Quantum Pharma Plc (LON:QP), the service-led niche pharmaceutical developer, manufacturer and supplier, announces the disposal of Total Medication Management Services Limited, the Group’s homecare dispensary and delivery business which trades as Biodose Services (‘Biodose Services’), to HealthNet Homecare Limited (the ‘disposal’).
The disposal represents a major step in transitioning Quantum’s focus to its core Specials and Niche Pharmaceuticals divisions and improving the Group’s quality of earnings. It follows the strategic review of the Medication Adherence (‘MA’) division which we reported in the final results announcement issued on 3 May 2017. Following the disposal the MA division will cease to exist, with Protomed being accounted for within the Specials division.
The initial cash consideration on disposal is £1.75m with a maximum additional contingent consideration of £0.2m, which will become payable on the future utilisation of tax losses of Biodose Services. The initial consideration net of working capital adjustments, arising following the exit of Biodose Services from the Group, will be applied to reduce Group borrowings. The effect on the Group’s balance sheet is positive through a reduction in net debt.
The disposal improves the Group’s gross and adjusted EBITDA margin by eliminating low margin turnover. In the year ended 31 January 2017 Biodose Services contributed £22.4m of Group revenues and recorded an adjusted EBITDA loss of £0.1m. Internal projections for Biodose Services in the current financial year anticipate a modest EBITDA profit. Biodose Services had net liabilities of £0.2m as at 31 January 2017.
Trading Update
Trading across the combined Niche and Specials divisions in the early months of the year has been ahead of plan and the Board expect this outperformance to offset the majority of the disposed contribution from Biodose Services in the current financial year.
Commenting on the strategic disposal, Chris Rigg, Chief Executive Officer of Quantum Pharma Plc, said: “The sale of Biodose Services positions Quantum as a simplified and focussed pharma business with a higher quality of earnings. It is particularly pleasing that we have been able to demonstrate a quick path to profitability for Biodose Services and exit it to a buyer who can bring greater emphasis and better synergies to that business.
The strong trading performance in the first few months of the year means that we expect to be slightly ahead of management expectations for the remaining Group and look forward to providing a further trading update on 9 August 2017.”
