CSL Pushes Back Vaccine Unit Spin-Off and Lowers Earnings Forecast After U.S. Immunization Slump

Australian biotechnology group CSL Limited has postponed the planned separation of its Seqirus vaccine division and cut its full-year earnings outlook, citing an unexpected slide in influenza vaccination rates in the United States. The announcement was delivered during the company’s annual general meeting in Melbourne on Tuesday, sending CSL shares down as much as 16.6 percent to A$176.23, their weakest level since December 2018.

Chief Executive Officer Paul McKenzie told shareholders that demand for flu shots in the United States—Seqirus’s largest market—has deteriorated more sharply than anticipated ahead of the northern hemisphere winter. Management now expects U.S. vaccination volumes to contract roughly 12 percent over the season, a decline linked by the company to policy changes introduced by U.S. Health Secretary Robert F. Kennedy Jr.

According to CSL, measures taken by the new administration include reduced federal funding for vaccine research and the removal of the director of the Centers for Disease Control and Prevention’s vaccine advisory body, actions the firm says have dampened public uptake. Chairman Brian McNamee described the fall in immunization as “remarkable” and added that management has limited visibility on where the trend may bottom out.

Revised Financial Guidance

Weaker demand has prompted CSL to narrow its revenue growth expectation for the 12 months ending June 2026 to between 2 percent and 3 percent, down from the 4 percent to 5 percent range set in August. Forecast growth in net profit after tax and amortisation (NPATA) has also been trimmed to 4 percent–7 percent, compared with the earlier 7 percent–10 percent guidance on a constant-currency basis.

The lower outlook follows a prolonged period of share-price weakness. Tuesday’s intraday decline marked the stock’s steepest fall since mid-August, when CSL first unveiled plans to spin off Seqirus as part of a broader reorganization that includes roughly 3,000 job cuts. Despite the revised projections, analysts noted that delaying the spin-off removes near-term execution risk, partially offsetting investor concerns.

Demerger Put on Hold

Under the original timetable, CSL intended to list Seqirus on the Australian Securities Exchange by June 2026. McKenzie said the transaction will now proceed only “when market conditions allow for the maximum creation of shareholder value,” without providing a new target date. Seqirus manufactures seasonal influenza vaccines as well as pandemic-preparedness products, and represents a significant portion of CSL’s revenue base.

Shareholder Response

Investor dissatisfaction with the company’s performance was evident at the meeting. A non-binding vote on executive remuneration drew a 42 percent protest, the second consecutive year that more than a quarter of votes opposed the pay report. Although a spill motion seeking to force the board’s re-election was ultimately defeated, the sizeable dissent underscores growing pressure on leadership to reverse the slide in market capitalization.

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CSL, founded in 1916 and now Australia’s fourth-largest listed company by market value, had long been viewed as a reliable growth stock thanks to its plasma-based therapies and vaccine portfolio. The sharp reversal in vaccination trends has challenged that reputation, leading management to reevaluate capital allocation and strategic priorities.

Market Conditions and External Factors

Industry observers attribute part of the downturn in U.S. immunization to shifting public sentiment as well as changes in health-care policy. Reduced promotional activity, uncertainty around insurance coverage and lower federal procurement have created what McKenzie called an “unprecedented” operating environment for vaccine producers. The United States typically accounts for about half of Seqirus’s seasonal flu revenue.

CSL did not adjust its longer-term guidance beyond the 2026 fiscal year, but executives signaled continued vigilance in monitoring market data. The company reaffirmed its commitment to research and development programs outside Seqirus, including late-stage trials for cardiovascular and rare-disease therapies.

Analysts will watch upcoming flu-season statistics and any additional policy announcements from Washington to gauge whether demand stabilizes. For now, the combination of a delayed corporate restructuring, softer profit growth and heightened investor scrutiny places additional focus on CSL’s ability to navigate the evolving U.S. vaccine landscape.

Crédito da imagem: Reuters