UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

 

For the month of August 2022

 

Commission File Number: 001-40851

 

 

Procaps Group, S.A.

(Translation of registrant’s name in English)

 

 

9 rue de Bitbourg, L-1273

Luxembourg

Grand Duchy of Luxembourg

R.C.S. Luxembourg: B253360

Tel : +356 7995-6138

(Address of Principal Executive Offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F ☒           Form 40-F ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

 

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

 

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

 

 

 

INFORMATION CONTAINED IN THIS REPORT ON FORM 6-K

 

On August 31, 2022, Procaps Group, S.A. (the “Company”) conducted a conference call and webcast to provide an update to investors on the Company’s financial results for the second quarter ended June 30, 2022 and the six months ended June 30, 2022.

 

A copy of the presentation is furnished as Exhibit 99.1 to this Report on Form 6-K and incorporated by reference herein.

 

Exhibit Index

 

Exhibit Number		Exhibit Title
99.1		Earnings Presentation of Procaps Group, S.A., dated August 31, 2022 – 2Q22 & 1H22 Financial Results

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	PROCAPS GROUP, S.A.
	By:	/s/ Ruben Minski
	Name:	Ruben Minski
	Title:	Chief Executive Officer

 

Dated: August 31, 2022

2

 

Exhibit 99.1

 

1 2Q22 & 1H22 Financial Results August 29, 2022 NASDAQ: PROC

2

3 Team Members Presenting Today Ruben Minski Founder – Chairman – Chief Executive Officer Founder, President and Director (44 years) Chemical Engineering Owners / President Management Program Finance Vice President & Treasurer Chief Executive Officer Chief Financial Officer MBA Electrical & Industrial Engineering Patricio Vargas Chief Financial Officer Advanced Management Program

4 I. 2Q22 & 1H22 Highlights II. Financial Summary III. Q&A IV. Appendix AGENDA

5 Announcement of acquisition of Grupo Somar and entrance in Mexico 120+ products registered in 1H22 – Deferol K, Azek , Mentsi 170+ products in registration phase 21% R enewal rate Construction of a new gummy manufacturing facility in Florida to support increased US demand of advanced gummy technologies 6 additional plants in Mexico, including 3 OTC FDA - approved (2 Softgel facilities) Closing of transaction and anti - trust approval expected by year end Commencing of operations in West Palm Beach Growing pipeline of RX product development ~ 5% of net revenues invested in R&D during 2Q22 ~7% of net revenues as CAPEX Announcement of acquisition of Grupo Somar (2) and expansion in Mexico – the second largest market in the region Focus on ESG agenda and emissions reduction NET REVENUE B2B NET REVENUES B2C NET REVENUES $198 million +12% vs. 1H21 +18% in constant currency * $58 million +11% vs. Q2 21 +13% in constant currency * $140 million +13% vs. Q2 21 + 20 % in constant currency * 2Q22 & 1H22 Highlights Continued progress in strategy execution Note: * Constant currency basis – 1H22 when compared to 1H21

6 Acquisition of an attractive product portfolio of branded generics targeted to private markets and with strong market positions Expansion into the second largest pharma market in Latin America, located in a country with Investment Grade rating Strong local management team with ample industry experience Significant synergies through cross - selling opportunities and cost efficiencies Product, geographic and revenue diversification reducing operational risks Increased manufacturing and R&D capabilities (including Quifa, Gelcaps , and Subsidiaries) Acquisition Announcement of Grupo Somar Transaction Strategic Rationale

7 Renewal Rate continues to grow as R&D investments are increasing Product Renewal Ratio (%) Relevant R&D Expenditure R&D Investment (%of Net Revenues) ~4 - 5% of Net Revenues invested annually in R&D Continued R&D investment with over 170 products under registration process in the region 1 20+ products launched during 1H22, with a 21% renewal rate due to phasing. Our goal continues at 25% level Oncology line launch with first - line prostate cancer New launches in Colombia: DEFEROL K, AZEC and MENTSI In - House R&D Capabilities Driving Attractive Growth Opportunities Clear avenues for growth given a robust pipeline and a high product renewal rate 24% 20% 21% 21% 3Q21 4Q21 1Q22 2Q22 4 3.8 3.9 5.3 9.2 4% 3% 5% 5% 5% -5% 5% 3Q21 4Q21 1Q22 2Q22 1H22 Launch of cardiology line, emphasis on product with Unigel technology (FEROVAS)

8 I. 2Q22 & 1H22 Highlights II. Financial Summary III. Q&A IV. Appendix AGENDA

9 2Q 22 & 1H22 Net Revenues 77 97 176 107 128 233 86 112 198 1Q21 2Q21 1H21 3Q21 4Q21 2H21 1Q22 2Q22 1H22 US$ mm +14% +12% Net Revenues Net Revenues Highlights: ▪ The increase was mainly driven by positive performances in CAN, Nextgel and CASAND business segments. ▪ Roll out of products in the region and launch of new products in Colombia ▪ FX impacted performance for the quarter and 1H22. On a constant currency basis, net revenues increased by 18% in 1H22.

10 Net Revenue Performance by SBU Consistent growth across most business segments Source: Procaps. Notes: (1) Coomeva is a Colombian public health insurance plan ( Entidades Promotoras de Salud , or “EPS”). Growth was driven by: 50 ▪ Nextgel positively impacted mainly by increase in sales of existing products, portfolio expansion with key partners and R&D services ▪ Procaps Colombia impacted by decrease of Covid cases, FX impact, and great performance of Farma and VitalCare lines ▪ CAN positively impacted by the roll out of new products and portfolio expansion in several therapeutic areas and lower 2021 base ▪ CASAND growth supported by positive performance of existing brands in key growth markets, and the rollout of new products ▪ Diabetrics performance is affected primarily by the closing of EPS. We expect to be normalized by year end 2Q22 2Q21 Δ% 2Q22 2Q21 Δ% B2B CDMO services Nextgel 32.9 27.5 19.9% 17.5 14.1 24.0% Procaps Colombia 39.6 41.4 -4.5% 15.1 16.5 -8.3% CAN 16.8 8.7 93.1% 6.3 2.1 193.9% CASAND 17.1 14.6 16.8% 6.9 6.3 10.9% Diabetes Solutions Diabetrics 6.0 6.7 -10.4% 1.4 1.5 -5.1% 112.4 98.9 13.6% 47.2 40.5 16.7% B2C Rx & OTC Products Total $ Million Net Revenue Contribution Profit 1H22 1H21 Δ% 1H22 1H21 Δ% B2B CDMO services Nextgel 58.3 52.5 11.0% 27.7 22.9 21.1% Procaps Colombia 71.5 68.6 4.2% 24.9 21.4 16.0% CAN 28.1 17.1 64.8% 8.4 4.5 87.4% CASAND 29.7 25.1 18.0% 11.8 9.0 31.9% Diabetes Solutions Diabetrics 10.6 13.1 -19.5% 1.3 2.5 -47.2% 198.0 176.4 12.3% 74.1 60.3 22.9% B2C Rx & OTC Products Total Net Revenue Contribution Profit $ Million

11 2Q22 & 1H22 Gross Profit & Adjusted EBITDA 58 98 73 120 2Q21 1H21 2Q22 1H22 25 33 28 37 2Q21 1H21 2Q22 1H22 Performance ▪ Adjusted EBITDA growth was strong, despite pressures from FX and raw material costs. Positively impacted by the performance of business units and sales of brands, offset by higher Opex . ▪ Contribution margin (gross profit less sales and marketing expenses) of 37% in 1H22. Positively impacted by the performance of business units and sales of brands, offset by higher sales and marketing expenses. 39 60 47 74 2Q21 1H21 2Q22 1H22 US$ million Contribution Margin US$ million Adjusted EBITDA US$ million Gross Profit +24% +20% +13% +12% +22% +25%

12 Balance Sheet & Indebtdeness US$ Million YE 2021 1H22 Cash and equivalents 72.1 37.6 Trade and other receivables 117.4 120.2 Inventories 79.4 99.2 Other current assets 29.1 40.2 Total current assets 298.1 297.2 Property, plants and equipments 112.8 120.4 Intangible assets 30.2 31.9 Other non - current assets 21.1 20.7 Total non - current assets 164.1 173.0 Total assets 462.1 470.2 Short term debt 74.6 75.7 Accounts payable 85.4 90.6 Other current liabilities 27.9 26.5 Total current liabilities 188.0 192.8 Long term debt 178.7 181.8 Warrant liability 23.1 22.5 Shares held in escrow 101.9 94.1 Other non - current liabilities 8.8 8.6 Total non - current liabilities 312.5 307.0 Total liabilities 500.5 499.8 Equity (38.3) (29.6) ▪ Cash on hand impacted by CAPEX, WK increase and high - cost debt reduction ▪ Inventories increased by $19.5 million supported provide support the supply risks we have seen worldwide ▪ We are ready to finance and carry out Somar transaction Indebtdeness Balance Sheet Changes US$ Million Short term 74.6 75.7 Long term 178.7 181.8 Gross debt 253.4 257.5 Cash and equivalents Net debt LTM Adj. EBITDA Net debt / Adj, EBITDA Quick ratio Equity (38.3) (29.6) 99.7 103.8 1.8x 2.1x 1.1x 1.0x 2021 1H22 72.1 37.6 181.3 220.0

13 I. 2Q22 & 1H22 Highlights II. Financial Summary III. Q&A IV. Appendix AGENDA

14 I. 2Q22 & 1H22 Highlights II. Financial Summary III. Q&A IV. Appendix AGENDA

15 R econciliation of Adjusted EBITDA 2Q22 2Q21 Δ% 1H22 1H21 Δ% Net Income (6.9) (0.6) n.a. 9.5 (17.6) n.a. Financial expenses 18.8 14.4 n.a. 4.2 28.6 n.a. Income tax (2.4) 0.9 - 369.3% 3.3 2.8 18.7% D&A 4.9 4.4 11.6% 8.4 8.9 - 5.9% EBITDA 14.4 19.0 - 24% 25.4 22.6 12% FX translation adjustments 1 8.4 1.6 425.0% 3.2 1.8 82.9% Transaction expenses 2 3.7 2.9 28.3% 6.1 5.8 4.7% Other expenses 3 1.1 1.1 0.0% 2.1 2.4 - 12.1% Adjusted EBITDA 27.5 24.6 12% 36.7 32.6 13% Adjusted EBITDA margin 24.5% 24.9% - 38.3 bps 18.54% 18.47% 7.6 bps

16 R econciliation of Contribution Margin USD$MM 2Q21 1H21 2Q22 1H22 Net Revenues 27.5 52.5 32.9 58.3 COGS (12.0) (25.3) (12.4) (24.9) Gross Profit 15.461 27.164 20.540 33.380 Gross margin % 56.3% 51.8% 62.4% 57.3% Sales and marketing expenses (1.4) (4.3) (3.0) (5.7) Contribution margin 14.1 22.9 17.5 27.7 Contribution margin % 51.3% 43.6% 53.1% 47.6% Net Revenues 41.4 68.6 39.6 71.5 COGS (19.4) (34.0) (16.1) (32.1) Gross Profit 22.071 34.634 23.445 39.360 Gross margin % 80.4% 50.5% 71.2% 55.1% Sales and marketing expenses (5.6) (13.2) (8.3) (14.5) Contribution margin 16.5 21.4 15.1 24.9 Contribution margin % 60.0% 31.2% 45.9% 34.8% Net Revenues 8.7 17.1 16.8 28.1 COGS (2.4) (5.5) (5.1) (9.9) Gross Profit 6.343 11.598 11.763 18.220 Gross margin % 23.1% 68.0% 35.7% 64.8% Sales and marketing expenses (4.2) (7.1) (5.5) (9.8) Contribution margin 2.1 4.5 6.3 8.4 Contribution margin % 7.8% 26.3% 19.0% 29.9% Nextgel Procaps Col CAN USD$MM 2Q21 1H21 2Q22 1H22 Net Revenues 14.6 25.1 17.1 29.7 COGS (3.2) (5.9) (3.0) (5.1) Gross Profit 11.439 19.215 14.076 24.599 Gross margin % 41.6% 76.5% 42.8% 82.9% Sales and marketing expenses (5.2) (10.2) (7.1) (12.8) Contribution margin 6.3 9.0 6.9 11.8 Contribution margin % 22.8% 35.7% 21.1% 39.9% Net Revenues 6.7 13.1 6.0 10.6 COGS (3.9) (7.9) (3.2) (6.4) Gross Profit 2.802 5.189 2.809 4.195 Gross margin % 10.2% 39.5% 8.5% 39.7% Sales and marketing expenses (1.3) (2.7) (1.4) (2.9) Contribution margin 1.5 2.5 1.4 1.3 Contribution margin % 5.5% 19.3% 4.3% 12.7% Net Revenues 98.9 176.4 112.4 198.0 COGS (40.8) (78.6) (39.8) (78.3) Gross Profit 58.115 97.801 72.633 119.755 Gross margin % 0.0% 0.0% 0.0% 0.0% Sales and marketing expenses (18.9) (38.3) (25.7) (45.8) Contribution margin 39.2 59.5 47.0 73.9 Contribution margin % 39.7% 33.7% 41.8% 37.3% Total CASAND Diabetrics

17 Use of Constant Currency As exchange rates are an important factor in understanding period - to - period comparisons, we believe the presentation of certain financial metrics and results on a constant currency basis in addition to the IFRS reported results helps improve investors’ ability to understand our operating results and evaluate our performance in comparison to prior periods . Constant currency information is non - IFRS financial information that compares results between periods as if exchange rates had remained constant period - over - period . We use results on a constant currency basis as one measure to evaluate our performance . We currently present net revenue on a constant currency basis . We calculate constant currency by calculating six month - end period for the six months ended June 30 , 2022 using prior - period (six months ended June 30 , 2021 ) foreign currency exchange rates . The functional foreign currencies for the primary regional markets where we operate, such as the Colombian Peso and the Brazilian Real, were adjusted on a constant currency basis at the exchange rates of COP $ 3 , 622 . 28 per U . S . $ 1 . 00 and R $ 5 . 3862 per U . S . $ 1 . 00 , respectively, for the six months ended June 30 , 2021 . We generally refer to such amounts calculated on a constant currency basis as excluding the impact of foreign exchange . These results should be considered in addition to, not as a substitute for, results reported in accordance with IFRS . Results on a constant currency basis, as we present them, may not be comparable to similarly titled measures used by other companies and are not measures of performance presented in accordance with IFRS .

18 Thank you ir@procapsgroup.com Investor.procapsgroup.com NASDAQ: PROC