Discontinuation Of Opul Business Weighs On Botox Rival Revance Therapeutics: Analyst Sees Non-Cash Impairment Charge In Millions

Needham analyst Serge Belanger reiterated a Buy rating on Revance Therapeutics, Inc. RVNC, lowering the price target to $35 from $40.

The price target adjustment reflects the various business changes. The analyst thinks RVNC discontinuing the Opul business ($3.7 million revs in 2Q23) will lead to a non-cash impairment charge of $80 million-$100 million. The business was projected to grow into a $50 million-$70 million unit by 2027/2028. 

For FY23, the analyst lowered the revenue estimate from $240.4 million to $234.1 million. For FY24, Belanger lowered the revenue estimate from $340.9 million to $319.7 million.

According to the analyst, investors are more focused on near-term sales guidance (3Q23 revs to be similar to 2Q23), a new pricing strategy (lower price similar to Botox), and the discontinuation of the Opul business, which drove the stock down 17% (vs a flat S&P 500). 

Belanger adds that 3Q23 guidance reflects a seasonal slowdown in RHA fillers, the Opul business was not a significant revenue contributor, and the new pricing strategy removes a key barrier for Daxxify uptake.

On the positive side, Belanger expects Daxxify to be a blockbuster product with peak sales of $500MM in both aesthetics and therapeutics. 

Overall, the analyst thinks RVNC is well-funded, projecting a positive adj EBITDA in 2025. 

The analyst notes that RVNC rolled out a new Daxxify pricing strategy on 9/1/23 that lowers the product's price levels by ~25% to align with Botox. The lower price should remove a key barrier for broader adoption by physicians and enhance uptake of the product, which currently has a ~16% market share.

Price Action: RVNC shares are trading lower by 1.96% to $13.54 on the last check Wednesday.