Highlights include:

• LEO Pharma delivered 10% revenue growth for the first half of 2023, compared to the same period in 2022. Revenue growth in constant exchange rates (CER) was 12%.
• The Dermatology portfolio grew 13% (15% in CER). This was driven by growth of Adtralza®/Adbry® as well as core brands.
• Adjusted EBITDA for the period increased to DKK 488m corresponding to a 8% margin. This represents an absolute increase of DKK 902m compared to the previous year and is equivalent to a 16%-points margin uplift.
• Solid results lead to LEO Pharma upwards revising its outlook for 2023. Revenue growth outlook is narrowed to 8-10% in constant exchange rates from 6-10%. Revenue growth in actual exchange rates will be approximately 2%-points lower. Adjusted EBITDA guidance for 2023 is raised to ‘Mid-single-digit positive’ margin from ‘Low single-digit positive’.
• LEO Pharma also announced a new capital structure that solidifies the company’s ability to pursue value accretive Business Development and M&A opportunities and supports continued long-term growth.

Christophe Bourdon, CEO of LEO Pharma, commented:

“Today’s results illustrate that we are delivering on our transformation strategy and are on track to meet our financial commitments. I am encouraged by the strong progress made, leading to a positive development of our pipeline, an acceleration of our top line and a significant improvement of our financial performance. We have now also significantly strengthened our capital structure to help us support our long-term growth and to continue to make a fundamental difference for those who need us most in medical dermatology.”

Financial highlights

LEO Pharma delivers solid first half-year results 2023 with revenue growing by 10%. The revenue growth in constant exchange rates (CER) was 12%.

The Dermatology portfolio grew 13% (15% in CER). This was driven by growth of the biologic Adtralza®/Adbry® (now launched in 15 markets) as well as core brands such as Protopic® and the Fucidin range. Geographically, growth was driven by both the North American region as well China, Southern Europe, and rest of world.

Operational costs (OPEX) declined 11%. This was driven by restructuring and transformation initiatives implemented over the last two years impacting the cost levels in 2023.

Adjusted EBITDA margin of 8% (an improvement of 16%-points compared to the first half results last year) was driven by sales growth, favorable gross margin, and lower costs. The EBITDA margin of 7% was impacted by limited restructuring costs.

Key figures

Update on 2023 outlook

As a result of the solid first half year results, LEO Pharma is now upwards revising its outlook for 2023. The range for revenue growth guidance for the full year is narrowed so that LEO Pharma now expects 8-10% revenue growth in constant exchange rates compared to the previously communicated guidance of 6-10%. Revenue growth in actual exchange rates will be approximately 2%-points lower due to currency movements. The company now expects an Adjusted EBITDA margin in the ‘positive mid-single digit’ range, compared to the previous guidance of a ‘positive low single-digit’.

New capital structure in place

Today, LEO Pharma also announced a new capital structure that enables the company to pursue value accretive Business Development and M&A opportunities supporting continued long-term growth. Key elements of the new capital structure are:

• LEO Pharma’s bank syndicate will provide a new DKK 1.5bn credit facility. In addition, LEO Pharma has obtained improved terms on its existing bank financing. The bank syndicate is comprised of Nordea, Danske Bank, Nykredit, DnB and Jyske Bank with Nordea acting as sole coordinator.
• The LEO Foundation and Nordic Capital will provide a cash injection of around DKK 750m.
• The LEO Foundation has taken the opportunity to simplify and further strengthen the capital structure by converting its existing shareholder loans into equity in LEO Pharma.

The new capital structure provides a total financial capacity of above DKK 4bn to pursue value accretive Business Development and M&A opportunities.

Philip Eickhoff, CFO of LEO Pharma commented:

“We are pleased with the solid progress made during first half. We are following the plan and we are delivering on our commitments. Together with our owners and banks, we have now secured a capital structure that supports the future growth both organically and through acquisitions.”

Peter Haahr, CEO of the LEO Foundation said:

“The solid half-year results and strengthened capital structure represent an important milestone in LEO Pharma’s transformation. We are very satisfied with the progress delivered by the management and the many dedicated employees in LEO Pharma. In partnership with Nordic Capital, we will continue to support LEO Pharma in becoming a global leader in medical dermatology and making new innovative treatments available to people living with skin diseases.”

Jonas Agnblad, Partner, Healthcare Team, Nordic Capital, said:

“We are proud of the achievements by LEO Pharma’s management and all of the employees since we partnered with the LEO Foundation in July 2021. The half-year results serve as a testimony to the consistent execution of the agreed value creation plan outlined when the partnership was established. LEO Pharma has furthermore taken important steps towards strengthening its pipeline and long-term growth outlook and is now able to continue its fast pace of innovation from a solid financial position. “