Blau Farmacêutica (BLAU3) Q4 2023 earnings summary

Executive summary

• 4Q23 revenue reached a quarterly record of BRL387m, up 7% QoQ; FY23 revenue was BRL1.373bn, down 2% YoY.

• FY23 net income was BRL247m, with an 18.0% margin; recurring net income was BRL179m, with a 13.0% margin.

• 2023 was investment-heavy; management expects new revenue sources and gradual margin recovery as capacity, launches and acquisitions mature.

Financial highlights

• 4Q23 gross profit was BRL120m, up 8% QoQ; gross margin rose to 31.0% from 30.7%. FY23 gross profit was BRL490m, down 27%, with a 35.7% margin versus 47.5% in 2022.

• 4Q23 recurring EBITDA was BRL57m, up 16% QoQ, with a 14.8% margin; FY23 recurring EBITDA was BRL259m, down 45%, with an 18.9% margin versus 33.7%.

• 4Q23 net income was BRL27m versus BRL99m in 3Q23; adjusted net income rose 24% QoQ to BRL32m.

• FY23 reported EBITDA was BRL368m versus BRL474m in 2022; net income was BRL247m versus BRL360m.

• Recurring expenses rose 2% QoQ; recurring EBITDA comparison was affected by Bergamo’s advantageous purchase accounting in 3Q23.

Outlook and guidance

• 2024 priorities include resuming growth, realizing Bergamo synergies, optimizing working capital, and benefiting from new launches and maturation of 2021–2023 launches.

• 2024 launches represent BRL714m TAM, 80% in oncology; the estimated 2024–2027 pipeline exceeds BRL7bn.

• Monoclonal antibodies are expected to contribute from 2028, with Brazil TAM of BRL5.6bn; two master cell banks are expected in 2024.

• 2024 investment plans include two new São Paulo lines and two Cotia lines; P1000’s timeline was extended to match capacity needs and preserve leverage.

• Plans include two plasma collection centers in 2024 and two more in 2025; medium-term milestones include 10 Hemarus centers, product verticalization, capacity expansion and biological launches.