Spanish contract development and manufacturing organization Rovi reported a 7.9% decrease in operating revenue in 2024, compared to the prior year, mainly due to the poor performance of its CDMO business.
“This division generated lower revenues from the manufacture of the COVID-19 vaccine in comparison to 2023, when Rovi had booked higher income related to the production of the ‘pandemic’ COVID-19 vaccine; and lower revenues related to the activities carried out to prepare the plant for production of the vaccine under the agreement with Moderna,” according to the company’s announcement on Tuesday.
In Tuesday’s earnings call with analysts, CFO Javier López-Belmonte said that Rovi “invoiced less than forecast in the contract manufacturing business in the fourth quarter of the previous year basically because of a provision that had not been initially expected that was charged revenue.”
Rovi in a regulatory filing earlier this month warned that its 2024 earnings before interest, taxes, depreciation, and amortization (EBITDA) levels would be lower than the market consensus. The company said that its EBITDA levels will be lower within a range of between 10% and 15% than analysts’ consensus estimates for last year.
“This revision of the market consensus in relation to the EBITDA is due basically to lower expected activity” in the CDMO business during the fourth quarter of 2024, Rovi said in its filing with the National Securities Market Commission, which is responsible for the oversight and regulation of the capital markets sector of Spain’s financial services industry.
Rovi on Tuesday said it expects the company’s 2025 operating revenue to decrease by a mid-single-digit percentage in comparison with 2024.
On the positive side of the ledger, Rovi said gross margin was 62.7% in 2024, an increase of 3.7 percentage points compared to 2023. The company said the increase was mainly due to the decrease in the contribution of CDMO revenue “relating to activities to prepare the plant to produce medicines under the agreement with Moderna, which contributed lower margins to group sales,” and the “increased contribution to the CDMO business by existing customers (excluding Moderna), which contributed high margins.”
In February 2022, Moderna expanded its collaboration with Rovi for the manufacture of COVID-19 mRNA vaccines. The 10-year agreement included a series of investments that were expected to increase Rovi’s manufacturing capacity across its facilities in Madrid, Spain. In April 2022, Moderna recalled more than 760,000 doses of its Spikevax COVID-19 vaccine made by Rovi after discovering one of the vials was contaminated.
Looking to 2025 and beyond
For this year, Rovi on Tuesday said it is “unable to forecast how the demand and production might evolve for the vaccination campaigns that will take place in 2025.” At the same time, the company is hopeful that the expansion of the compounding, aseptic filling, inspection, labelling, and packaging capacities at its Madrid facilities — as well as “the current high market demand” for CDMO services — will “favor obtaining new business, with the resulting sales impact.”
CEO Juan López-Belmonte told analysts on Tuesday’s earnings call that Rovi remains “excited” about the near- and long-term potential of its CDMO business given market dynamics and given the company’s “substantial” capital investment in sterile fill-finish capacity and technology services.
“With such investments and with current expansions underway, Rovi expects to significantly increase its current sterile capacity and its FDA and EMEA, EU GMP Annex-1 compliant facilities in Spain and to become one of the largest and most experienced pharmaceutical groups in Spain with eight fully integrated plants, three of which are fully engaged in contract development manufacturing operations,” López-Belmonte said.