August 8, 2018 / 7:39 AM / 12 days ago

UPDATE 1-UDG Healthcare flags weakness in contract sales, patient support

(Adds details on segments, asset sale, shares)

Aug 8 (Reuters) - Britain’s UDG Healthcare Plc said on Wednesday gains from acquisitions and a rebound in contract packaging boosted its third quarter, but flagged weakness at its contract sales and patient support services segment.

Shares of the company fell 4.5 percent in early trading on the London Stock Exchange.

The company, a provider of outsourced sales and marketing, drug distribution and packaging services, stuck to its full-year guidance of an 18 to 21 percent growth in adjusted diluted earnings per share.

UDG’s said its biggest business, Ashfield, which contributes more than two-thirds of the company’s profit, has been benefiting from the completion of a series of recent acquisitions.

But Ashfield’s segment that provides commercial and clinical services to healthcare companies was hit by a challenging quarter, with operating profit “well below” the year-earlier period.

UDG is also reviewing the management structure of Ashfield.

“It is worth acknowledging that this business can be cyclical and is typically geared to FDA approvals and particularly to newly approved primary care products which have been slower of late. We would expect a pick-up in Q4 albeit modest,” Liberum analysts said in a note.

UDG’s second largest business, Sharp Packaging Services, posted a double-digit operating profit growth in the third quarter, driven by strength in the United States.

The recovery comes months after UDG reported in May a drop in Sharp’s first-half operating profit and lowered the full-year outlook for the division due to weaker U.S. demand for bottling.

UDG said at the time Sharp was expected to deliver double-digit underlying operating profit growth in the second half, lowering full-year percentage growth forecast to mid-single digits from its prior guidance of low double-digits.

Separately, the company said on Wednesday it completed sale of its legacy Aquilant business, which made up 4 percent of the operating profit in the first-half, for 23 million euros ($26.7 million) to European investment firm H2 Equity Partners. ($1 = 0.8611 euros) (Reporting by Justin George Varghese in Bengaluru; Editing by Amrutha Gayathri)

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