30 June 2021 – disposal
The AIM-listed global pharmaceutical products and services company has disposed of its non-core UK Specials manufacturing and Aseptic compounding business to Target Healthcare Ltd for a total consideration of up to £7.75m. Of this £5m is up-front. The transaction will include the transfer of two UK facilities in Burnopfield and Follingsby as well as 198 UK-based employees. Quantum Pharma’s ‘unlicensed-to-licensed’ capability will be retained. The disposal represents a further simplification to the Clinigen structure, which is now focused on its two core divisions of Services and Products. In the financial year 2020 the divested business contributed Net Revenue of £38.8m and total adjusted EBITDA of £1.0m. The disposal is expected to result in an exceptional non-cash loss of around £9.6m in the current financial year. The return on investment on the total Quantum Pharma transaction for the last financial year was 14.0% and this is now expected to be more than 17% for the current financial year following the disposal, driven by the continued strong growth of the Colonis product portfolio in particular. Clinigen will continue to source and supply unlicensed medicines in the UK and globally through its Products and Services divisions. This appears to be a sensible deal. We rate the shares as a BUY.