Avantor Inc (NYSE:AVTR) on Friday reported adjusted EPS of 23 cents in line with consensus.

The life science tools company reported sales of $1.58 billion, missing the consensus of $1.61 billion.

Sales fell 6% compared to the first quarter of 2024. Foreign currency translation had a negative impact of 1%, resulting in a sales decline of 2% on an organic basis.

Laboratory Solutions sales were $1.07 billion, a reported decrease of 8%. Sales decreased by 3% organically.

Bioscience Production sales were $516.4 million, a reported decrease of 1%, flat on an organic basis.

“While earnings and margin performance were in line with our plan, Lab Solutions revenue was impacted by reduced demand – particularly in our Education and Government end market – following recent policy changes,” said Michael Stubblefield, president and CEO.

“We are updating our full-year outlook to reflect ongoing funding and policy-related headwinds. While we are not satisfied with our current growth trajectory, we are implementing a comprehensive strategy to strengthen our Lab Solutions segment and are committed to moving with urgency to improve performance across the business,” Stubblefield added.

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Net income increased to $64.5 million from $60.4 million in the first quarter of 2024. Net Income margin was 4.1%.

Adjusted EBITDA was $269.5 million, and Adjusted EBITDA margin was 17.0%.

Adjusted Operating Income was $242.8 million, and the margin was 15.4%.

Avantor announced significant actions across the business to accelerate growth and enhance its cost structure, increasing the cost transformation target to $400 million in gross run-rate savings by the end of 2027.

On Friday, Avantor announced that Stubblefield intends to step down as director, president, and CEO. The Board has initiated a search process to identify the company’s next CEO.

William Blair analyst Matt Larew writes, “While we acknowledge that Avantor has a possible path to outperformance as end-markets continue to return and more of the now $400 million in targeted cost savings take hold, we think the company’s below-peer growth and margin profile make the discount to peers warranted at this time.”

Larew keeps the Market Perform rating.

Price Action: AVTR stock is down 19.6% at $12.44 at last check Friday.

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