By Rishav Chatterjee
(Reuters) – Australian biotech CSL on Tuesday delayed the planned spin-off of its vaccines division and cut its profit forecast due to a bigger-than-expected drop in flu vaccination rates in the United States, sending its shares down as much as 16.6%.
The company told shareholders in August it would spin off CSL Seqirus and make it a listed entity on the Australian Stock Exchange next June as part of a broader restructuring plan that also involved cutting 3,000 jobs.
At the time, he believed vaccination rates were stabilizing in the United States following a flu season marked by the highest rates of illness and death in 15 years, CSL CEO Paul McKenzie said at its annual meeting Tuesday.
“In our Seqirus business, we have seen a larger decline than we expected in flu vaccination rates in the United States,” he told shareholders in a speech. “This occurs despite a positive recommendation from the US administration on influenza vaccines and an unprecedented level of infection affecting public health.”
VACCINE HEADWINDS IN THE US
In the United States, Health Secretary Robert F. Kennedy Jr has targeted vaccines, cutting funding for research and dismissing the director of the Centers for Disease Control and Prevention, which makes vaccine recommendations.
In March, the U.S. Food and Drug Administration independently recommended virus strains for the 2025-2026 flu vaccines, deviating from traditional advisory committee voting. Rival Sanofi last week noted pressure on its sales of flu and COVID-19 vaccines in the US and a “negative buzz” around the vaccines.
CSL on Tuesday cut its company-wide full-year revenue guidance to 2% to 3% growth, down from the previous range of 4% to 5% for the financial year ending June 2026.
The company now expects annual net profit after tax and amortization (NPATA) to increase between 4% and 7%, down from previously expected growth of 7% to 10% in constant currency.
Craig Sidney, senior investment adviser at Shaw and Partners, said the sharp sell-off in CSL shares was due to the unexpected downgrade of its full-year guidance.
He said that while the stock had shown some weakness recently, the scale of the revision caught investors off guard and would likely lead brokers to lower their price targets and earnings forecasts.
THE SCENARIO WILL OCCUR WHEN VALUE FOR SHAREHOLDERS IS MAXIMIZED
The Seqirus spinoff is now expected to occur when market conditions support maximizing value for shareholders, the company said.
“Separation remains the preferred approach to unlock simplification, focus and sustained long-term growth for each of these great companies,” said Chairman Brian McNamee.