Barranquilla-Based Procaps Reports Record Q3 Financial Results

Barranquilla-based pharmaceutical company Procaps Group (NASDAQ: PROC), has announced its financial results for the third quarter ended September 30, 2021. The company said net revenues increased by $27.5 million USD, or 35%, to $106.8 million for the three months ended September 30, 2021, compared to $79.3 million for the three months ended September 30, 2020, driven by strong demand across its branded Rx and OTC (Over The Counter) businesses in both existing products as well as from the continued rollout of new product launches.

Gross profit increased by 14.5 million, or 30%, to $62.3 million (yielding a gross margin of 58%) for the three months ended September 30, 2021, compared to $47.8 million (yielding a gross margin of 60%) for the three months ended September 30, 2020. Net loss for the three months ended September 30, 2021 was $36.9 million, compared to a net loss of $1.0 million for the three months ended September 30, 2020. Procaps says the increase in net loss was primarily attributable to a one-time, non-cash adjustment of $44 million to reflect the termination, on the closing of the business combination, of put options previously granted to certain shareholders.

“The third quarter of 2021 was highlighted by the achievement of a successful business combination with Union Acquisition Corp. II (“LATN”) and the listing of our ordinary shares on  NASDAQ, along with continued financial and operational momentum,” said Ruben Minski, Procaps Group’s Founder, Chairman and CEO. “The resurgence in the market with the re-opening of the economy, rapid ramp-up of new product launches, continued roll-out of products into new geographic areas and measured improvements to our inventory rotations combined to deliver 35% revenue growth during the quarter, including double-digit increases in four out of five of our business units.

Adjusted EBITDA increased by 27% to $24.5 million for the three months ended September 30, 2021, compared to $19.3 million for the three months ended September 30, 2020. Adjusted EBITDA margin decreased to 22.9% for the three months ended September 30, 2021, compared to 24.3% for the three months ended September 30,2020.

In a written statement, Minski added: “In our B2B segment, we expect to see growth from both our existing portfolio and product pipeline and in our B2C segment, we anticipate growth initiatives from our existing portfolio and from new products focused on current therapeutic areas in chronic diseases such as pain relief, immunology, cardiology, respiratory and dermatology, and the internationalization of our existing portfolio, with on-going efforts to expand our footprint of successful products outside of Colombia. Our internationalization strategy and on-going efforts to expand our footprint of successful products outside of Colombia continues to be one of our primary focuses, with a return to trade fairs and over 67 products internationalized during the quarter. We believe our company-wide product pipeline, with an estimate of over 600 product launches in the next three years, will provide the support for our growth in the next few years.

Year to date, net revenues increased by $69.9 million, or 33%, to $283.2 million for the nine months ended September 30, 2021, compared to $213.3 million for the nine months ended September 30, 2020. Net loss for the nine months ended September 2021 was $54.6 million, compared to a net loss of $19.9 million for the nine months ended September 30, 2020. The increase in net loss was primarily attributable to a one-time, non-cash adjustment of $59 million to reflect the termination, on the closing of the business combination, of the put options previously granted to certain shareholders and the valuation of such put options.

Chief Financial Officer Patricio Vargas explained: “As a result of our business combination, there were a number of one-time charges that affected our bottom line, and we are happy to report that they are extinguished and now reflect positive total equity on the balance sheet. For the nine months ended September 30, 2021, finance expenses totaled $79 million, of which $23 million was related to finance expenses accrued for the put options held by certain shareholders and $36 million represented a one-time expense for the termination of put options held by certain shareholders in connection with the recently closed business combination. Moreover, classifying and extinguishing these derivatives enables the company to articulate a cleaner financial profile in subsequent quarters as we move closer toward positive net income operations. Considering the favorable demand conditions that we have observed in the different markets we operate, we have decided to increase our investments in marketing and R&D, which we believe will result in further growth in 2022.”

“The quarter’s accomplishments and strong financial results are helping to accelerate the delivery of our innovative pharmaceutical solutions and drive new expansion initiatives that we believe will enable us to increase our market share of the approximately $58 billion pharmaceutical market in Latin America,” concluded Minski.