Evotec Q1 Earnings Call Highlights

Key Points

• Evotec reported Q1 revenue of EUR 156.6 million (down 21.7% YoY) and adjusted EBITDA of negative EUR 21.9 million, with management citing EUR 10.2 million of FX headwinds, the non‑recurrence of a $25 million Sandoz license payment, and softness in discovery demand (revenues would be down ~6% excluding FX and the Sandoz payment).
• The company reaffirmed full‑year 2026 guidance of EUR 700–780 million in revenue (or EUR 730–810 million at constant currency) and EUR 0–40 million adjusted EBITDA, saying performance should improve and be weighted to the second half as milestones and D&PD market conditions recover.
• Evotec moved its “Horizon” transformation into implementation, booked EUR 75 million of reorganization provisions in Q1, plans to exit the Framingham site, expects personnel adjustments starting Q3 2026, and targets ~EUR 75 million of structural run‑rate savings by end‑2027 (20–30% to materialize in 2026).

Evotec NASDAQ: EVO reported first-quarter 2026 results that management said were shaped by a tough year-over-year comparison, continued softness in early drug discovery demand, and foreign exchange headwinds, while the company began implementing its “Horizon” business transformation plan and reaffirmed full-year guidance.

Q1 results: revenue decline tied to prior-year one-off and FX headwinds

Group revenue in the first quarter totaled EUR 156.6 million, down 21.7% from the prior-year period, Chief Financial Officer Claire Hinshelwood said. On a constant-currency basis, revenue decreased 16.6% to EUR 166.9 million. Adjusted group EBITDA was negative EUR 21.9 million, compared with EUR 3.1 million a year earlier (or negative EUR 18.9 million at constant exchange rates).

Hinshelwood attributed the year-over-year revenue change primarily to three factors:

• Negative foreign exchange effects of EUR 10.2 million, driven mainly by the U.S. dollar and British pound.
• Non-recurrence of a $25 million (EUR 23.1 million) Sandoz license payment recorded in Q1 2025.
• Continued softness in demand within Discovery & Preclinical Development (D&PD), reflecting a challenging market environment.

Excluding both FX effects and the non-recurring Sandoz license, Hinshelwood said group revenues declined 6%, which she described as a “significantly more moderate” underlying change than the reported headline decline.

Segment performance: D&PD pressured; Just shows underlying momentum ex-Sandoz

In Evotec’s D&PD segment, Q1 revenue fell 14.7% on a reported basis to EUR 119.9 million. On a constant-currency basis, D&PD revenue declined 10% to EUR 126.6 million. Segment adjusted EBITDA in D&PD decreased to negative EUR 9.8 million. At constant exchange rates, adjusted EBITDA was negative EUR 5.5 million, which Hinshelwood said was “broadly consistent with Q1 2025” despite lower revenue, reflecting reductions in the structural cost base and business mix effects.

Just – Evotec Biologics revenue declined 38% to EUR 36.8 million, primarily due to the absence of the prior-year Sandoz license payment and an “expected decline in DOW revenues,” according to Hinshelwood. She added that the decline was partially offset by about 50% year-on-year growth in non-DOW, non-Sandoz revenues. On a constant-currency basis, segment revenue was EUR 40.4 million. Just’s adjusted EBITDA decreased to negative EUR 12.1 million (or negative EUR 13.4 million at constant exchange rates), with the year-over-year change primarily tied to the non-repeat of the Sandoz payment.

R&D expenses were EUR 10.1 million, down from EUR 14.9 million a year ago. Hinshelwood said spending remained “tightly focused on projects most relevant to our partners,” while Evotec continued investing in its technologies and platforms.

Guidance reaffirmed; improvement expected to be weighted to the second half

Chief Executive Officer Christian Wojczewski said Evotec is confirming its full-year 2026 guidance of EUR 700 million to EUR 780 million in revenue (or EUR 730 million to EUR 810 million at constant exchange rates) and EUR 0 million to EUR 40 million in adjusted EBITDA (or EUR 10 million to EUR 50 million at constant exchange rates).

Management emphasized that performance is expected to improve through 2026 and be “weighted towards the second half,” driven by an anticipated market and D&PD recovery as well as “increasing visibility across our strategic partnership pipeline,” Wojczewski said.

Asked about the implied ramp in quarterly results needed to meet guidance, Hinshelwood pointed to the company’s milestone- and strategic-deal-driven revenue model and reiterated that first-half dynamics were consistent with what Evotec outlined previously. “It’s the dynamic of those large strategic partnerships and the milestones that are making the difference between what you see in the first quarter and when you look at the full-year outlook,” she said.

Horizon transformation moves into implementation; restructuring provisions recorded

Wojczewski said Evotec moved the Horizon initiative “from announcement into implementation” during the quarter, with progress on Works Council consultation processes across European sites and preparation for footprint and organizational adjustments. The plan is framed around three pillars: operational excellence, science leadership, and commercial execution.

On the footprint, Wojczewski said the company is progressing with an exit of the Framingham site as it consolidates its U.S. operational footprint. Across Europe, Evotec expects most legally mandated Works Council consultations to be completed by mid-2026, with personnel adjustments expected to start in Q3 2026.

Evotec recorded EUR 75 million of reorganization cost provisions in Q1 “directly attributable” to the Horizon measures, which Wojczewski said mainly reflect personnel actions (including severance) and impairment losses on property, plant and equipment. He reiterated the company’s expectation for approximately EUR 75 million in structural run-rate savings by the end of 2027, with around 20% to 30% expected to materialize in 2026.

During the Q&A, Hinshelwood said Horizon implementation should also reduce “under-absorption” at certain sites that is currently weighing on margins, helping improve profitability over time.

Leadership changes, strategic evaluation, and commercial indicators

Evotec highlighted several leadership updates. Wojczewski noted that Ashiq H. Khan was appointed Chief Commercial Officer, and Ingrid Muller joined the management board as Chief Operating Officer on May 1. Wojczewski also announced an “orderly transition” in the CFO role: Paul Hitchin stepped down effective April 30 for personal reasons, and Hinshelwood assumed the CFO position May 1.

Wojczewski said Evotec is conducting a strategic evaluation of the group—covering “portfolio, capital structure, and ownership framework”—supported by external advisors. He emphasized there is “no predefined outcome, timeline, or commitment to pursue any transaction,” and later told analysts the review was not initiated due to inbound interest but followed logically from the company’s strategic reset and Horizon operating model changes.

On commercial momentum in D&PD, Wojczewski cited several internal indicators that he said are stabilizing or improving, including a continued decline in negative change orders, proposal activity at a 12-month high at quarter-end, improved proposal turnaround times, and net sales orders that were broadly stable sequentially and “approximately 15%” higher year over year. He reiterated that quarterly revenues can be volatile due to milestones, strategic deals, and license payments.

Evotec also referenced recent partnership and public-sector activity. Wojczewski said the company received two new Gates Foundation grants to advance tuberculosis drug discovery and translational research, and highlighted progress in a medical dermatology collaboration with Almirall, where the joint team nominated a first preclinical development candidate in two years and is advancing the program toward IND with Evotec’s INDiGO platform.

On liquidity, Hinshelwood reported total liquidity of EUR 444.8 million at the end of Q1, down from EUR 476.4 million at the end of Q4 2025. She said the group remained in a net cash position, citing improved working capital movements and disciplined capital expenditure. She also noted that reported liquidity excludes expected gross proceeds of approximately $100 million related to Gilead’s acquisition of Evotec’s EVOequity portfolio company Tubulis, which Evotec expects to receive in Q2 2026.

About Evotec NASDAQ: EVO

Evotec SE NASDAQ: EVO is a global biotechnology company headquartered in Hamburg, Germany, specializing in drug discovery and development partnerships. The company leverages its integrated discovery platforms to support pharmaceutical and biotech clients in advancing novel therapies from target identification through preclinical development.

Evotec's service offering encompasses high-throughput screening, bioanalytics, combinatorial chemistry, structural biology, pharmacology, and computational drug design.

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