The numbers landing on Evotec’s desk last Thursday left little room for spin. Germany’s largest independent drug discovery contractor posted first-half revenue of €300.1 million, down 19.2 percent from the prior-year period, while adjusted EBITDA swung to a loss of €42.7 million — a sharp deterioration from the €1.9 million deficit recorded a year earlier.
What makes those figures particularly uncomfortable is that they were not a surprise. Management had already slashed its full-year outlook in July, and Thursday’s interim results merely confirmed that the operational deterioration was real. The company now guides to revenues of €570–610 million for 2026, a far cry from the €780 million ceiling originally targeted, with adjusted EBITDA expected to land somewhere between minus €70 million and minus €105 million — versus the small profit of up to €40 million once anticipated.
Core Business Shows Pulse Beneath the Weakness
Strip away the partnership-related revenue streams, however, and a more nuanced picture emerges. Net sales excluding strategic partnerships in the Discovery, Preclinical & Translational (D&PD) division climbed 28 percent year-on-year in the first half. Management attributes the momentum to stronger customer acquisition and more disciplined commercial execution — evidence that Evotec’s early-stage drug discovery franchise retains its appeal even as the broader portfolio struggles.
The headline segment numbers tell a grimmer story. D&PD generated second-quarter revenue of €108.1 million, down 15.8 percent, while Just-Evotec Biologics contributed €35.4 million, also well below the prior-year level. The divergence between the ex-partnerships growth and the overall decline underscores how dependent the company had become on alliance income that is now drying up.
Horizon Program and Balance Sheet Moves
Against that backdrop, the “Horizon” transformation initiative has taken on added urgency. Evotec aims to strip out €75 million in annual costs by the end of 2027, with 20 to 30 percent of those savings expected to materialize as early as this year. The program is central to recalibrating a cost base that was built for a larger revenue footprint.
The company has also been busy shoring up its finances. During the first half, it raised €116.1 million through convertible bonds and monetized its stake in Tubulis for roughly $100 million. These moves buy time and funding for the restructuring, even as the operating business contracts.
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There have been governance changes too. Camilla Macapili Languille stepped down from the supervisory board on August 7, having served as an independent member since June 2022. Wes Wheeler has meanwhile been appointed to the Audit & Compliance Committee.
Market Stays Unimpressed
Investors have yet to see a reason to step in. The shares closed Thursday at €3.39, just a few percentage points above the 52-week low of €3.19 touched recently. The stock has shed 38 percent since the start of the year and sits roughly 45 percent below its level twelve months ago. At 33 percent under the 200-day moving average of €5.06, the downtrend has become deeply entrenched.
The distance from the 52-week high of around €7.80, set last November, amounts to roughly 57 percent — a measure of how quickly sentiment has soured.
Partnerships Offer a Longer-Term Story
Evotec has not been idle on the deal front. A research collaboration with Odyssey Therapeutics launched on August 6, applying artificial intelligence to autoimmune and inflammatory disease research. The first half also brought grants from the Gates Foundation and a $10 million milestone payment from Bristol Myers Squibb.
Those developments speak to the company’s continued relevance in early-stage drug discovery and its ability to attract partners with deep pockets. But they have done little to shift the narrative around the company’s near-term financial trajectory. With the July guidance cut now validated by actual half-year numbers, the market’s focus remains fixed on execution — and on whether Horizon can deliver savings fast enough to offset the revenue decline.
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