Evotec AG Reports Q1 2025 Results, Plans Sale of Biologics Segment to Sandoz AG

Evotec AG reported H1 2025 results with a 5% decrease in group revenues to €371.2 million due to soft demand in the Discovery & Preclinical Development segment. The Just – Evotec Biologics segment increased 16% in revenues. The company announced a potential sale of its Just – Evotec Biologics EU segment to Sandoz AG and received a grant from The Gates Foundation for tuberculosis treatment development.

Evotec AG (NASDAQ: EVO) reported its H1 2025 financial results, highlighting mixed performance across segments. Group revenues declined 5% to €371.2 million, with the Discovery & Preclinical Development (D&PD) segment seeing a 11% decrease to €269.0 million due to soft market conditions [1]. Conversely, the Just – Evotec Biologics (JEB) segment showed strong growth of 16% to €102.2 million, driven by a broadened customer base [2].

The company announced significant progress in strategic collaborations, including milestone payments totaling US$95 million from Bristol Myers Squibb for protein degradation and neuroscience research. Additionally, Evotec signed a non-binding agreement to sell its J.POD biologics facility in Toulouse for approximately US$300 million, marking a shift towards an asset-lighter business model [1].

For full-year 2025, Evotec expects revenues of €760-800 million and adjusted EBITDA of €30-50 million. The company's strategy of refocusing on biologics and reducing costs appears to be on track, with cost control measures keeping adjusted EBITDA loss contained at €1.9 million, despite the revenue decline [1].

Evotec's H1 2025 results reveal a 5% year-over-year revenue decline to €371.2 million, with diverging performance across business segments. The renamed D&PD segment saw revenues fall 11% to €269 million, reflecting persistent softness in the drug discovery market. This weakness isn't unique to Evotec, as the entire CRO sector faces similar headwinds with biotech funding challenges continuing to impact outsourcing decisions [1].

The bright spot is the JEB segment, which posted impressive 16% growth to €102.2 million, driven by customer diversification beyond Sandoz and DoD. This performance validates the company's strategic pivot toward biologics capabilities while simultaneously transitioning to a more capital-efficient model [1].

Management's execution on cost control has kept adjusted EBITDA loss contained at €1.9 million, only slightly worse than last year's €0.5 million loss, despite the revenue decline. The company appears to be exceeding its previously announced cost-saving targets, which should support the full-year guidance of €30-50 million in adjusted EBITDA [1].

The most significant strategic development is the planned sale of Just – Evotec Biologics EU for approximately $300 million in cash plus additional technology-related consideration. This transaction, while still subject to regulatory approval, represents a pivotal shift toward an asset-lighter business model that better leverages Evotec's proprietary technology and IP without tying up capital in manufacturing infrastructure [1].

Progress in key collaborations with Bristol Myers Squibb has triggered substantial milestone payments totaling $95 million, providing important validation of Evotec's platform technologies and near-term revenue support [1].

Management expects the market recovery for discovery services to begin as early as 2026, maintaining full-year 2025 revenue guidance of €760-800 million (compared to €797 million in 2024). The guidance suggests H2 will show sequential improvement as cost measures take effect and collaboration revenues accelerate [1].

References:
[1] https://www.stocktitan.net/news/EVO/evotec-se-reports-h1-2025-results-strong-progress-on-strategy-h8hq7an8cthi.html
[2] https://www.morningstar.com/news/accesswire/1060275msn/evotec-se-reports-h1-2025-results-strong-progress-on-strategy-execution