Cohance Lifesciences (COHANCE) Q2 24/25 earnings summary

Executive summary

• Revenue grew 12% year-on-year in Q2 FY25, driven by Pharma CDMO and Sapala acquisition; gross margins expanded 473 bps due to business mix and consolidation effects.

• Pharma CDMO business posted 40% YoY growth in Q2, with robust pipeline and increased RFQ inflow.

• Strategic initiatives included conversion of Spec-Chem/Ag-Chem to SBU, expansion in oligonucleotides, and positive Phase III readouts.

• Leadership changes include appointment of new Executive Chairman and CCO; business development teams expanded in US, EU, and Asia.

• Merger with Cohance Lifesciences progressing, with shareholder meeting scheduled for November 28, 2024.

Financial highlights

• Q2 FY25 consolidated revenue: INR 2.58 billion (up 12% YoY); adjusted EBITDA: INR 1.11 billion (margin 43.3%); adjusted PAT: INR 878 million (margin 34.1%).

• H1 FY25 consolidated revenue: INR 4.88 billion; adjusted EBITDA: INR 1.99 billion (margin 40.7%); adjusted PAT: INR 1.53 billion (margin 31.3%).

• Free cash flow in H1 FY25: INR 1.1 billion; cash & bank balance: INR 6.56 billion post Sapala acquisition payment.

• Capex in H1 FY25: INR 694 million, mainly for R&D and plant expansion.

• Gross margins expanded to 79.8% in Q2 FY25 and 76.3% in H1 FY25.

Outlook and guidance

• Growth outlook for FY25 maintained; H2 expected to outperform H1, with full-year growth at combined platform level.

• Further growth acceleration anticipated from FY26; aim to double combined business in five years, with M&A as a growth accelerator.

• Pharma CDMO and API++ segments expected to sustain growth, with shipment schedules skewed towards H2.