Avantor, Inc. AVTR reported fourth-quarter 2024 adjusted earnings per share (EPS) of 27 cents, up 8% from the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate by 8%.

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GAAP EPS for the quarter was 73 cents, up from 15 cents year over year.

Full-year 2024 EPS was 99 cents, reflecting a 6.6% decrease from the comparable 2023 period.

AVTR Revenue Details

Revenues grossed $1.69 billion in the reported quarter, down 2.1% year over year. The metric missed the Zacks Consensus Estimate by 1.5%.

Avantor's foreign currency translation and Clinical Services divestiture had an unfavorable impact in the reported quarter, resulting in an organic sales growth of 1%.

Full-year 2024 revenues were $6.78 billion, reflecting a 2.6% decline from the comparable 2023 period.

Shares of this company plunged 11.7% till Friday’s trading.

Avantor’s Segmental Analysis

The Laboratory Solutions segment’s net sales were $1.13 billion, reflecting a reported decrease of 4.8% year over year. Organic sales decreased 0.9% in the reported quarter. This figure compares to our segmental projection of $1.19 billion.

Per management, the segment’s sales grew modestly on a sequential basis. The company had strong performance in proprietary chemicals and specialty procurement sales, particularly for AVTR’s biopharma and healthcare customers. However, the customary seasonal increase in activity levels was muted, given the macro backdrop and the timing of holidays.

Bioscience Production’s net sales were $560.8 million, reflecting a reported increase of 3.8%, whereas organic sales increased 4.1% year over year. This figure compares to our segmental projection of $555 million.

Per management, Bioprocessing (representing about two-thirds of the segment) exceeded expectations with high single-digit growth. Avantor also saw another strong quarter of order intake, with orders increasing meaningfully on a sequential basis. The silicones offering grew double digits, while electronic materials were stable sequentially with an expected year-over-year decline.

AVTR’s Margin Analysis

In the quarter under review, Avantor’s gross profit declined 1.3% year over year to $562.9 million. However, the gross margin expanded 27 basis points (bps) to 33.4%. We had projected 31.5% of gross margin for the fourth quarter.

Selling, general and administrative expenses decreased 4.1% to $371.4 million year over year.

Adjusted operating profit totaled $191.5 million, up 4.5% from the prior-year quarter’s level. The adjusted operating margin in the quarter also expanded 71 bps to 11.4%.

Avantor’s Financial Position

Avantor exited 2024 with cash and cash equivalents of $261.9 million compared with $262.9 million at 2023-end. Total debt at the end of 2024 was $4.06 billion compared with $5.54 billion at 2023-end.

Cumulative net cash provided by operating activities at the end of 2024 was $840.8 million compared with $870 million a year ago.

AVTR’s Guidance

Avantor has initiated its outlook for 2025.

The company projects its organic revenues to witness growth of 1-3% for the full year.

Management expects low-single-digit organic growth in the Laboratory Solutions segment and mid-single-digit organic growth in Bioscience Production. Management also expects bioprocessing to grow mid-to-high single digits in 2025.

The company now expects its adjusted EPS to lie within $1.02-$1.10, up 10% from the comparable 2024 period. The Zacks Consensus Estimate is pegged at $1.10.

Our Take

Avantor exited the fourth quarter of 2024 with better-than-expected earnings. The strength in Bioscience Production’s year-over-year net sales and order intake on a sequential basis during the quarter was impressive. AVTR also witnessed robust proprietary chemicals and specialty procurement sales within the Laboratory Solutions segment during the quarter. The expansion of both margins bodes well.

On the earnings call, management confirmed that the company launched a new service offering to address capacity and space limitation challenges faced by many large pharma and biotech customers. This offering is expected to leverage digital tools and generative AI to automate operational tasks, providing virtual assistance to researchers at their lab bench. AVTR also introduced the new Masterflex Miniflex Panel-Mount pumps, further strengthening its fluid handling offering.

The company has also signed several new third-party supplier agreements during the fourth quarter, enhancing its portfolio with differentiated technologies, including LGC Standards. Avantor’s deal with Quantum-Si will enable it to bring its single-molecule next-generation protein sequencing portfolio to market in the United States and Canada, as well as an exclusive global distribution agreement with Novilytic covering their Proteometer platform.

During the quarter, AVTR also completed the installation of an enhanced solutions manufacturing facility in Gliwice, Poland. This expansion will likely position Avantor to meet the growing demand for outsourced buffer, media and clean-in-place products in the biopharma end-market, resulting in lower costs and increased flexibility for its customers. The company also leveraged advanced automation at its regional distribution center in Bridgeport, NJ, to streamline workflows, reduce processing times and significantly increase order accuracy. These look promising for the stock.

However, lower-than-expected revenues and the decline in the overall reported revenues were discouraging. The Laboratory Solutions segment’s revenues also declined in the quarter, which is disappointing. AVTR continues to navigate inflationary forces, raising our apprehension about the stock.

Avantor’s Zacks Rank and Stocks to Consider

AVTR currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Cardinal Health, Inc. CAH, ResMed Inc. RMD and Twist Bioscience Corporation TWST.

Cardinal Health, carrying a Zacks Rank of 2 (Buy), reported second-quarter fiscal 2025 adjusted EPS of $1.93, beating the Zacks Consensus Estimate by 10.3%. Revenues of $55.26 billion outpaced the consensus mark by 0.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cardinal Health has a long-term estimated growth rate of 10.7%. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.6%.

ResMed reported second-quarter fiscal 2025 adjusted EPS of $2.43, beating the Zacks Consensus Estimate by 5.7%. Revenues of $1.28 billion surpassed the Zacks Consensus Estimate by 1.6%. It currently carries a Zacks Rank #2.

ResMed has a long-term estimated growth rate of 16%. RMD’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 6.9%.

Twist Bioscience reported first-quarter fiscal 2025 loss per share of 53 cents, narrower than the Zacks Consensus Estimate of a loss of 62 cents per share. Revenues of $88.7 million surpassed the Zacks Consensus Estimate by 2%. It currently carries a Zacks Rank #2.

Twist Bioscience has an estimated growth rate of 41.1% for fiscal 2025. TWST’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 7.7%.

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