Please ensure Javascript is enabled for purposes of website accessibility

GlaxoSmithKline Predicts a 2020 Loss, Prepares for Its Consumer Spinoff

By Cory Renauer - Feb 5, 2020 at 2:56PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The pharmaceutical giant's fourth-quarter 2019 earnings were disappointing, but there were things for investors to smile about in the new details on its upcoming spinoff.

GlaxoSmithKline (GSK -0.15%) reported fourth-quarter earnings results Wednesday, along with guidance for 2020 that was less than encouraging. But investors' disappointment with outlook may have been tempered somewhat by the accompanying news about the company's plan to completely spin off its consumer healthcare assets.

Earnings disappointment

During the last three months of 2019, GlaxoSmithKline earned an adjusted $0.33 per share which was $0.27 a share less than analysts' consensus estimate.

Blister pack full of pills shaped like dollar signs.

Image source: Getty Images.

For the year, sales of the company's next-generation shingles vaccine more than doubled to $2.34 billion, but investors should probably brace themselves for stagnating sales on that front once most older adults have received the vaccine. While vaccine sales exploded in 2019, the company's HIV segment grew by just 1% on a constant-currency basis.

More joint venture details

Last August, GlaxoSmithKline completed a transaction with Pfizer (PFE 0.58%) that combined their consumer healthcare segments into a gigantic joint venture. At the time, the British pharma giant announced an intention to demerge the joint venture from the company within three years.

On Wednesday, GlaxoSmithKline provided a few more details concerning its upcoming split into two companies. In addition to consumer health products, Glaxo is also mulling the divestment of its prescription dermatology assets. In 2019, the established pharmaceuticals segment recorded $580 million in prescription dermatology sales, which worked out to around 1% of total revenue reported by the company.

One-time costs to prepare its consumer healthcare segment for separation are expected to reach around $800 million. By 2022, the company expects to recoup those costs and more each year in the form of annual savings associated with the spinoff.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

GSK Stock Quote
GSK
GSK
$40.25 (-0.15%) $0.06
Pfizer Inc. Stock Quote
Pfizer Inc.
PFE
$49.86 (0.58%) $0.29

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
379%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/09/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.