Ipsen today announced financial results for the full year 2016.
Commenting on the 2016 full year performance, David Meek, Chief Executive Officer of Ipsen, said: “The strong operating performance in 2016 serves as a solid foundation for the company in this new era of accelerated momentum and transformation. Sales grew by nearly 12% year-on-year, a record high for Ipsen, and core operating margin improved despite additional investments for the Cabometyx® launch in Europe.”
David Meek added: “2016 was a very productive year for Ipsen with the Cabometyx® approval and launch for second line renal cell carcinoma in Europe, the launch of new indications for Dysport® in the U.S., a new corporate governance structure implemented, and most recently, the acquisition of Onivyde®, which reinforces our specialty oncology strategy. The focus for 2017 will be on building upon the strong momentum of the current business and the successful launch of Cabometyx®, which combined with the expected addition of Onivyde® and the new Primary Care products, will significantly contribute to the growth and profitability of the company in the coming years.”
New definition of Core Financial Measures
Ipsen has updated its definition of Core financial measures (Core Operating income, Core consolidated net profit, Core EPS) to exclude the amortization of intangible assets (excluding software) and the gain or loss on disposal of fixed assets.
Core financial measures are the key performance indicators for understanding and measuring the performance of the Group. Ipsen believes that the updated financial indicators reflect with better clarity the Group’s underlying business trends and enable more meaningful comparisons year on year, as they exclude non-core items which may vary significantly.
These performance indicators do not replace IFRS indicators, and should not be relied upon as such.
Reconciliations between IFRS 2015/2016 results and the newly defined Core financial measures are presented in Appendix 4 and in the “Reconciliation from Core consolidated net profit to IFRS consolidated net profit” table on page 12.
Review of the full year 2016 results
Note: Unless stated otherwise, all variations in sales are stated excluding foreign exchange impacts.
In 2016, Group sales reached €1,584.6 million, up 11.8% year-on-year.
Specialty Care sales reached €1,273.0 million, up 16.1%, driven by the strong growth of Somatuline® in North America, as well as a solid performance throughout Europe.
Dysport® good sales performance in aesthetics in the U.S. through Galderma, and in Russia and the Middle East was offset by importation issues in Brazil that occurred in the second half of the year due to a temporary cancellation of the certificate of Good Manufacturing Practices (cGMP). Decapeptyl® sales reflect good volume growth in Europe and China offset by price pressure in the region. The Group booked during the fourth quarter the first sales of Cabometyx® in Europe, mainly in Germany, Austria and France following the product approval by EMA in September.
Primary Care sales reached €311.6 million, down 2.7%, impacted by lower sales in Russia for Tanakan® and other Primary Care products, while Smecta® sales were slightly up driven by the implementation of the new OTx6 commercial model.
Core Operating Income totaled €363.9 million, up 11.1%. Core operating margin reached 23.0%, up 0.3 points compared to 2015, mainly driven by strong business performance, partially offset by investments for the Cabometyx® launch and the adverse impact of foreign currencies.
Core consolidated net profit was €263.6 million, up 12.8% over the period, compared to €233.8 million in 2015.
Core earnings per share – fully diluted (see Appendix 4) grew by 13.0% year-on-year to reach €3.18 for 2016, compared to €2.82 in 2015.
Free cash flow generated in 2016 reached €228.8 million, up by €52.5 million, driven by the strong operating performance and a good management of working capital and capital expenditures.
Closing net cash reached €68.6 million at the end of the period, compared to €186.9 million in 2015, notably after payments to Exelixis for the original cabozantinib license and subsequent extension to Canada, as well as regulatory and commercial milestones, for a total of €257.3 million in 2016.
IFRS Operating Income totaled €304.7 million, up 24.8% from €244.0 million in 2015, impacted by lower impairment charge, with an Operating margin at 19.2%, up 2.3 points compared to 2015.
IFRS Consolidated net profit was €226.6 million, up 18.8% over the period, compared to €190.7 million in 2015 and fully diluted EPS at €2.73 in 2016, was up 18.7% from €2.30 in 2015.
Comparison of 2016 performance with financial objectives
The Group exceeded the raised guidance provided on 26 October 2016 for Specialty Care sales and Core operating margin and came in at the favorable end of revised guidance for Primary Care sales.
The table below shows the comparison between the financial objectives provided on 26 October 2016 and 2016 actuals, both including the amortization of intangible assets.
Below is a reconciliation of the Core Operating Income from the previous definition to the new reported definition:
Dividend for the 2016 financial year proposed for the approval of Ipsen’s shareholders
The Ipsen S.A. Board of Directors, which met on 22 February 2017, has decided to propose at the annual shareholders’ meeting on 7 June 2017 the payment of a dividend of €0.85 per share, stable year-on-year.
2017 Financial objectives
The Group has set the following financial targets for 2017 assuming a successful closing of the Onivyde® transaction with Merrimack by the end of the first quarter 2017, and of the Consumer Healthcare transaction with Sanofi in the second quarter of 2017:
- Specialty Care sales growth year-on-year greater than +18.0%;
- Primary Care sales growth year-on-year greater than +4.0%;
- Core operating margin (excluding amortization of intangible assets) greater than 24% of net sales.
Sales objectives are set at constant currency.
Meeting, webcast and conference call for the press (in English)
Ipsen will host a press conference on Thursday 23 February 2017 at 9:30 a.m. (Paris time, GMT +1) at Salons de l’hôtel des Arts et Métiers – 9 bis avenue d’Iéna – 75116 Paris (France). A conference call will take place and a web conference (audio and video webcast) will be available at old.ipsen.com. Participants should enter the call in approximately 5 to 10 minutes prior to its start. No reservation is required to participate in the conference call.
France and continental Europe: +33 (0)1 70 99 35 34
UK: +44 (0)20 7162 9960
United States: +1 646 851 2094
Conference ID: 961391
A recording will be available for 7 days on Ipsen’s website and at the following numbers:
France and continental Europe: +33 (0)1 70 99 35 29
UK: +44 (0)20 7031 4064
United States: +1 954 334 0342
Conference ID: 961391
Meeting, webcast and conference call (in English) for the financial community
Ipsen will host an analyst meeting on Thursday 23 February 2017 at 2:30 p.m. (Paris time, GMT+1) at its headquarters in Boulogne-Billancourt (France). A conference call will take place and a web conference (audio and video webcast) will be available at old.ipsen.com. Participants should dial in to the call approximately 5 to 10 minutes prior to its start. No reservation is required to participate in the conference call.
France and continental Europe: +33 (0)1 70 99 32 08
UK: +44 (0)20 7162 0077
United States: +1 646 851 2407
Conference ID: 961277
A recording will be available for 7 days on Ipsen’s website and at the following numbers:
France and continental Europe: +33 (0)1 70 99 35 29
UK: +44 (0)20 7031 4064
United States: +1 954 334 0342
Conference ID: 961277
1 Year-on-year growth excluding foreign exchange impacts
2 Excludes amortization of intangible assets (excluding software), gain or loss on disposal of fixed assets, restructuring costs, impairment losses and other non-core items
3 Reconciliation between this new definition of Core Operating Income and the previous definition is presented on page 3
4 Bridges from IFRS consolidated net profit to Core consolidated net profit are presented in appendix 4
5 Cash and cash equivalents, less bank overdrafts, bank loans and other financial liabilities and excluding financial derivative
instruments
6 OTx: Combination of prescription and over-the-counter
7 2016 revised financial objectives communicated on 26 October 2016
