Catalent's Stock Gains on Q4 Earnings Beat, Gross Margin Up

Catalent, Inc. CTLT reported fourth-quarter fiscal 2024 adjusted earnings per share (EPS) of 65 cents, which was significantly up from the year-ago period’s EPS of 2 cents. The figure surpassed the Zacks Consensus Estimate by 41.3%.  

The company’s GAAP EPS was 13 cents during the quarter against the year-ago period’s loss per share of 59 cents.

Catalent’s Revenues in Detail

Revenues grossed $1.30 billion in the reported quarter, up 23.3% year over year. The metric topped the Zacks Consensus Estimate by 5.4%.

At constant exchange rate or CER, revenues were also up 24%.

Organic net revenues (excluding the impact of acquisitions, divestitures and currency translation) increased 24% year over year.

The top line was driven by strength in both the Biologics and Pharma and Consumer Health (PCH) segment.

Full-year fiscal 2024 revenues were $4.38 billion, reflecting a 2.8% uptick on a reported basis and 2% at CER from the comparable fiscal 2023 period. The figure topped the Zacks Consensus Estimate by 1.4%.

Shares of this company were up 0.1% in after-hours trading.

CTLT’s Segments in Detail

Catalent reports via two segments — Biologics and PCH.

Revenues in the Biologics segment rose 51.3% year over year on a reported basis (up 51% at CER) to $605 million in the quarter under review.

Revenues in the PCH segment increased 6.4% from the year-ago period (up 7% at CER) to $697 million.

Catalent’s Operational Update

In the quarter under review, Catalent’s gross profit rose 78.6% to $384 million year over year. The gross margin expanded 914 basis points to 29.5%.

Selling, general and administrative expenses rose 22.6% to $266 million year over year.

Adjusted operating profit totaled $118 million against the prior-year quarter’s adjusted operating loss of $2 million.

CTLT’s Financial Update

Catalent exited fiscal 2024 with cash and cash equivalents of $289 million compared with $280 million at the end of fiscal 2023. Total debt at the fiscal 2024-end was $4.91 billion compared with $4.85 billion at the end of fiscal 2023.

Cumulative net cash provided by operating activities at the end of fiscal 2024 was $268 million compared with $254 million a year ago.

Catalent’s Guidance

Catalent will not provide any outlook in light of the pending transaction with Novo Holdings.

Our Take

Catalent exited the fourth quarter of fiscal 2024 with better-than-expected results. The solid year-over-year improvement in its overall top-line and bottom-line results was encouraging. The revenue uptick in both segments was impressive as well. Management’s confirmation that the company recorded growth in non-COVID revenues by nearly 30% in the fiscal fourth quarter raises our optimism.

However, Catalent faced escalating operating costs during the quarter, which was discouraging.

CTLT’s Zacks Rank and Key Picks

Catalent currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are DaVita Inc. DVA, Quest Diagnostics Incorporated DGX and Boston Scientific Corporation BSX.

DaVita, carrying a Zacks Rank of 1 (Strong Buy), reported second-quarter 2024 adjusted EPS of $2.59, beating the Zacks Consensus Estimate by 4.9%. Revenues of $3.19 billion outpaced the consensus mark by 0.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

DaVita has a long-term estimated growth rate of 17.5%. DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 24.2%.

Quest Diagnostics reported second-quarter 2024 adjusted EPS of $2.35, beating the Zacks Consensus Estimate by 1.7%. Revenues of $2.40 billion surpassed the Zacks Consensus Estimate by 0.5%. It currently carries a Zacks Rank #2 (Buy).

Quest Diagnostics has a long-term estimated growth rate of 6.2%. DGX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.3%.

Boston Scientific reported second-quarter 2024 adjusted EPS of 62 cents, beating the Zacks Consensus Estimate by 6.9%. Revenues of $4.12 billion surpassed the Zacks Consensus Estimate by 2.5%. It currently carries a Zacks Rank #2.

Boston Scientific has a long-term estimated growth rate of 12.6%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.

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