In today’s briefing:
- Estia & Bain Enter Into Scheme Agreement
- Estia Health (EHE AU): Bain Capital’s Binding Proposal
- Sun Pharmaceutical (SUNP IN): Q1 Profit Falls Due to One-Off Expenses; Double-Digit Revenue Growth
- BeiGene (6160.HK/BGNE.US) 23H1 – “Accidents” Behind the Strong Growth
- Laboratory Corporation of America Holdings: Does It Have A Sustainable Competitive Advantage? – Key Drivers
Estia & Bain Enter Into Scheme Agreement
- After its initial bid of $3.00/share was rejected by Estia Health (EHE AU), Bain returned on the 7 June with a $3.20/share non-binding proposal and was granted exclusive due diligence.
- Estia and Bain Capital have now entered into a Scheme Implementation Agreement at A$3.20/share, a 50% premium to undisturbed.
- A shareholder meeting is expected to be held in November with implementation expected prior to the end of 2023.
Estia Health (EHE AU): Bain Capital’s Binding Proposal
- Estia Health (EHE AU) has entered a SID with Bain Capital at A$3.20 per share, a 49.5% premium to the undisturbed price (21 March).
- The offer is attractive in comparison to historical share prices and multiples. The offer is also attractive in comparison to the Japara Healthcare (JHC AU) precedent transaction.
- The MAC clause, particularly around material regulatory events, could be risky. At the last close and for an end-of-December payment, the gross and annualised spread is 3.7% and 9.5%, respectively.
Sun Pharmaceutical (SUNP IN): Q1 Profit Falls Due to One-Off Expenses; Double-Digit Revenue Growth
- Sun Pharmaceutical Industries (SUNP IN) reported 11% YoY revenue growth to INR118B in Q1FY24, mainly driven by the U.S. business. EBITDA margin expanded 109bps to 27.9%.
- Net profit declined 2% YoY to INR20B due to certain one-off charges amounting to INR3B. Excluding the exceptional items, adjusted net profit grew 14% YoY to INR23B.
- With 26 marketed products globally, Sun Pharma is betting big on specialty products. Specialty pipeline includes 5 molecules undergoing clinical trials. Specialty R&D accounts for 35% of total R&D spends.
BeiGene (6160.HK/BGNE.US) 23H1 – “Accidents” Behind the Strong Growth
- BeiGene maintained strong product sales in 23H1 and its net loss continued to narrow. This means that BeiGene has realized the cost control problem and entered a healthy growth phase.
- Our revenue forecast indicates BeiGene is approaching the minimum threshold for turning losses into profits. A more likely scenario is revenue need to reach over US$4 billion to be breakeven
- However, regardless of the calculation, BeiGene ‘s valuation is still unreasonably high. Its potential/certainty is nowhere near that of Alnylam. Maintaining sustained high growth is not easy because “accidents” remain.
Laboratory Corporation of America Holdings: Does It Have A Sustainable Competitive Advantage? – Key Drivers
- Laboratory Corporation of America delivered a disappointing set of results as the company was unable to meet the revenue expectations as well as the earnings expectations of Wall Street.
- Base business revenue and base business revenue of Diagnostic Laboratories grew driven by strong base business volume and Ascension.
- Labcorp, a segment of the company’s laboratory services business, delivered exceptional growth in its Diagnostic Laboratories and generated strong progress in Central Laboratories.
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