Key Points
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Bayer raised its financial outlook, increasing adjusted EBITDA guidance to €9.8 billion–€10.3 billion and improving its free-cash-flow and year-end net-debt forecasts, while maintaining Core EPS guidance.
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Pharmaceuticals led growth, with NUBEQA and KERENDIA sales rising sharply; Bayer lifted its full-year pharmaceutical EBITDA margin outlook to 25%–27% despite continued declines in XARELTO and EYLEA.
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Litigation and operational pressures remain key risks:€3.7 billion in litigation payments drove negative free cash flow, while Crop Science faces crop-protection headwinds and Consumer Health expects growth in the lower half of its guidance range.
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Bayer Aktiengesellschaft (ETR:BAYN) said it remains on track to meet its 2026 commitments after reporting 3% organic sales growth and 7% adjusted EBITDA growth for the first nine months of the year, supported by momentum in Pharmaceuticals and resilience in Crop Science.
Chief Executive Officer Bill Anderson said core earnings per share reached €3.97, in line with guidance, while free cash flow was negative €3 billion because of previously anticipated litigation-related payments. The company raised its full-year outlook for adjusted EBITDA, free cash flow and net financial debt, while maintaining its core EPS guidance.
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"Nine months into the year, we're on track to deliver our commitments with a strong operational performance," Anderson said. "Our businesses demonstrated operational resilience and underlying potential."
Group outlook raised as debt declines
Chief Financial Officer Judith Hartmann said currency-adjusted group sales rose 2% in the third quarter, while adjusted EBITDA increased 7%. Foreign exchange was a tailwind to reported third-quarter sales, contributing about €250 million, though currency effects remained a drag for the first nine months, reducing sales by around €700 million and adjusted EBITDA by approximately €360 million.
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Bayer now expects full-year adjusted EBITDA of €9.8 billion to €10.3 billion at constant currencies, compared with previous guidance of €9.6 billion to €10.1 billion. The company raised its free-cash-flow forecast by €1 billion, now expecting negative free cash flow of €1.5 billion to negative €0.5 billion, versus its prior outlook of negative €2.5 billion to negative €1.5 billion.
Net financial debt fell to €31.1 billion at the end of the third quarter, aided by €3 billion in proceeds from the closing of Apollo's equity investment. Bayer now expects year-end net financial debt of €28 billion to €29 billion at constant currencies, improving from its earlier forecast of €29 billion to €30 billion.
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Hartmann said the company's negative free cash flow over the first nine months included €3.7 billion in litigation-related payments. Bayer has paid about 60% of the €5 billion in settlement payments discussed for 2026, she said, though some payments could shift into 2027.
Pharmaceuticals enters new growth cycle
Pharmaceuticals was Bayer's principal third-quarter growth driver. Division sales rose 6% in the quarter and 2% over the first nine months to €13.4 billion. Third-quarter adjusted EBITDA increased 24%, with the margin reaching 27.6%, while the nine-month margin was 26.8%.
Sales of prostate cancer treatment Nubeqa increased 58% in the third quarter to roughly €1 billion and totaled €2.6 billion year to date. Kerendia sales rose 65% in the quarter, driven primarily by the U.S. and China, and approached €1 billion for the first nine months. Bayer now expects Kerendia to grow by about 60% for the full year.
The company also said Beyonttra entered its top 15 pharmaceutical products by revenue for the first time during the third quarter. Meanwhile, Xarelto sales fell 31% and Eylea sales declined 24% during the quarter amid loss of exclusivity and biosimilar competition, although Bayer said the rate of decline has begun to moderate. Eylea 8 mg accounted for 60% of total Eylea sales.
Bayer raised its full-year Pharmaceuticals adjusted EBITDA margin outlook to 25% to 27%, from 23% to 25%, and expects full-year organic sales growth toward the upper end of its guidance range. However, Pharmaceuticals division head Stefan Oelrich said third-quarter margins should not be viewed as a new run rate because launch spending for asundexian, marketed in China as Sunharbo, is expected to increase in coming quarters.
The company received its first approval for asundexian in China for secondary stroke prevention, making it the first approved Factor XIa inhibitor worldwide, according to Anderson. Bayer is seeking further approvals, including in the U.S. Oelrich said the company expects negotiations under the U.S. Inflation Reduction Act for Nubeqa to begin in 2027, with sales effects beginning in 2029.
Crop Science balances seed gains against crop-protection pressure
Crop Science sales declined 2% in the third quarter, but increased 3.6% for the first nine months. The division's year-to-date EBITDA margin was 24.6%, above the prior-year level, aided by sales mix, execution under its five-year framework and licensing-resolution income.
Seeds and Traits grew 3% in the quarter and delivered double-digit year-to-date growth, supported by corn and soybean market-share gains. Soybean sales increased 5% in the third quarter, including strong Latin American performance, while year-to-date sales increased 45%, or 10% excluding first-quarter licensing-resolution income. Corn sales were stable during the quarter and rose 4% year to date.
Core Crop Protection sales fell 6% in the quarter and over the first nine months, affected by portfolio exits, regulatory pressures, generic competition and adverse weather. Rodrigo Santos, president of Bayer's Crop Science division, cited drought and heat in Europe and Asia as limiting fungicide and herbicide applications. He said the company is seeing stronger momentum in Latin America entering the fourth quarter.
Bayer said it expects Seeds and Traits growth to offset further Crop Protection headwinds for the full year. For 2027, executives cautioned that Crop Science faces a tougher comparison due to the absence of licensing-resolution income, along with uncertainty tied to farmer economics, generic competition, weather and potential reductions in U.S. corn acreage.
Consumer Health holds guidance amid mixed markets
Consumer Health sales increased 2% over the first nine months, though third-quarter sales were broadly stable in what Bayer described as a mixed market environment, particularly in the U.S. The division's third-quarter EBITDA margin was 24%, and its nine-month margin was 22.9%.
Digestive Health rose 5% in the third quarter, led by MiraLAX, while Dermatology increased 3%, primarily driven by Bepanthen. Allergy and Cold declined because of a weaker season and cautious U.S. retailer inventory builds, while Nutritionals fell amid competition in the U.S. and Europe.
Bayer expects Consumer Health to deliver full-year growth in the lower half of its guidance range.
Litigation containment remains a priority
Anderson said Bayer remains focused on achieving "significant containment" of Roundup litigation. The company is awaiting a judge's ruling on a proposed class settlement following a final approval hearing in September, with Anderson saying Bayer expects a decision in the coming weeks.
He said plaintiff interest in joining the class settlement has increased following a U.S. Supreme Court ruling that struck down a failure-to-warn legal theory and a subsequent unanimous defense verdict in the Aretino case. Bayer also said it will continue to defend or settle PCB-related claims as appropriate.
About Bayer Aktiengesellschaft (ETR:BAYN)
Bayer Aktiengesellschaft, together its subsidiaries, operates as a life science company worldwide. It operates through Pharmaceuticals, Consumer Health, and Crop Science segments. The Pharmaceuticals segment offers prescription products primarily for cardiology and women's health care; specialty therapeutics in the areas of oncology, hematology, and ophthalmology; and diagnostic imaging equipment and digital solutions, and contrast agents, as well as cell and gene therapy. The Consumer Health segment markets nonprescription over-the-counter medicines for self-medication and self-care; and solutions for nutritional supplements, allergy, cough and cold, dermatology, pain and cardiovascular risk prevention, and digestive health.
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The article " What Bayer Aktiengesellschaft (BAYN) Said on Its Q3 Earnings Call " was originally published by MarketBeat.
