B2Gold Corp (NYSE:BTG) reported good H119 results headlined by 12% and 35% y-o-y growth in revenues and operating profit, respectively. The performance was driven by volume growth from the Interventional Medicine segment, royalties from Zytiga and cost control. Cash at the end of H119 was $285m and could be a powerful asset in redressing BTG’s uncertainties.
H119 financials
A strong H1 performance saw total revenues grow 12% y-o-y to $496m comprising 18% growth in licensing revenues and 10% growth in product sales (to $156m and $340m respectively). Adjusted operating profit rose 39% y-o-y to $179m driven by the higher revenues but also c 30% lower SG&A expenses. Together, these drove adjusted EPS up by 32%. Net cash at the end of H119 was $285m (vs $295m at FY18), whereas net cash flow in H1 was reduced by $113m due to a one-off litigation settlement of $73m and acquisitions.
A strong H1 makes for a challenging H2 comparison
The uncertainties surrounding BTG have been well flagged and we believe it has the capacity to address them. The 14% growth in interventional medicine sales in H1 was driven by volume, with flat pricing implying a commoditised market. Within the pharmaceutical business, CroFab antivenin sales grew 4%, but it is encountering low cost competition. Prostate cancer drug Zytiga (abiraterone) remains patent protected, but BTG’s partner J&J (NYSE:JNJ) recently had its sole unexpired US patent struck down and is appealing the judgement. Zytiga’s exclusivity in Europe lasts until September 2022 but the inevitability of its genericisation casts a cloud over 28% of BTG’s H1 revenues.
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