Catalent cuts forecast, delays results again as challenges mount

By Bhanvi Satija and Pratik Jain

(Reuters) -Contract drug manufacturer Catalent (NYSE:CTLT) Inc on Friday slashed its full-year forecasts for profit and sales and delayed its quarterly results for the third time, bruised by a series of missteps at its major production facilities.

The company promised to take steps to correct the issues and said it had changed the financial directors at facilities with the greatest challenges, besides naming a new interim chief financial officer last month.

Shares of the company reversed their premarket declines and rose 13% to $36.24 as the new guidance looks more achievable than their previous one, according to KeyBanc Capital markets analyst Paul Knight.

"I think people are starting to get a narrower bandwidth from management on guidance," said Knight.

Catalent, one of the top contract manufacturers for pharmaceutical companies, said a drop in revenue from COVID vaccine manufacturing had coincided with higher-than-expected costs and production challenges at its facilities in Indiana and in Brussels.

Adding to woes, its cost-cutting plans have been delayed due to regulatory inspections and subsequent corrective actions, the company said.

All those factors, along with an adjustment to financial statements related to its Bloomington, Indiana site led to a fresh delay in Catalent's quarterly results.

"Our financial performance and operational execution have all fallen significantly short of our expectations and our February forecast and we accept the responsibility for disappointing you," said CEO Alessandro Maselli.

Despite Friday's gain in shares, Catalent's stock is down 19% since it first disclosed production challenges at its three major production plants in April.

Catalent said it continues to win significant new business, including an expansion of supply agreement with Novo Nordisk (NYSE:NVO), for which it makes diabetes drug Wegovy.

It was not immediately clear whether the expanded supply agreement would entail more filling work by Catalent at its Brussels plant or at a different site such as at Bloomington where it has the aseptic facilities needed to fill Wegovy pens.

Knight said the expansion reassured that Catalent still has a good presence with Novo, and removed what was probably one of the bigger concerns.

The delay in its quarterly report triggered a delisting notice from New York Stock Exchange.

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Catalent cut its full-year revenue to a range of $4.25 billion to $4.35 billion, from its prior forecast of $4.63 billion to $4.88 billion.

It also slashed its annual adjusted net income forecast to between $187 million and $228 million, from between $567 million and $648 million previously.