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Investing.com - Avantor, Inc. (NYSE:AVTR) shares plunged 14% on Wednesday after the life sciences tools company reported third-quarter results that missed analyst expectations and recorded a substantial goodwill impairment charge.
The company posted adjusted earnings of $0.22 per share for the third quarter, falling short of analyst estimates of $0.23 per share. Revenue declined 5.3% to $1.62 billion, below the consensus forecast of $1.65 billion. On an organic basis, sales fell 4.7% compared to the same period last year.
Avantor’s results were significantly impacted by a non-cash goodwill impairment charge of $785 million related to its Distribution reporting unit, resulting in a GAAP net loss of $711.8 million, or $1.04 per share. The company cited challenging market conditions and recent financial performance as reasons for the impairment.
"To position Avantor for success in any macroeconomic environment, we are making decisive, meaningful changes aimed at improving execution, accountability and financial performance," said Emmanuel Ligner, President and Chief Executive Officer.
"I strongly believe in Avantor’s growth and profitability potential, and this conviction is reflected in the new $500 million share repurchase program our Board has authorized."
The company’s Laboratory Solutions segment saw revenue decrease 6.4% to $1.1 billion, with a 4.9% organic decline. Bioscience Production revenue fell 2.9% to $527.3 million, representing a 4.3% organic decrease.
Despite the disappointing results, Avantor generated $207.4 million in operating cash flow and $171.7 million in free cash flow during the quarter. The company’s adjusted EBITDA was $267.9 million, with a margin of 16.5%, down from 17.6% in the prior-year period.
The newly announced $500 million share repurchase authorization signals management’s confidence in the company’s future cash generation capabilities despite current challenges.
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