Catalent names Ricky Hopson interim CFO, announces adverse impact to Q3 results

Catalent announced a business update. While complete financial information and operating data for the company’s third fiscal quarter ended March 31 are not yet finalized, the company expects that productivity issues and higher-than-expected costs experienced at three of its facilities, including two of its largest manufacturing facilities, during the quarter will materially and adversely impact the company’s financial results for the third fiscal quarter and its outlook for the remainder of the 2023 fiscal year. The company also announced that Ricky Hopson will assume the role of Interim CFO, effective April 14. Catalent is engaging an executive search firm to evaluate candidates for a permanent CFO. One of the facilities that experienced productivity issues is the company’s gene therapy manufacturing site located in Harmans, Maryland near the BWI airport, where the company’s plans to increase capacity for a customer’s product during the third quarter in order to ramp production was slower than expected. During this ramp-up, certain operational challenges, including those related to the initial deployment of a new enterprise resource planning system at BWI, significantly reduced the expected revenue in the third fiscal quarter associated with the site, and will also impact revenue previously expected in the fourth quarter. Timely resolution of these issues was delayed by the necessity of focusing site resources on important regulatory inspections involving the BWI site, which were successfully completed. The ERP-related challenges were operational in nature and will not impact the Company’s ability to produce timely and accurate financial statements. None of these issues is expected to adversely impact the quality or commercial launch quantities of any product made at BWI in light of, among other things, the level of "bright stock" on hand. However, revenue from the unproduced batches cannot be made up for in this fiscal year due to manufacturing capacity constraints. The company expects to recover related revenue in the second half of calendar year 2023. In the third fiscal quarter, the company also experienced productivity challenges and higher-than-expected costs at its drug product and drug substance manufacturing facilities located in Bloomington, Indiana and Brussels, Belgium, where the company was unable to achieve anticipated productivity levels and associated revenue due in part to the continued need to implement enhancements to its operational and engineering controls following regulatory inspections that occurred earlier in the fiscal year. While these issues are also expected to affect the company’s fiscal fourth quarter to end on June 30, productivity levels in Bloomington are expected to be restored to previously forecast levels in that quarter. As with BWI, the company does not expect to make up for the lost production at Bloomington until after the close of the current fiscal year. After conducting an internal review of the company’s manufacturing operations, the company has taken a number of measures at BWI, Bloomington, and Brussels, including both management and operational changes, to address the root causes of the issues identified at each site.