Catalent, Inc. (CTLT Quick QuoteCTLT - Free Report) reported fourth-quarter fiscal 2022 adjusted earnings per share (EPS) of $1.19, up 2.6% year over year. The bottom line exceeded the Zacks Consensus Estimate by 3.5%.

The adjustments include charges and benefits related to amortization, as well as acquisition, integration and other special items’ costs, among others.

The company’s GAAP EPS was $1.04 in the quarter, up 7.2% year over year.

Revenues in Detail

Revenues grossed $1.31 billion in the reported quarter, up 10.5% year over year. The metric, however, missed the Zacks Consensus Estimate by 0.9%.

At constant exchange rate or CER, revenues were up 15%.

The top line was driven by robust performances by most of its segments in the reported quarter.

Organic net revenues (excluding the impact of acquisitions, divestitures and currency translation) increased 10% year over year.

Full-year revenues were $4.83 billion, reflecting a 20.8% improvement from the year-ago period. The metric lagged the Zacks Consensus Estimate by 0.4%.

At CER, revenues were up 23%, whereas organic net revenues grew by 20%.

Segments in Detail

Effective Jul 1, 2022, Catalent changed its operating structure. The new organizational structure includes a shift from four operating and reporting segments to two segments — Biologics, and Pharma and Consumer Health.

However, the company's prior reporting structure through Jun 30, 2022, included the four segments — Biologics, Softgel and Oral Technologies, Oral and Specialty Delivery, and Clinical Supply Services.

Revenues in the Biologics segment rose 10.6% year over year (up 14% at CER) to $667 million in the quarter under review.

Revenues in the Softgel and Oral Technologies segment increased 16.3% from the year-ago period’s level (up 22% at CER) to $350 million.

The Oral and Specialty Delivery arm recorded revenues of $194 million, up 4.3% and 11% on a reported basis and at CER, respectively, year over year.

Revenues in the Clinical Supply Services business were down 0.9% year over year (up 4% at CER) to $104 million.

Catalent, Inc. Price, Consensus and EPS Surprise

Catalent, Inc. price-consensus-eps-surprise-chart | Catalent, Inc. Quote

Operational Update

In the quarter under review, Catalent’s gross profit rose 11.2% to $488 million. Gross margin expanded 21 basis points (bps) to 37.2%.

Selling, general and administrative expenses rose 22.8% to $226 million year over year.

Adjusted operating profit totaled $262 million, rising 2.7% from the prior-year quarter’s level. Adjusted operating margin in the quarter contracted by 151 bps to 19.9%.

Financial Update

Catalent exited fiscal 2022 with cash and cash equivalents of $449 million compared with $896 million at the end of fiscal 2021. Total debt at the end of fiscal 2022 was $4.20 billion compared with $3.24 billion at the end of fiscal 2021.

Cumulative net cash provided by operating activities at the end of fiscal 2022 was $439 million compared with $433 million a year ago.

Guidance

Catalent has issued its financial outlook for fiscal 2023.

The company projects revenues within $4,975 million-$5,225 million for the full year. The Zacks Consensus Estimate for fiscal 2023 revenues is currently pegged at $5.28 billion.

Our Take

Catalent exited the fourth quarter of fiscal 2022 with better-than-expected earnings. The year-over-year improvement in the top and bottom lines is impressive. Continued strength in its Biologics arm in the quarter under review looks encouraging. Robust performances by the Oral and Specialty Delivery, and Softgel and Oral Technologies segments also raise optimism. Expansion of gross margin also bodes well.

Catalent had undertaken some facility expansion activities during the reported quarter besides inking some strategic deals over the past few months. These developments raise our optimism about the stock.

However, lower-than-expected revenues in the quarter is disappointing. Soft revenues in the Clinical Supply Services segment are a concern. Contraction of the adjusted operating margin in the quarter also raises apprehension.

Zacks Rank and Key Picks

Catalent currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are McKesson Corporation (MCK Quick QuoteMCK - Free Report) , AMN Healthcare Services, Inc. (AMN Quick QuoteAMN - Free Report) and ShockWave Medical, Inc. .

McKesson, carrying a Zacks Rank #2 (Buy), reported first-quarter fiscal 2023 adjusted earnings per share (EPS) of $5.83, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $67.2 billion outpaced the consensus mark by 5.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

McKesson has an estimated long-term growth rate of 9.9%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average being 13%.

AMN Healthcare, sporting a Zacks Rank #1, reported second-quarter 2022 adjusted EPS of $3.31, which beat the Zacks Consensus Estimate by 11.8%. Revenues of $1.43 billion outpaced the consensus mark by 4.8%.

AMN Healthcare has an estimated long-term growth rate of 3.2%. AMN’s earnings surpassed estimates in all the trailing four quarters, the average being 15.7%.

ShockWave Medical reported second-quarter 2022 EPS of 68 cents, which surpassed the Zacks Consensus Estimate by 58.1%. Second-quarter revenues of $120.7 million outpaced the Zacks Consensus Estimate by 12.6%. It currently flaunts a Zacks Rank #1.

ShockWave Medical has an estimated growth rate of 33.1% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average being 180.1%.