Catalent Reports Improved Financials, Net Loss Narrows in Q3 2024

Catalent, Inc. reported significant financial improvements for the three months ended September 30, 2024, compared to the same period in 2023. The company achieved net revenue of $1,023 million, a 4% increase from $982 million in the prior year. This growth was primarily driven by increased manufacturing of prescription products, with the Biologics segment contributing $461 million and the Pharma and Consumer Health segment generating $563 million, reflecting increases of 3% and 5%, respectively.

The gross margin also improved, rising to $181 million from $169 million, marking a 7% increase. However, selling, general, and administrative expenses surged by 23% to $252 million, attributed to acquisition costs related to the pending merger with Novo Holdings, increased employee-related expenses, and higher credit losses.

Catalent reported a net loss of $129 million for the quarter, a substantial improvement from the $759 million loss recorded in the same period last year. This improvement was reflected in the basic and diluted loss per share, which decreased to $(0.71) from $(4.19). The operating loss also showed significant improvement, narrowing to $(67) million from $(726) million in the previous year.

The company’s restructuring efforts included a headcount reduction of approximately 50 employees, incurring $2 million in employee-related charges. Total restructuring costs for the quarter amounted to $9 million, up from $2 million in the same period last year. These efforts are part of a broader strategy to optimize operations across its segments.

Catalent's cash position improved, with cash and cash equivalents increasing to $335 million from $289 million at the end of June 2024. The company generated $61 million in cash from operating activities, a turnaround from the $70 million used in operations in the prior year.

In terms of strategic developments, Catalent entered into a merger agreement with Creek Parent, Inc., which is expected to close by the end of 2024, pending regulatory approvals. The merger values the company at approximately $16.5 billion. Additionally, Catalent divested its Small Molecule Analytical Services subsidiary for $23 million, resulting in a gain of $17 million.

As of September 30, 2024, total assets were reported at $9,708 million, slightly down from $9,753 million at the end of June 2024. The company continues to face challenges, including a material weakness in internal controls related to inventory costing and valuation, which it is actively addressing through a remediation plan.