By Bhanvi Satija and Pratik Jain
(Reuters) – Contract drug manufacturer Catalent Inc on Friday slashed its full-year forecasts for profit and sales and delayed its quarterly results for the third time, bruised by protracted production challenges at three of its facilities.
The company also said it would record an increase of about $55 million in inventory reserve for one of its facilities and will correct a $26 million revenue recognition error in the fourth quarter of fiscal 2022.
Shares of the company, however, reversed their premarket declines and rose 17% to $37.60 as Catalent executives sought to allay investor concerns over the loss of contracts.
Catalent’s CEO Alessandro Maselli said on a conference call the company’s customer supply situation remains healthy and it would be able to sufficiently service its customers.
Despite the gain, Catalent’s shares are down 19% since it first disclosed production challenges at its three major production plants in April.
The company manufactures drugs, vaccines and gene therapies at 55 different sites for major pharmaceutical companies, including Moderna Inc’s COVID-19 vaccine, Novo Nordisk’s weight-loss drug Wegovy and Sarepta Therapeutics’ gene therapy for Duchenne muscular dystrophy.
Production challenges at its three sites in Maryland, Indiana and Brussels are likely to affect the company’s revenue in the third and fourth quarters, Catalent has previously said. The company had also flagged an over $400 million hit to both its annual sales and core profit expectations.
The delay in its quarterly report, which has triggered a delisting notice from New York Stock Exchange, is also due to some adjustments to the financial statements related to its operations at Bloomington, Indiana site.
Maselli said Catalent had undergone nine successful inspections from the U.S. Food and Drug Administration in the last six months, of which only a few included observations and which “can be readily addressed”.
Catalent on Friday 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.
(Reporting by Bhanvi Satija and Pratik Jain in Bengaluru and Maggie Fick in London; Editing by Krishna Chandra Eluri)