Stocks of Avantor plummet after CEO plans to leave amid sales slump and outlook cut

Takeaways

• Avantor's CEO is stepping down after 11 years as head of the chemical and other life sciences company.
• The company missed its first-quarter net revenue estimates due to government cuts that hurt sales of lab solutions.
• Avantor announced that it would be implementing a new strategy for the lab sciences sector, and lowered its outlook for the full year.

The shares of Avantor (AVTR), a manufacturer of lab chemicals and life sciences products, dropped 16% after the announcement that its CEO had resigned. The company also reported weaker than expected net sales, as government spending declined, and lowered their guidance.

The company said the board and Michael Stubblefield agreed that this was the "right time to initiate a leadership transition." It added that Stubblefield will be stepping down as soon as his replacement is named, and that the board has already initiated the search and "plans to move through the process expeditiously." Stubblefield, who has been the CEO of the firm since 2014, will step down as soon as his successor is named. The board has already begun its search and “plans to move through the process expeditiously.”

Avantor Posts Sales Weaker Than Expected

Separately, Avantor reported that first-quarter net sales fell 6% over the previous year to $1.58 Billion, missing Visible Alpha’s estimate of $1.61 Billion. The adjusted earnings per shares (EPS) of $ 0.23 was in line. 

Sales at its Laboratory Solutions division slumped 8% to $1.07 billion, which Stubblefield explained "was impacted by reduced demand—particularly in our Education and Government end market—following recent policy changes." Bioscience Production sales units fell 1%, to $516.4 Million.

Stubblefield said the company was updating its full-year outlook "to reflect ongoing funding and policy-related headwinds." He added that Avantor was "implementing a comprehensive strategy to strengthen our Lab Solutions segment and are committed to moving with urgency to improve performance across the business." The company is also expanding their cost-cutting plans, which are now expected to save 400 million dollars by the end 2027.

Avantor predicts that organic revenue growth will range from minus 1 to plus 1 percent in 2025. This is a change from the previous estimate of plus 1% or plus 3 percent. It expects an adjusted EBITDA of 17.5% to 18,5%, as opposed to the previous 18.0% to 19%.

Shares of Avantor fell to their lowest levels in five years.