KEY POINTS

  • The healthcare-solutions provider’s first-quarter earnings were below expectations.
  • The company fell short of meeting top and bottom lines for the quarter.

What’s going on with Catalent stock

Specialty healthcare company Catalent stock dropped on Tuesday. Following the release of disappointing quarterly results, the company’s stock price fell by nearly 25%.

Why we care

With roots dating back to the 1930s, Catalent (NYSE: CTLT) is a premier global manufacturer of drugs specializing in softgel capsules. Catalent, still a leader in softgel delivery technology today, has expanded its scope to include quick-dissolve tablets, liquid dosing technologies, gene therapy vectors, and cell therapy platforms.

For the first quarter of fiscal 2023, Catalent’s net revenue was a flat $1.02 billion year-over-year. Even more concerning, non-GAAP (generally accepted accounting principles) net income plunged 52% to hit only $61 million, or $0.34 per share.

Both figures were significantly lower than what analysts had predicted. Analysts tracking the stock were expecting, on average, $1.08 billion in revenue. They also predicted a much greater per-share, adjusted net income of $0.58.

As a provider of delivery and development solutions for healthcare companies, Catalent has a unique niche. The firm recently saw a slump in biologics, which is the greater of its two reporting segments. As a result, the company’s net revenue for the period was $523 million, down 2% from the same time last year. However, pharma and consumer health saw an 11% increase in sales, earning a total of $499 million.

What now

Not only did Catalent’s profitability drop sharply, but the company also dropped its full-year guidance for both net revenue and adjusted net income.

The company’s new expectations for its former product are $4.625 billion to $4.875 billion. That’s lower than the previous guidance of $4.975 billion to 5.225 million. In addition, analysts now expect adjusted net income to be $567 million to $648 million. That’s a considerable decrease from the old forecast of $660 million to $730 million.

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