Gerresheimer's Share Price Collapse: Unpacking the Accounting Controversy and Its Implications for Investors

The recent collapse of Gerresheimer AG's share price—down 56% from its 52-week high—has sparked intense scrutiny over the company's corporate governance and financial practices. At the heart of this crisis lies a contentious accounting controversy involving the recognition of revenues under “bill-and-hold” agreements in its 2024 financial statements. This case underscores broader risks in the healthcare packaging sector, where complex revenue recognition standards and governance weaknesses can erode investor trust and destabilize market valuations.

The Accounting Controversy: A Governance Red Flag

Germany's financial regulator, BaFin, launched an audit of Gerresheimer's 2024 consolidated financial statements in September 2025, focusing on whether the company improperly accelerated revenue recognition under “bill-and-hold” contractsGerresheimer shares tank as financial regulator suspects …, [https://www.reuters.com/sustainability/boards-policy-regulation/germanys-bafin-launches-audit-gerresheimers-2024-group-accounts-2025-09-24/]^[1]. These agreements allowed Gerresheimer to record a low double-digit million euros in revenue in 2024, despite the goods not being delivered or services fully performed. BaFin suspects this practice may violate accounting regulations by deferring revenue to 2025Gerresheimer comments on the audit by German BaFin, [https://www.gerresheimer.com/en/customer/company/news/detail/gerresheimer-comments-on-the-audit-by-german-bafin]^[2].

While Gerresheimer maintains its accounting was compliant, the audit has exposed critical governance gaps. The company's Management Board, led by CEO Dietmar Siemssen, has emphasized transparency, but the controversy raises questions about internal controls. For instance, the absence of a robust oversight mechanism to flag such aggressive revenue recognition practices suggests a failure in risk management—a recurring issue in healthcare packaging, where ASC 606 standards demand nuanced judgmentASC 606 Revenue Recognition in Healthcare: A Guide for CFOs, [https://www.linkedin.com/pulse/asc-606-revenue-recognition-healthcare-strategic-cfos-landman-karny-6yagc]^[3].

Corporate Governance Under Scrutiny

Gerresheimer's governance structure, outlined in its Articles of Association, includes a Management Board and Supervisory Board tasked with ensuring compliance and strategic oversightGerresheimer AG (GRRMF) Company Profile & Facts, [https://finance.yahoo.com/quote/GRRMF/profile/]^[4]. However, activist investors like Asset Value Investors (AVI) and Active Ownership have criticized the board's effectiveness. AVI, now the second-largest shareholder with a 5.31% stake, has demanded the sale of the underperforming Moulded Glass division and the appointment of new financial leadership to restore credibilityAVI calls for leadership change and strategic overhaul at Gerresheimer AG, [https://quoteddata.com/2025/06/avi-calls-for-leadership-change-and-strategic-overhaul-at-gerresheimer/]^[5].

The pressure for change is justified by Gerresheimer's deteriorating financial health. A net debt-to-EBITDA ratio of 4.1x, coupled with a high accrual ratio of 0.21, highlights a significant disconnect between reported profits and actual cash flowEarnings Troubles May Signal Larger Issues for Gerresheimer, [https://simplywall.st/stocks/de/pharmaceuticals-biotech/etr-gxi/gerresheimer-shares/news/earnings-troubles-may-signal-larger-issues-for-gerresheimer]^[6]. These metrics, combined with a recent €800 million acquisition of Bormioli (now a 4.1x leverage burden), suggest poor capital allocation decisions and a lack of strategic clarityAVI calls for leadership change and strategic overhaul at Gerresheimer AG, [https://quoteddata.com/2025/06/avi-calls-for-leadership-change-and-strategic-overhaul-at-gerresheimer/]^[5].

Industry Risks and Regulatory Challenges

The healthcare packaging sector faces unique risks due to its reliance on variable payment structures and compliance with evolving standards like ISO 11607-1:2019Revised 2025 White Paper: Medical Device Packaging and Testing, [https://lso-inc.com/news/now-available-revised-2025-white-paper-on-medical-device-packaging-and-testing/]^[7]. Improper revenue recognition, as seen in Gerresheimer's case, not only distorts financial reporting but also undermines trust in the sector's ability to meet stringent regulatory expectations. For example, the coexistence of fee-for-service models and value-based care creates opportunities for aggressive accounting practices, particularly in companies with weak internal controlsASC 606 Revenue Recognition in Healthcare: A Guide for CFOs, [https://www.linkedin.com/pulse/asc-606-revenue-recognition-healthcare-strategic-cfos-landman-karny-6yagc]^[3].

Moreover, the sector's shift toward sustainability and extended producer responsibility (EPR) schemes adds another layer of complexity. Companies must innovate in packaging design while navigating stricter environmental regulations—a challenge Gerresheimer appears unprepared for, given its current governance turmoilNew packaging rules in 2025, [https://www.packaging-gateway.com/features/new-packaging-rules-in-2025/]^[8].

Investor Implications and the Path Forward

For investors, Gerresheimer's crisis serves as a cautionary tale about the interplay between governance failures and financial misstatements. The BaFin audit could result in restatements or penalties, further eroding shareholder value. Meanwhile, activist demands for leadership changes and strategic overhauls signal a loss of confidence in the current management's ability to navigate these challengesAVI calls for leadership change and strategic overhaul at Gerresheimer AG, [https://quoteddata.com/2025/06/avi-calls-for-leadership-change-and-strategic-overhaul-at-gerresheimer/]^[5].

A critical test for Gerresheimer will be its response to the audit and shareholder pressures. If the company fails to demonstrate accountability—through transparent reporting, board restructuring, or divestitures of non-core assets—it risks a prolonged decline in market valuation. Conversely, a proactive approach to governance reform and strategic refocusing could rebuild trust, though the window for such a turnaround is narrowing.

Conclusion

Gerresheimer's share price collapse is not merely a reflection of accounting missteps but a symptom of deeper governance and risk management failures. As the healthcare packaging sector grapples with evolving regulatory and sustainability demands, companies must prioritize robust internal controls and transparent leadership. For Gerresheimer, the path to recovery hinges on its ability to address these weaknesses—or risk becoming a cautionary example for investors in a high-stakes industry.