Avantor Sets $400M Cost Savings Target by 2027 Amid Margin Pressure and CEO Transition

Avantor has set a $400M cost savings target by 2027 amid margin pressure and CEO transition. Emmanuel Ligner has been appointed as the next CEO, effective August 18, bringing over 30 years of experience in the industry. Michael Stubblefield, President and CEO, opened the call by addressing the leadership transition and highlighting Ligner's expertise.

In its latest earnings call, Avantor, Inc. (AVTR) outlined a significant cost savings target of $400 million by 2027, aiming to address margin pressure and facilitate a smooth CEO transition. Michael Stubblefield, President and CEO, announced the appointment of Emmanuel Ligner as the new CEO, effective August 18, highlighting Ligner's over 30 years of experience in the life sciences industry [1].

Stubblefield emphasized that organic revenue growth improved sequentially by 200 basis points and was flat year-over-year. However, the adjusted EBITDA margin contracted to 16.6%, and adjusted EPS for the quarter was $0.24. Despite these figures, Stubblefield reaffirmed the company's ongoing cost transformation program, expecting $400 million in run rate savings by the end of 2027 [1].

The Laboratory Solutions segment showed organic revenue growth in line with expectations, increasing sequentially compared to Q1 and finishing modestly down year-over-year. Contract extensions with several top 15 global pharma accounts are expected to result in more than $100 million in share gains once fully commercialized, and a 5-year extension with BIO Business Solutions, described as "our largest customer," was also secured [1].

R. Brent Jones, Executive VP & CFO, reported that second quarter revenue was $1.68 billion, flat year-over-year on an organic basis. Adjusted gross profit for the quarter was $554 million, representing a 32.9% adjusted gross margin. Adjusted EBITDA was $280 million, and adjusted EPS was $0.24. Free cash flow reached $125 million, with adjusted net leverage at 3.2x adjusted EBITDA [1].

Management provided updated full-year guidance, reducing the organic revenue growth expectation to negative 2% to flat, down from the prior guidance of negative 1% to plus 1%. Lab Solutions growth is now expected to be minus low single digits, while Bioscience Production is expected to be flat. Adjusted EBITDA margin expectations were updated to between 16.5% and 17%, and adjusted EPS guidance was revised to between $0.94 and $0.98. Free cash flow expectations were reduced to $550 million to $600 million before transformation expenses [1].

Analysts' tone was slightly negative, with repeated questions challenging the sustainability of margin levels, the impact of pricing pressure, and the outlook for bioprocessing. Management maintained a neutral to slightly defensive tone, emphasizing strategic wins and cost actions while acknowledging headwinds [1].

Avantor's second quarter was defined by a leadership transition, sequential improvement in organic revenue growth, and continued strategic focus on winning and retaining key accounts, despite persistent competitive and operational headwinds. The company revised guidance downward for revenue, margins, and free cash flow, with management emphasizing long-term cost transformation targets and digital investments to drive future value [1].

References:
[1] https://seekingalpha.com/news/4476609-avantor-outlines-400m-cost-savings-target-by-2027-amid-margin-pressure-and-ceo-transition
[2] https://www.prnewswire.com/news-releases/avantor-reports-second-quarter-2025-results-302519338.html