AVTR Stock Plunges Despite Q4 Earnings Beat Estimates, Margins Decline

Avantor, Inc. AVTR reported fourth-quarter 2025 adjusted earnings per share (EPS) of 22 cents, down 18.5% from the year-ago quarter. However, the bottom line surpassed the Zacks Consensus Estimate by 4.8%.

GAAP EPS for the quarter was 8 cents, down from 73 cents per share in the prior-year quarter.

AVTR Revenue Details

Revenues grossed $1.66 billion in the reported quarter, down 1.4% year over year. The metric beat the Zacks Consensus Estimate by 3%.

Avantor's foreign currency translation had a positive impact of 3.1%, and M&A had a negative impact of 0.4%, resulting in a 4.1% sales decline on an organic basis.

Shares of this company plunged 13.6% till yesterday’s trading.

Avantor’s Segmental Analysis

The Laboratory Solutions segment’s net sales were $1.12 billion, reflecting a reported decrease of 0.9% year over year. Organic sales decreased 4.1% year over year in the reported quarter. This figure compares to our segmental projection of $1.05 billion.

Per management, the Laboratory Solutions segment delivered a mixed performance, with organic revenues declining 4% year over year while showing modest sequential improvement. Management noted that end-market activity remained stable but subdued, with the prolonged government shutdown weighing on demand, partially offset by an end-of-year budget flush that supported equipment and instrumentation sales. Within the segment, the channel business declined mid-single digits as strength in chemicals was more than offset by weakness in consumables and equipment & instrumentation, while services revenues fell low single digits and specialty was essentially flat, with proprietary chemicals posting low-single-digit growth.

Bioscience Production’s net sales were $547.5 million, reflecting a reported decrease of 2.4%, whereas organic sales decreased 4.1% year over year. This figure compares to our segmental projection of $557 million.

Per management, the Bioscience Production segment posted a 4% organic revenue decline in the fourth quarter while delivering mid-single-digit sequential growth. Bioprocessing revenue fell in the high single digits year over year, reflecting tough prior-year comps and ongoing backlog in process chemicals, though orders remained healthy with a book-to-bill above 1, excluding serum. Single-use assemblies grew low single digits, while controlled environment consumables were weaker than expected. Segment margins contracted year over year due to volume-driven fixed-cost deleverage, mix headwinds and incremental spending to improve operational performance.

AVTR’s Margin Analysis

In the quarter under review, Avantor’s gross profit declined 6.9% year over year to $523.9 million. The gross margin contracted 190 basis points (bps) to 31.5%. We had projected 34.3% of gross margin for the third quarter.

Selling, general and administrative expenses increased 5.7% year over year to $392.4 million.

Adjusted operating profit totaled $225.4 million, down 19.3% from the prior-year quarter’s level. The adjusted operating margin in the quarter contracted 310 bps to 13.5%.

Avantor, Inc. Price, Consensus and EPS Surprise

Avantor, Inc. price-consensus-eps-surprise-chart | Avantor, Inc. Quote

Avantor’s Financial Position

Avantor exited the fourth quarter of 2025 with cash and cash equivalents of $365.4 million compared with $251.9 million at the third-quarter end. Total debt at the end of the fourth quarter of 2025 was $3.95 billion compared with $3.86 billion at the end of the third quarter.

Cumulative net cash provided by operating activities at the end of the fourth quarter of 2025 was $623.8 million compared with $840.8 million a year ago.

AVTR’s 2026 Guidance

Avantor has provided its outlook for the full-year 2026.

The company projects its organic revenues to witness growth of negative 2.5% to negative 0.5% with growth in the VWR distribution business expected to modestly outpace that of Bioscience and Medtech Products. While operational recovery in process chemicals and a strong order book provide some support, continued market pressures across the channel business are likely to weigh on overall performance, with VWR expected to exit 2026 on a relatively more stable footing despite ongoing competitive and demand-related headwinds.

Per management, Bioscience and Medtech Products is expected to underperform VWR in 2026, reflecting difficult year-over-year comparisons, particularly within the Research and Specialty Chemicals subsegment. Electronic Materials, serum and NuSil are cited as key areas facing tough comps, which are expected to constrain segment growth despite progress in process chemicals and operational improvements.

The company expects adjusted EPS to lie in the range of 77 cents to 83 cents. The Zacks Consensus Estimate is pegged at 89 cents.

Our Take

Avantor exited the fourth quarter of 2025 with better-than-expected results, wherein earnings and revenues both beat their respective estimates. However, a decline in both top and bottom lines also does not bode well for the stock.

Per management, Avantor’s product momentum continues to be anchored in bioprocessing, particularly within process chemicals, fluid handling and other proprietary materials that are deeply embedded in customer production workflows. Management emphasized that patient-driven demand for biologics remains healthy, supporting long-term growth in these mission-critical categories. Order trends in process chemicals were highlighted as encouraging, with a book-to-bill ratio above 1 in the quarter (excluding serum) and the order book up in the high single digits year to date. However, revenue conversion has been constrained by operational bottlenecks and an elevated backlog, which management acknowledged remains too high and is a key near-term execution challenge despite modest sequential improvement.

Alongside product execution, management stressed that cost discipline remains intact, though it is now fully embedded within the broader “Avantor Revival” initiative rather than tracked as a standalone transformation program. The company has already achieved approximately $265 million in run-rate savings through the end of 2025, ahead of original expectations, reflecting actions taken across SG&A, compensation structures and operational efficiency. However, leadership noted that these savings have been partially offset by unfavorable mix, pricing actions to defend share and incremental spending tied to revival initiatives, limiting near-term margin flow-through.

Management views revival as a comprehensive reset rather than a pure cost-cutting exercise, combining simplification, portfolio optimization, operational improvement and targeted investment to drive sustainable growth. Key actions include investments of roughly $20 million to debottleneck operations, $10-$15 million to upgrade VWR’s digital and e-commerce capabilities, and the addition of senior leadership, including a new chief operating officer, to strengthen execution and accountability. While 2026 is positioned as a transition year with continued margin pressure, management believes these structural changes are essential to stabilize the business, improve customer service levels and position Avantor to deliver more consistent growth and profitability over time.

Avantor’s Zacks Rank and Stocks to Consider

AVTR 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, Cardinal Health, Inc. CAH and Doximity, Inc. DOCS.

DaVita reported fourth-quarter 2025 adjusted EPS of $3.40, beating the Zacks Consensus Estimate by 5.1%. Revenues of $3.62 billion surpassed the Zacks Consensus Estimate by 2.7%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

DaVita has a long-term estimated growth rate of 20.2%. DVA’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 1.2%.

Cardinal Health, carrying a Zacks Rank of 2 (Buy) at present, reported second-quarter fiscal 2026 adjusted EPS of $2.63, beating the Zacks Consensus Estimate by 9.9%. Revenues of $65.63 billion topped the consensus mark by 0.9%.

Cardinal Health has a long-term estimated growth rate of 15%. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.3%.

Doximity reported third-quarter fiscal 2026 adjusted EPS of 46 cents, beating the Zacks Consensus Estimate by 4.6%. Revenues of $185.1 million surpassed the Zacks Consensus Estimate by 2.2%. It currently carries a Zacks Rank #2.

Doximity has a long-term estimated growth rate of 16.1%. DOCS’ earnings surpassed estimates in each of the trailing four quarters, the average surprise being 19.9%.

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This article originally published on Zacks Investment Research (zacks.com).

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