Hikma Pharmaceuticals’ Earnings Call: Mixed Financial Performance

Hikma Pharmaceuticals ((GB:HIK)) has held its Q2 earnings call. Read on for the main highlights of the call.

Hikma Pharmaceuticals’ recent earnings call painted a mixed picture of its financial performance. While the company showcased notable revenue growth and strategic advancements, concerns arose from the decline in operating profit and cash flow, as well as challenges in maintaining margins. Despite these hurdles, Hikma’s strategic focus and potential for future growth provide a positive outlook for the company.

Revenue Growth

Hikma Pharmaceuticals reported a 6% increase in revenue, driven by robust volumes across all business segments and regions. This growth was significantly bolstered by recent product launches and the acquisition of Xellia, which have contributed positively to the company’s financial performance.

Injectables Segment Performance

The Injectables segment experienced a 12% core revenue growth year-on-year, benefiting from recent launches and the Xellia acquisition. The European and MENA businesses reported impressive revenue growth of 26% and 16%, respectively, highlighting the segment’s strong performance.

Strategic Partnerships and Pipeline Expansion

Hikma made significant strides in strengthening its pipeline and enhancing manufacturing capabilities. The company signed new strategic partnerships to expand its reach and capabilities, positioning itself for future growth and innovation.

Branded Business Growth

In the MENA region, Hikma’s Branded business delivered a 4% top-line growth and a 3% increase in operating profit. The company remains the second-largest pharmaceutical company in MENA by sales, underscoring its strong market position.

Rx Business Developments

The Rx business, formerly known as Generics, showed solid performance with growth from inhalation products and new product launches. Hikma established new R&D capabilities in Zagreb to broaden its pipeline, demonstrating its commitment to innovation and development.

Core Operating Profit Decline

Hikma’s group core operating profit declined by 7% to $373 million in the first half of 2025. This decrease was attributed to regional and product mix, FX headwinds, and a strong comparator period in H1 2024, highlighting the challenges faced by the company.

Operating Cash Flow Reduction

The company experienced a reduction in operating cash flow, which decreased to $161 million from $198 million in the same period of 2024. This decline was primarily due to the timing of tax payments, affecting the company’s cash position.

Injectables Segment Margin Decline

The core operating margin for the Injectables segment decreased from 36.3% in H1 2024 to 30%. This decline was due to changes in product and geographic mix, as well as increased costs related to the appreciation of the euro.

Price Erosion in Rx Segment

The Rx segment faced mid- to high single-digit price erosion, resulting in an 11% year-on-year contraction in gross profit. This price erosion posed a challenge to the segment’s profitability.

Forward-Looking Guidance

Looking ahead, Hikma Pharmaceuticals reiterated its full-year 2025 guidance, projecting revenue growth between 4% to 6% and core operating profit ranging from $730 million to $770 million. The company anticipates segmental adjustments for Injectables’ core operating margin (32% to 33%) and Branded revenue growth (6% to 7%). Despite the challenges, Hikma maintains a robust balance sheet with a leverage ratio of 1.7x net debt to core EBITDA and has invested $68 million in CapEx.

In conclusion, Hikma Pharmaceuticals’ earnings call highlighted a mixed financial performance, with notable revenue growth and strategic advancements countered by declines in operating profit and cash flow. However, the company’s strategic focus and growth potential offer a positive outlook for the future, making it a company to watch in the pharmaceutical sector.