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

Core Insights - Catalent, Inc. reported a significant increase in adjusted earnings per share (EPS) for Q4 fiscal 2024, reaching 65 cents, up from 2 cents in the previous year, exceeding the Zacks Consensus Estimate by 41.3% [1] - The company's GAAP EPS was 13 cents, a recovery from a loss of 59 cents per share in the same quarter last year [1] Revenue Performance - Revenues for the quarter totaled $1.30 billion, reflecting a year-over-year increase of 23.3% and surpassing the Zacks Consensus Estimate by 5.4% [2] - At constant exchange rates (CER), revenues increased by 24%, with organic net revenues rising 24% year over year [2] - The revenue growth was driven by strong performance in both the Biologics and Pharma and Consumer Health (PCH) segments [2] Segment Analysis - Revenues in the Biologics segment rose by 51.3% year over year to $605 million, with a 51% increase at CER [4] - The PCH segment saw a revenue increase of 6.4% year over year, reaching $697 million, with a 7% increase at CER [4] Operational Highlights - Gross profit for the quarter increased by 78.6% to $384 million, with gross margin expanding by 914 basis points to 29.5% [5] - Selling, general, and administrative expenses rose by 22.6% to $266 million [5] - Adjusted operating profit was $118 million, a significant improvement from an adjusted operating loss of $2 million in the prior-year quarter [5] Financial Position - At the end of fiscal 2024, Catalent had cash and cash equivalents of $289 million, up from $280 million at the end of fiscal 2023 [6] - Total debt increased to $4.91 billion from $4.85 billion at the end of fiscal 2023 [6] - Cumulative net cash provided by operating activities was $268 million, compared to $254 million a year ago [6] Future Outlook - Catalent will not provide any guidance due to a pending transaction with Novo Holdings [7] Overall Assessment - The company demonstrated better-than-expected results in Q4 fiscal 2024, with notable improvements in both top-line and bottom-line metrics [8] - The growth in non-COVID revenues by nearly 30% in the fiscal fourth quarter is a positive indicator [8] - However, the company faced rising operating costs during the quarter, which may pose challenges [8]