This article first appeared on GuruFocus .
Release Date: August 21, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Net sales grew 4.8% in local currencies, in line with expectations.
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Core EBITDA margin improved to 22.4% from 21.6% year-over-year.
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Integration of newly acquired US and Australian sites is on track, with strong customer interest and three concrete offers already submitted.
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EVOLVE+ strategy is delivering results, including a 31% increase in RFPs for Drug Products and 69 more RFPs for Drug Substances year-to-date.
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Strategic technology upgrades are progressing as planned, with the first sterile products shipped to the US from El Masnou and the new Minden facility now on stream.
Negative Points
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Currency headwinds from weaker USD and EUR against CHF negatively impacted sales by 2-3% in H1 2026.
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Operating cash flow decreased to CHF93.7 million from CHF149.6 million, driven by timing of tax payments, currency effects, and increased working capital from the acquisition.
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Net debt to core EBITDA increased to 2.3x following the acquisition, with a focus on deleveraging ahead.
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Seasonality is more pronounced this year, with a larger share of revenue recognition events scheduled for H2, leading to a stronger second-half weighting.
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Core financial expenses increased due to expanded bond financing, and input costs, particularly personnel expenses, continued to rise.
Q & A Highlights
Q: What were the key financial results for the first half of 2026, and how do they align with the company's guidance? A: Marcel Imwinkelried, CEO, confirmed that the performance was exactly according to plan. Net sales grew by 4.8% in local currencies, and the core EBITDA margin increased from 21.6% to 22.4%. This solid foundation allows the company to confirm its full-year guidance of high single-digit growth in local currencies and an EBITDA margin above 23%.
Q: Can you provide more details on the financial performance, including sales breakdown and seasonality? A: Tania Micki, CFO, reported net sales of CHF633 million, a 2.2% increase on a reported basis. Drug Substances sales reached CHF431.1 million, while Drug Products sales were CHF201.9 million. She noted that seasonality is more pronounced this year due to the acquisition of three Drug Substances sites in the US and Australia, which closed on May 1, and the planned ramp-up of new products in the second half. Revenue recognition is tied to the completion of production campaigns, which can vary in duration, leading to a stronger second-half weighting.
Q: What is the status of the integration of the newly acquired sites, and what is the expected impact on capacity and revenue? A: Marcel Imwinkelried, CEO, stated that the integration is on track. The target remains to free up 80 cubic meters of high-quality capacity for innovative products from 2028 onwards. The first product transfer at Wilmington will be completed this year, and transfers at Pennsville have been initiated. The company expects first revenues from new business in 2027, with a step-by-step ramp-up from 2028. Customer interest is high, with five visits to Wilmington already and three concrete offers submitted.
Q: How is the company's capital allocation strategy evolving, particularly regarding CapEx and deleveraging? A: Tania Micki, CFO, explained that the capital allocation framework remains unchanged, focusing on organic growth and selective M&A. The immediate priority is the successful integration of the acquired business. With major capacity expansion projects completed, the company will focus on decreasing capital expenditure to the low teens as a percentage of sales, or even closer to 10% in the near future. Following the acquisition, leverage increased to 2.3x net debt to core EBITDA, and the ambition is to return to pre-acquisition levels through strong cash generation and deleveraging.
Q: What progress has been made on the EVOLVE+ strategy, and what are the early signs of success? A: Marcel Imwinkelried, CEO, highlighted significant progress across all dimensions of the strategy. The company has seen a 31% increase in RFPs in Drug Products and a 69% increase in Drug Substances year-to-date compared to 2025. In Drug Substances, they won twice as many new innovation customers. The R&D teams at the newly acquired Athens and Grafton sites are almost fully booked, validating the strategy's hypothesis. The company now operates the largest global small molecule drug substance CDMO network with 10 sites across the US, Europe, and Asia.
Q: Can you elaborate on the progress of strategic technology upgrades and their impact on the business? A: Marcel Imwinkelried, CEO, confirmed that all strategic technology upgrades are coming online as planned. El Masnou shipped its first sterile products to the US after a successful FDA audit. The Minden facility is now fully on stream, with the first large campaign produced and packed. Barbera is executing first development projects for spray drying, and Hameln's first prefilled syringe line is coming online as planned. These upgrades are key to attracting new business, especially from small and midsized pharma.
Q: What were the main drivers of the core EBITDA margin improvement, and how did currency fluctuations impact results? A: Tania Micki, CFO, attributed the 80 basis point improvement in core EBITDA margin to productivity gains, a favorable product mix, and strong cost discipline across the network. This was achieved despite increased input costs, particularly personnel expenses. The US dollar and euro weakened against the Swiss franc, resulting in a currency headwind of 3.4% in Drug Products and 2.2% in Drug Substances. However, the company's natural hedge worked well, resulting in no material impact on the EBIT margin. For the full year, a currency headwind of around 2% is expected.
Q: How did cash flow perform in the first half, and what are the priorities for cash generation? A: Tania Micki, CFO, reported operating cash flow of CHF93.7 million, down from CHF149.6 million in the prior-year period. The decrease was driven by the timing of tax payments, currency translation effects, and an increase in net working capital from the newly acquired sites. Free cash flow remained positive at CHF15.1 million. One of her key priorities is to drive strong cash conversion, which is fundamental to the capital allocation strategy and long-term value creation. The focus will be on cash generation and net working capital management.
Q: What is the outlook for the remainder of 2026, and how does the company view its midterm prospects? A: Marcel Imwinkelried, CEO, expressed confidence in confirming the full-year guidance of high single-digit growth in local currencies and an EBITDA margin above 23%. The company has a laser focus on executing the EVOLVE+ strategy, ramping up organic growth, and unlocking the full value of the acquisition. The midterm outlook is positive, with expectations of continued profitable growth, CapEx in the lower teens or closer to 10% of sales, and M&A remaining "always on" at the right price and for the right business.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
