Evotec (NASDAQ:EVO) reported preliminary unaudited results for the second quarter and first half of 2026 and lowered its full-year outlook, citing delayed strategic partnership revenue, slower conversion of commercial activity into revenue and longer timelines for new partnership agreements.
Chief Executive Officer Christian Wojczewski said the company had previously warned of a difficult first half, reflecting continued weakness in the early drug discovery market and the absence of a $25 million Sandoz licensing payment recorded in the prior-year period. However, he said expectations for a stronger second half have been revised because revenue from strategic partnerships is now expected to materialize later than previously anticipated.
Revenue and EBITDA Decline in First Half
Chief Financial Officer Claire Hinshelwood said group revenue for the second quarter is expected to decline about 16% year over year to €143.5 million. For the first half of 2026, revenue is expected to fall 19% to €300.1 million.
In Evotec’s Discovery and Preclinical Development, or D&PD, segment, second-quarter revenue is expected to decline approximately 15% to €108.1 million, while first-half revenue is expected to fall 16% to €227.9 million. In Just – Evotec Biologics, or JEB, second-quarter revenue is expected to decline 17% to €35.4 million, and first-half revenue is expected to fall 29% to €72.3 million.
Hinshelwood said unfavorable foreign exchange movements, driven by the U.S. dollar and British pound, are expected to represent a €13 million headwind to first-half revenue.
Adjusted group EBITDA is expected to be negative €20.8 million in the second quarter and negative €42.7 million for the first six months of 2026.
Evotec Lowers Full-Year Outlook
Evotec now expects full-year 2026 group revenue of approximately €570 million to €610 million at incurred foreign exchange rates, or €595 million to €635 million at constant exchange rates. Adjusted group EBITDA is expected to range from negative €70 million to negative €105 million at incurred foreign exchange rates, or negative €60 million to negative €90 million at constant exchange rates.
Wojczewski said the guidance change reflects three main factors:
- Delayed revenue from existing strategic partnerships: This accounts for about 40% of the revenue difference versus the previous outlook. Wojczewski said these revenues are delayed, not lost, and are expected to be recognized in 2027 rather than 2026.
- Lower expected contributions from new strategic partnerships: This represents about 45% of the revenue difference. Evotec now expects longer timelines to finalize new agreements, meaning any deals reached this year are unlikely to contribute meaningfully to 2026 revenue.
- Slower sales-to-revenue conversion: About 15% of the revenue difference is tied to lower-than-expected conversion in 2026. Wojczewski said commercial activity has improved, but revenue recognition has lagged earlier assumptions.
Hinshelwood said the EBITDA impact is significant because of Evotec’s high fixed-cost base, with a high proportion of the revenue reduction flowing through to earnings.
Commercial Indicators Improve Despite Revenue Lag
Wojczewski said leading commercial indicators in D&PD improved during the first half, particularly in the base business excluding large strategic partnerships. He said inbound inquiries increased by approximately 30%, while the number of proposals rose by more than 45%.
In the base D&PD business, including standalone services and integrated programs but excluding large strategic partnerships, net sales increased approximately 28% in the first half compared with the first half of 2025. Proposal value increased by more than 20%.
Wojczewski said the company has also shortened its average sales cycle by more than 15% in the first half of 2026. Still, he said revenue conversion depends on the type of customer engagement. Standalone services typically convert to revenue in about three to six months, integrated programs in about nine to 24 months, and strategic partnerships in about 12 to 24 months.
“The challenge we face in 2026 is one of conversion timing,” Wojczewski said. “As commercial complexity increases, the time required for this activity to translate into revenue increases as well.”
Strategic Partnership Pipeline Remains Active
During the question-and-answer session, Wojczewski said Evotec’s strategic partnership pipeline includes roughly 10 to 20 opportunities, generally involving pharma or biotech companies and often big pharma partners. He said areas of discussion include obesity, women’s health, kidney and renal diseases, and capabilities such as molecular glues, cell therapy, iPSC and omics.
Wojczewski said about 15% of the opportunities are in a very late stage and could still close toward the end of the year, though they are not expected to materially affect 2026 revenue. He said roughly 60% are in early- to late-stage term sheet discussions, with the remaining 25% in early discussions or due diligence.
Asked about the company’s collaboration with Bristol Myers Squibb, Wojczewski described the partnership as “very healthy” and said 2026 is a transition year. He said Evotec has been investing in its omics platforms, including proteomics and transcriptomics screening, and expects the BMS collaboration to return to growth next year.
Liquidity, Cost Savings and JEB Developments
Evotec reported total liquidity of €465.6 million as of June 30, up from €444.8 million at the end of the first quarter. Hinshelwood said the increase was primarily driven by gross proceeds of approximately $100 million from Gilead’s acquisition of EVOequity portfolio company Tubulis, as well as a recent €116 million convertible bond placement. First-half liquidity also reflected a scheduled debt repayment of approximately €65.8 million.
The company said its Horizon transformation program remains on track. Wojczewski said Evotec expects total run-rate cost savings of about €75 million by the end of 2027, with 20% to 30% of that amount expected to be realized in 2026. Savings are expected to become apparent in the second half of this year.
In JEB, Wojczewski said customer interest remains strong in Evotec’s continuous bioprocessing offerings. He highlighted the June introduction of J.TRAIN, a model designed to allow customers to deploy Evotec’s proprietary continuous manufacturing technology in their own facilities. In response to an analyst question, Wojczewski said J.TRAIN should be viewed as a strategic decision for customers and said investors should not expect a signed deal this year.
Evotec plans to publish its full financial results on Aug. 13.
About Evotec (NASDAQ:EVO)
Evotec SE (NASDAQ:EVO) is a global biotechnology company headquartered in Hamburg, Germany, specializing in drug discovery and development partnerships. The company leverages its integrated discovery platforms to support pharmaceutical and biotech clients in advancing novel therapies from target identification through preclinical development.
Evotec’s service offering encompasses high-throughput screening, bioanalytics, combinatorial chemistry, structural biology, pharmacology, and computational drug design.
