environment in both the US and the UK relating to Concordia's products.
We maintain our price target of $34 per share. Our price target is based on an 8.5x 2016 EV/EBITDA and net debt of $3.1 billion.