Evotec's Restructuring Bill Nears €100 Million as Shares Languish Near Decade Lows

Evotec's H1 revenue fell 19.2% and adjusted EBITDA swung to -€42.7M, with shares hitting a 10-year low amid ongoing restructuring and weak biotech financing.

The numbers Evotec published on August 13 did more than confirm the profit warning issued a month earlier — they laid bare the full cost of the company's overhaul. Reorganisation expenses tied to the Project Horizon programme reached €98.9 million in the first half, with an additional €42.3 million writedown on its Hamburg laboratory facility compounding the damage. Those one-off charges go a long way toward explaining the operating loss, though they do little to soften the underlying message of deteriorating business momentum.

Group revenue contracted 19.2 percent to €300.1 million in the period, while adjusted EBITDA swung from a negative €1.9 million a year earlier to a minus of €42.7 million. The second quarter alone saw sales fall 16.2 percent to €143.5 million, with adjusted EBITDA landing at minus €20.8 million. Management points to sluggish conversion of revenue into earnings and persistently tight financing conditions across the biotech sector as the principal drivers of the decline.

The weakness is not evenly distributed across the business. Discovery & Preclinical Development posted a 28 percent increase in net sales excluding strategic partnerships, a bright spot that stands in sharp contrast to the company's biologics arm. Just Evotec Biologics saw revenue drop 17.4 percent to €35.4 million, underscoring that the core problem sits with the larger partnership agreements — shifts in those contracts accounted for roughly 85 percent of the original revenue guidance cut, according to the company.

For the full year, Evotec is holding firm to the lowered outlook it issued in late July: revenue between €570 million and €610 million, with adjusted EBITDA in a loss range of €70 million to €105 million. There has been no further deterioration relative to that warning, but equally, no signs of recovery have emerged.

The market's response to the half-year figures was swift and unforgiving. Shares touched €3.33 on the Friday following the release, a level not seen in a decade, according to media reports. The stock has since settled around €3.26, leaving it just 2.3 percent above the 52-week low of €3.19 marked in mid-July. Year-to-date losses stand at roughly 40 percent, extending to 47 percent on a twelve-month view. The distance to the 200-day moving average of €5.03 is a telling 35 percent, a measure of how thoroughly the medium-term downtrend has reshaped the valuation.

Technical indicators offer little comfort. The shares trade about 18 percent beneath their 50-day average, and the relative strength index sits at 33 — a reading that suggests oversold conditions without yet signalling any stabilisation. A series of recent headlines has done nothing to arrest the slide: the departure of supervisory board member Camilla Macapili Languille roughly three weeks ago coincided with a 5.7 percent decline, while even the announcement of new collaborations has failed to lift sentiment, with the stock down 4.7 percent since those deals were unveiled.

Management, however, is not standing still. The Project Horizon programme aims for annual cost savings of €75 million by the end of 2027, with 20 to 30 percent of that target expected to materialise this year. The plan involves consolidating the company's footprint from 19 sites to 10 — a structural shift that will take time to show up in the income statement. A strategic review of the business, first announced in early May, continues with no outcome yet determined.

On the financing front, Evotec has been shoring up its position through multiple channels. The company placed convertible bonds worth €116.1 million and monetised roughly $100 million from the sale of stakes in its Tubulis holding. At the half-year mark, liquidity stood at €465.6 million, providing sufficient runway to pursue the transformation without immediate funding pressure.

Operationally, there are counterpoints to the gloomy earnings picture. The company has secured grants from the Gates Foundation, received a $10 million milestone payment from Bristol Myers Squibb, and signed new agreements with the US agency BARDA and with Odyssey Therapeutics. The Odyssey partnership, sealed in August, focuses on AI-driven research and development in autoimmune and inflammatory diseases. June brought the launch of the J.TRAIN continuous manufacturing platform and a preclinical dermatology candidate developed with Almirall.

Yet for investors, the calculus remains uneasy. Genuine progress on partnerships and cost discipline is being weighed against a structurally weak revenue and earnings profile — and so far, the market's verdict has been unambiguous.