Benitec Biopharma Ltd. :BNTC-US: Earnings Analysis: 2016 By the Numbers : September 23, 2016

Benitec Biopharma Ltd. reports financial results for the year ended June 30, 2016.

We analyze the earnings along side the following peers of Benitec Biopharma Ltd. – Oncolytics Biotech Inc., InVivo Therapeutics Corporation, Medivir AB Unsponsored ADR and OpGen, Inc. (ONCYF-US, NVIV-US, MVRBY-US and OPGN-US) that have also reported for this period.


  • Gross margins narrowed from -1,060.26% to -2,617.41% compared to the same period last year, operating (EBITDA) margins now -10,076.92% from -4,562.21%.
  • Year-on-year change in operating cash flow of -66.12% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings rose compared to same period last year, despite decline in operating and pretax margins.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2012 2013 2014 2015 2016
Relevant Numbers (Annual)
Revenues 0.34 0.53 0.25 0.26 0.18
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings -4.27 -3.57 -6.46 -9.59 -18.03
Earnings Growth (YOY) -20.82 16.58 -81.25 -48.35 -88.1
Net Margin -1270.97 -669.29 -2542.81 -3748.86 -10031.58
EPS -2.23 -1.53 -1.43 -1.66 -2.53
Return on Equity -102.96 -215.04 -40.08 -38.34 -111.37
Return on Assets -80.01 -144.48 -37.83 -36.75 -104.75

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Earnings Growth Analysis

The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from -1,060.26% to -2,617.41%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from -4,562.21% to -10,076.92% in this time frame. For comparison, gross margins were -1,060.26% and EBITDA margins were -4,562.21% in the previous period.

Gross Margin Versus EBITDA Margin

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

BNTC-US‘s decline in gross margins were offset by some improvements on the balance sheet. The management of working capital, for example, shows progress. The company’s working capital days have fallen to 32,150.96 days from 35,411.25 days for the same period last year. This leads Capital Cube to conclude that the gross margin decline is not altogether bad.

Gross Margin Versus Working Capital Days

Cash Versus Earnings – Sustainable Performance?

BNTC-US‘s change in operating cash flow of -66.12% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth


Despite a decline in operating (EBIT) margins as well as a decline in pretax margins, the company’s earnings rose.

EBIT Margin Versus PreTax Margin
EBIT Margin History
PreTax Margin History

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Company Profile

company, which develops innovative therapeutics based on its patented gene-silencing technology called ddRNAi or ‘expressed RNAi’. The company has also licensed ddRNAi to other biopharmaceutical companies for applications including HIV/AIDS, Huntington’s Disease, chronic neuropathic pain and retinitis pigmentosa. Its clinical pipeline is focused on market opportunities in Hepatitis C, Hepatitis B, lung cancer and wet Age-related Macular Degeneration, as well as the orphan genetic disease, oculopharyngeal muscular dystrophy. Benitec Biopharma was founded by Kenneth C. Reed in 1997 and is headquartered in Melbourne, Australia.

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