Avantor Inc.

04/29/2026 | Press release | Distributed by Public on 04/29/2026 07:03

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's discussion and analysis of financial condition and results of operations
This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those contained in or implied by any forward-looking statements. See "Cautionary factors regarding forward-looking statements."
Basis of presentation
This discussion should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and notes. Pursuant to SEC rules for reports covering interim periods, we have prepared this discussion and analysis to enable you to assess material changes in our financial condition and results of operations since December 31, 2025, the date of our Annual Report. Therefore, we encourage you to read this discussion and analysis in conjunction with our Annual Report.
Overview
During the three months ended March 31, 2026, we recorded net sales of $1,581.4 million, net income of $43.3 million, Adjusted EBITDA of $219.4 million, operating income of $99.5 million, and Adjusted Operating Income of $190.6 million. Net sales for the three months ended March 31, 2026 remained flat on a year-over-year basis, which included a 4.1% organic net sales decrease compared to the same period in 2025. See "Reconciliations of non-GAAP measures" for reconciliations of net income to Adjusted EBITDA, net income margin to Adjusted EBITDA margin, operating income to Adjusted Operating Income, and operating income margin to Adjusted Operating Income margin. See "Results of operations" for a reconciliation and explanation of changes of net sales growth (decline) to organic net sales growth (decline).
Segment Change
Effective January 1, 2026, we revised our internal operating model and reporting structure and now operate and report our results through two operating segments, which are also our reportable segments: Bioscience & Medtech Products and VWR Distribution & Services. This structure is consistent with how
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our Chief Executive Officer, who is our CODM, assesses performance and allocates resources. This segment change did not impact our consolidated operating results. Segment disclosures, including those for comparative periods presented, have been revised to conform to the current period presentation.
Factors and current trends affecting our business and results of operations
The following updates the factors and current trends disclosed in our Annual Report. These updates may affect our performance and financial condition in future periods.
We have been impacted by inflationary pressures
We have experienced inflationary pressures across all of our cost categories. While we have implemented pricing and productivity measures to combat these pressures, they may continue to adversely impact our results.
Fluctuations in foreign currency rates impact our results
Our consolidated results of operations are comprised of many different functional currencies that translate into our U.S. dollar reporting currency. The movement of the U.S. dollar against those functional currencies, particularly the Euro, has caused significant variability in our results and may continue to do so in the future.
Our results may be impacted by changes in trade policy
Recent developments in U.S. trade policy have reduced certain tariff-related pressures; however, ongoing uncertainty remains, and changes in trade policy could adversely affect our results in future periods.
Goodwill impairment risk - VWR Distribution
During the first quarter of 2026, a sustained decline in our share price and market capitalization constituted a triggering event that required an interim goodwill impairment assessment for the VWR Distribution reporting unit. The assessment indicated that the estimated fair value of the reporting unit exceeded its carrying value by a limited margin, and therefore no impairment was recognized during the quarter.
The limited excess of fair value over carrying value reflects business conditions and valuation inputs that are sensitive to adverse changes, including operating performance, market conditions, and other assumptions used in estimating fair value. These conditions represent a known uncertainty that could materially affect future results. We continue to monitor these factors closely and are pursuing operational and strategic actions intended to improve the performance of the VWR Distribution business.
If market conditions deteriorate further, including a continued decline in market capitalization or reductions to the financial projections for the VWR Distribution reporting unit, a material non-cash goodwill impairment charge could be required in a future reporting period (see note 7).
Key indicators of performance and financial condition
To evaluate our performance, we monitor a number of key indicators. As appropriate, we supplement our results of operations determined in accordance with GAAP with certain non-GAAP financial measurements that we believe are useful to investors, creditors and others in assessing our performance. These measures should not be considered in isolation or as a substitute for reported GAAP results because
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they may include or exclude certain items as compared to similar GAAP-based measures, and such measures may not be comparable to similarly titled measures reported by other companies. Rather, these measures should be considered as an additional way of viewing aspects of our operations that provide a more complete understanding of our business.
The key indicators that we monitor are as follows:
•Net sales, gross margin, operating income, operating income margin, net income or loss and net income or loss margin. These measures are discussed in the section entitled "Results of operations";
•Organic net sales growth (decline), which is a non-GAAP measure discussed in the section entitled "Results of operations." Organic net sales growth (decline) eliminates from our reported net sales change the impacts of revenues from acquisitions and divestitures that occurred in the last year (as applicable) and changes in foreign currency exchange rates. We believe that this measurement is useful to investors as a way to measure and evaluate our underlying commercial operating performance consistently across our segments and the periods presented. This measurement is used by our management for the same reason. Reconciliations to the change in reported net sales, the most directly comparable GAAP financial measure, are included in the section entitled "Results of operations";
•Adjusted EBITDA and Adjusted EBITDA margin, which are non-GAAP measures discussed in the section entitled "Results of operations." Adjusted EBITDA is our net income or loss adjusted for the following items: (i) interest expense, (ii) income tax expense, (iii) amortization of acquired intangible assets, (iv) depreciation expense, (v) losses on extinguishment of debt, (vi) charges associated with the impairment of certain assets, (vii) gain on sale of business, and (viii) certain other adjustments. Adjusted EBITDA margin is Adjusted EBITDA divided by net sales as determined under GAAP. We believe that these measurements are useful to investors as ways to analyze the underlying trends in our business consistently across the periods presented. These measurements are used by our management for the same reason. A reconciliation of net income or loss and net income or loss margin, the most directly comparable GAAP financial measures, to Adjusted EBITDA and Adjusted EBITDA margin, respectively, are included in the section entitled "Reconciliations of non-GAAP measures";
•Adjusted Operating Income and Adjusted Operating Income margin, which are non-GAAP measures discussed in the section entitled "Results of operations." Adjusted Operating Income is our operating income or loss adjusted for the following items: (i) amortization of acquired intangible assets, (ii) charges associated with the impairment of certain assets, (iii) gain on sale of business, and (iv) certain other adjustments. This measurement is our segment reporting profitability measure under GAAP. Adjusted Operating Income margin is Adjusted Operating Income divided by net sales as determined under GAAP. We believe that these measurements are useful to investors as ways to analyze the underlying trends in our business consistently across the periods presented. These measurements are used by our management for the same reason. A reconciliation of operating income or loss and operating income or loss margin, the most directly comparable GAAP financial measures, to Adjusted Operating Income and Adjusted Operating Income margin, respectively, are included in the section entitled "Reconciliations of non-GAAP measures";
•Cash flows from operating activities, which we discuss in the section entitled "Liquidity and capital resources-Historical cash flows";
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•Free cash flow, which is a non-GAAP measure, is equal to our cash flows from operating activities, less capital expenditures, plus direct transaction costs and income taxes paid related to acquisitions and divestitures (as applicable) in the period. We believe that this measurement is useful to investors as it provides a view on the Company's ability to generate cash for use in financing or investing activities. This measurement is used by management for the same reason. A reconciliation of cash flows from operating activities, the most directly comparable GAAP financial measure, to free cash flow, is included in the section entitled "Liquidity and capital resources-Historical cash flows."
Results of operations
We present results of operations in the same manner in which we manage our business, evaluate performance and allocate resources. We also provide a discussion of net sales and Adjusted Operating Income by reportable segment: Bioscience & Medtech Products and VWR Distribution & Services. Corporate costs are managed on a standalone basis, certain portions of which are allocated to our reportable segments.
Executive summary
(dollars in millions)
Three months ended March 31, Change
2026 2025
Net sales $ 1,581.4 $ 1,581.4 $ -
Gross margin 31.7 % 33.8 % (210) bps
Operating income
$ 99.5 $ 147.4 $ (47.9)
Operating income margin
6.3 % 9.3 % (300) bps
Net income
$ 43.3 $ 64.5 $ (21.2)
Net income margin
2.7 % 4.1 % (140) bps
Adjusted EBITDA $ 219.4 $ 269.5 $ (50.1)
Adjusted EBITDA margin 13.9 % 17.0 % (310) bps
Adjusted Operating Income $ 190.6 $ 242.8 $ (52.2)
Adjusted Operating Income margin 12.1 % 15.4 % (330) bps
Net sales for the first quarter were flat on a year-over-year basis. Gross margin decreased, reflecting lower sales volume, inflationary pressures, higher inventory reserves and freight costs, partially offset by a favorable foreign currency impact. These factors reduced gross profit compared to the prior-year period. Lower gross profit, inflationary pressures on compensation expense and an unfavorable foreign currency impact on SG&A expenses resulted in reduced operating income, Adjusted Operating Income and Adjusted EBITDA.
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Net Sales
Three months ended
(in millions)
Three months ended March 31,
Reconciliation of net sales growth (decline) to organic net sales growth (decline)
Net sales growth (decline) Foreign currency impact Organic net sales growth (decline)
2026
2025
Bioscience & Medtech Products $ 431.4 $ 426.4 $ 5.0 $ 13.6 $ (8.6)
VWR Distribution & Services 1,150.0 1,155.0 (5.0) 50.7 (55.7)
Total $ 1,581.4 $ 1,581.4 $ - $ 64.3 $ (64.3)
Net sales for the three months ended March 31, 2026 remained flat on a year-over-year basis. The period included $64.3 million, or 4.1%, of favorable foreign currency impact, while organic net sales decreased by $64.3 million or 4.1%.
In the Bioscience & Medtech Products segment, net sales increased by $5.0 million, or 1.2%, which included $13.6 million, or 3.2%, of favorable foreign currency impact. Organic net sales decreased by $8.6 million, or 2.0%. The sales decrease was primarily driven by lower sales volume in the Fluid Handling and NuSil businesses, partially offset by higher sales volume in Process Chemicals.
In the VWR Distribution & Services segment, net sales decreased by $5.0 million, or 0.4%, which included $50.7 million, or 4.4%, of favorable foreign currency impact. Organic net sales decreased by $55.7 million or 4.8%. The sales decrease was primarily driven by lower sales volumes of lab consumables and equipment and instrumentation in the VWR Channel.
Gross margin
Three months ended March 31,
Change
2026
2025
Gross margin 31.7 % 33.8 % (210) bps
Three months ended
Gross margin for the three months ended March 31, 2026 contracted by 210 basis points, reflecting lower sales volume, inflationary pressures, higher inventory reserves and freight costs, partially offset by a favorable foreign currency impact.
Operating income
(in millions)
Three months ended March 31,
Change
2026
2025
Gross profit $ 500.7 $ 534.9 $ (34.2)
Operating expenses 401.2 387.5 13.7
Operating income
$ 99.5 $ 147.4 $ (47.9)
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Three months ended
Operating income for the three months ended March 31, 2026 decreased primarily due to lower gross profit, as previously discussed, and higher SG&A expenses, driven mainly by inflationary pressures on compensation expense and unfavorable foreign exchange fluctuations.
Net income
(in millions)
Three months ended March 31,
Change
2026
2025
Operating income
$ 99.5 $ 147.4 $ (47.9)
Interest expense, net (42.9) (42.2) (0.7)
Loss on extinguishment of debt (0.6) - (0.6)
Other expense, net
(0.5) (19.5) 19.0
Income tax expense
(12.2) (21.2) 9.0
Net income
$ 43.3 $ 64.5 $ (21.2)
Three months ended
Net income for the three months ended March 31, 2026 decreased primarily due to lower operating income, as previously discussed, partially offset by the absence of pension termination charges incurred in the prior year and lower income tax expense from reduced taxable income.
Adjusted EBITDA and Adjusted EBITDA margin
For reconciliations of Adjusted EBITDA and Adjusted EBITDA margin to net income and net income margin, respectively, the most directly comparable measures under GAAP, see "Reconciliations of non-GAAP financial measures."
(dollars in millions)
Three months ended March 31,
Change
2026
2025
Adjusted EBITDA
$ 219.4 $ 269.5 $ (50.1)
Adjusted EBITDA margin 13.9 % 17.0 % (310) bps
Three months ended
For the three months ended March 31, 2026, Adjusted EBITDA decreased by $50.1 million, or 18.6%, which included a favorable foreign currency translation impact of $8.9 million or 3.3%. The remaining decline of $59.0 million, or 21.9%, was primarily driven by lower gross profit and higher SG&A costs, as previously discussed.
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Adjusted Operating Income and Adjusted Operating Income margin
For reconciliations of Adjusted Operating Income and Adjusted Operating Income margin to operating income and operating income margin, respectively, the most directly comparable measures under GAAP, see "Reconciliations of non-GAAP financial measures."
(dollars in millions)
Three months ended March 31,
Change
2026
2025
Adjusted Operating Income:
Bioscience & Medtech Products $ 102.7 $ 114.5 $ (11.8)
VWR Distribution & Services 105.4 147.9 (42.5)
Corporate (17.5) (19.6) 2.1
Total $ 190.6 $ 242.8 $ (52.2)
Adjusted Operating Income margin 12.1 % 15.4 % (330) bps
Three months ended
Adjusted Operating Income decreased by $52.2 million, or 21.5%, which included a favorable foreign currency translation impact of $7.8 million, or 3.2%. The remaining decline of $60.0 million, or 24.7%, is further discussed below.
In the Bioscience & Medtech Products segment, Adjusted Operating Income declined by $11.8 million or 10.3%, or 13.1% when adjusted for a favorable foreign currency impact. The decrease was primarily due to lower sales volume, higher inventory reserves, unfavorable product mix and inflationary pressures on compensation expense.
In the VWR Distribution & Services segment, Adjusted Operating Income declined by $42.5 million or 28.7%, or 31.8% when adjusted for a favorable foreign currency impact. The decrease was primarily driven by lower sales volume, inflationary pressures and higher freight costs.
In Corporate, Adjusted Operating Income decreased by $2.1 million due to various immaterial factors.
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Reconciliations of non-GAAP measures
The following table presents the reconciliation of net income and net income margin to Adjusted EBITDA and Adjusted EBITDA margin, respectively:
(dollars in millions, % based on net sales)
Three months ended March 31,
2026
2025
$ % $ %
Net income
$ 43.3 2.7 % $ 64.5 4.1 %
Interest expense, net 42.9 2.7 % 42.2 2.7 %
Income tax expense
12.2 0.9 % 21.2 1.3 %
Depreciation and amortization 105.0 6.6 % 99.7 6.3 %
Loss on extinguishment of debt 0.6 - % - - %
Restructuring and severance charges1
15.1 1.0 % 4.4 0.3 %
Transformation expenses2
- - % 15.4 1.0 %
Reserve for certain legal matters, net3
0.4 - % - - %
Other4
(0.1) - % 4.0 0.2 %
Pension termination charges5
- - % 18.1 1.1 %
Adjusted EBITDA $ 219.4 13.9 % $ 269.5 17.0 %
━━━━━━━━━
1.Reflects the incremental expenses incurred in the period related to restructuring initiatives to increase profitability and productivity. Costs included in this caption are specific to employee severance, site-related exit costs, and contract termination costs.
2.Represents incremental expenses directly associated with the Company's former cost transformation initiative, which concluded in 2025. These expenses are primarily related to the cost of external advisors.
3.Represents charges and legal costs, net of recoveries, incurred in connection with certain litigation and other contingencies that management evaluates separately from core operating performance.
4.Represents net foreign currency (gain) loss from financing activities, other stock-based compensation expense (benefit) and a purchase price adjustment in 2025 related to the sale of our Clinical Services business in 2024.
5.As described in note 12 to our unaudited condensed consolidated financial statements.
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The following table presents the reconciliation of net income and net income margin to Adjusted Operating Income and Adjusted Operating Income margin, respectively, and includes operating income and operating income margin (the most directly comparable GAAP measures) as intermediate subtotals:
(dollars in millions, % based on net sales)
Three months ended March 31,
2026
2025
$ % $ %
Net income
$ 43.3 2.7 % $ 64.5 4.1 %
Interest expense, net 42.9 2.7 % 42.2 2.7 %
Income tax expense
12.2 0.9 % 21.2 1.3 %
Loss on extinguishment of debt 0.6 - % - - %
Other expense, net
0.5 - % 19.5 1.2 %
Operating income
99.5 6.3 % 147.4 9.3 %
Amortization 75.7 4.8 % 73.9 4.7 %
Restructuring and severance charges1
15.1 1.0 % 4.4 0.3 %
Transformation expenses2
- - % 15.4 1.0 %
Reserve for certain legal matters, net3
0.4 - % - - %
Other4
(0.1) - % 1.7 0.1 %
Adjusted Operating Income $ 190.6 12.1 % $ 242.8 15.4 %
━━━━━━━━━
1.Reflects the incremental expenses incurred in the period related to restructuring initiatives to increase profitability and productivity. Costs included in this caption are specific to employee severance, site-related exit costs, and contract termination costs.
2.Represents incremental expenses directly associated with the Company's former cost transformation initiative, which concluded in 2025. These expenses are primarily related to the cost of external advisors.
3.Represents charges and legal costs, net of recoveries, incurred in connection with certain litigation and other contingencies that management evaluates separately from core operating performance.
4.Represents other stock-based compensation expense (benefit) and a purchase price adjustment in 2025 related to the sale of our Clinical Services business in 2024.
Liquidity and capital resources
We fund short-term cash requirements primarily from operating cash flows and credit facilities. The majority of our long-term financing is from indebtedness. For the three months ended March 31, 2026, we generated $58.7 million of cash from operating activities, ended the quarter with $279.3 million of cash and cash equivalents and our availability under our credit facilities was $1,380.5 million.
We have required term loan payments of $31.1 million due in the next twelve months.
In October 2025, our Board of Directors authorized the repurchase of up to $500.0 million of our common stock. Repurchases may be funded through available cash, borrowings under existing credit facilities, or other financing arrangements. The program may be modified, suspended, or terminated at any time. As of March 31, 2026, $425.0 million remained available for repurchase under the program.
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Liquidity
The following table presents our primary sources of liquidity:
(in millions)
March 31, 2026
Unused availability under our revolving credit facility:
Capacity $ 1,400.0
Undrawn letters of credit outstanding (19.5)
Unused availability $ 1,380.5
Cash and cash equivalents 279.3
Total liquidity $ 1,659.8
Based on the combination of the unused availability under our revolving credit facility and cash and cash equivalents, we believe that we have sufficient capital resources to meet our liquidity needs.
Our debt agreements include representations and covenants that we believe are usual and customary. The credit facility includes a leverage-based financial maintenance covenant and a consolidated interest coverage ratio financial maintenance covenant, each of which is subject to customary definitions, adjustments and exclusions. As of March 31, 2026, our net leverage and consolidated interest coverage ratio were within the covenant requirements.
At March 31, 2026, $227.7 million or 81.5% of our $279.3 million in cash and cash equivalents was held by our non-U.S. subsidiaries and may be subject to certain taxes upon repatriation, primarily where foreign withholding taxes apply.
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Historical cash flows
The following table presents a summary of cash provided by (used in) various activities:
(in millions)
Three months ended March 31,
Change
2026 2025
Operating activities:
Net income
$ 43.3 $ 64.5 $ (21.2)
Non-cash items1
116.2 133.9 (17.7)
Working capital changes2
(48.1) (38.2) (9.9)
All other (52.7) (50.9) (1.8)
Total $ 58.7 $ 109.3 $ (50.6)
Investing activities:
Capital expenditures (33.5) (28.0) (5.5)
Other 0.8 (0.9) 1.7
Total $ (32.7) $ (28.9) $ (3.8)
Financing activities (107.2) (33.6) (73.6)
━━━━━━━━━
1.Consists of typical non-cash charges including depreciation and amortization, stock-based compensation expense, deferred income tax expense and others.
2.Includes changes to our accounts receivable, inventory, contract assets and accounts payable.
Cash flows from operating activities provided $50.6 million less cash in 2026, primarily due to a reduction in net income, as previously discussed, and higher net working capital requirements.
Investing activities used $3.8 million more cash in 2026. The change was primarily attributable to a modest increase in capital expenditures compared to the prior year.
Financing activities used $73.6 million more cash in 2026, primarily due to the higher prepayments of term loans.
Free cash flow
(in millions)
Three months ended March 31,
Change
2026 2025
Net cash provided by operating activities $ 58.7 $ 109.3 $ (50.6)
Capital expenditures (33.5) (28.0) (5.5)
Divestiture-related transaction expenses and taxes paid
- 0.8 (0.8)
Free cash flow $ 25.2 $ 82.1 $ (56.9)
Free cash flow was $56.9 million lower in 2026, primarily due to lower cash flow from operating activities, as previously discussed, and a modest increase in capital expenditures.
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Indebtedness
For information about our indebtedness, refer to the section entitled "Liquidity" and note 9 to our unaudited condensed consolidated financial statements included in Part I, Item 1 - "Financial statements."
Critical accounting policies and estimates
We update our critical accounting policies and estimates in interim periods only for material changes since year-end, including significant changes in assumptions, methodology, sensitivity, or where new information or events materially affect these estimates.
Testing goodwill for impairment
Our consolidated balance sheet includes significant amounts of goodwill and other intangible assets. At March 31, 2026, the combined carrying value of goodwill and other intangible assets, net of accumulated amortization and impairment charges, was $8,050.8 million, representing approximately 69% of our total assets. As a result, impairment assessments for these assets involve significant management judgment and represent a critical accounting estimate.
Required Annual Assessment
On October 1 of each year, we perform annual impairment testing of goodwill and indefinite-lived intangible assets, or more frequently if events or changes in circumstances indicate that the carrying value of those assets may not be recoverable. The impairment analysis for goodwill and indefinite-lived intangible assets consists of an optional qualitative assessment, which may be followed by a quantitative analysis.
The qualitative assessment requires identification and evaluation of relevant events or circumstances that could indicate impairment and an assessment of whether it is more likely than not that a reporting unit's fair value is less than its carrying value. The quantitative impairment test requires estimation of the fair value of our reporting units using a weighted average of a discounted cash flow method and a guideline public company method. These valuation methods require management to make numerous assumptions, including but not limited to future profitability and cash flows, net sales, gross margin, SG&A expenses, capital expenditures, investments in debt-free net working capital, discount rates reflecting current market assumptions, the weighting of valuation methods, and the selection of comparable publicly traded companies. Variations in any of these assumptions could result in materially different estimates of fair value.
Our estimates are based on historical performance, management's knowledge and experience, and overall economic conditions, including projections of future earnings potential. Developing forecasted cash flows requires evaluation of intermediate- to long-term performance, including assumptions regarding revenue growth, operating margins, inflation, capital requirements, and working capital management. Estimating appropriate discount rates requires judgment in selecting risk premiums, which can materially impact valuation outcomes. The selection of peer companies and the weighting of valuation approaches under the market method also involve judgment, and alternative assumptions could result in materially different conclusions.
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2025 Distribution Reporting Unit Impairment
As a result of sustained declines in our publicly quoted share price and market capitalization, together with deterioration in the operating results of our Distribution reporting unit, we performed an interim goodwill impairment assessment as of September 30, 2025. The deterioration in operating performance reflected lower sales volumes and a decline in gross margin, which negatively impacted projected future cash flows for the reporting unit relative to prior expectations.
Based on the results of that impairment test, the carrying amount of the Distribution reporting unit exceeded its estimated fair value, resulting in a non-deductible, non-cash goodwill impairment charge of $785.0 million, which was recorded in the consolidated statement of operations for the three months ended September 30, 2025. Following the impairment charge, the carrying value of the Distribution reporting unit was approximately $3,500.0 million, of which approximately $2,000.0 million was comprised of goodwill. No impairment of other long-lived assets within the Distribution reporting unit was identified.
All other reporting units tested were not impaired, as their estimated fair values exceeded their respective carrying amounts as of the interim testing date.
Following the impairment charge, the carrying value of the Distribution reporting unit approximated its estimated fair value. As a result, a meaningful portion of the remaining carrying value of this reporting unit, including the associated goodwill, was considered at risk of further impairment. Recognition of additional impairment charges could be required in future periods if operating performance, market conditions, or other valuation assumptions were to deteriorate further.
Since October 1, 2025 is our annual impairment testing date, management performed the required annual assessment as of that date, including a review of key assumptions, market indicators, and other relevant factors. No conditions were identified that differed materially from those considered in the September 30, 2025 interim impairment analysis. Accordingly, the conclusions reached in that interim test remained appropriate, and no additional impairment was recorded as of October 1, 2025.
2026 Interim Impairment Test
As described in note 7, effective January 1, 2026, we updated our reporting unit structure. The VWR Distribution reporting unit includes the operations that previously comprised our Distribution reporting unit, and goodwill was reassigned using a relative fair value allocation method. The VWR Distribution reporting unit is included within the VWR Distribution & Services reportable segment.
During the quarter ended March 31, 2026, a sustained decline in our share price and market capitalization represented a triggering event under the goodwill impairment guidance. As a result, we performed an interim goodwill impairment assessment for all of our reporting units (see note 7).
As of March 31, 2026, the estimated fair value of the VWR Distribution reporting unit exceeded its carrying value by approximately 5.5%, and therefore no goodwill impairment was recognized during the quarter. Goodwill allocated to the VWR Distribution reporting unit totaled approximately $2,800.0 million as of the testing date. The limited excess of fair value over carrying value indicates that the valuation of this reporting unit is sensitive to adverse changes in key assumptions, including future operating performance, cash flows, discount rates, and market conditions. A modest increase in discount rates or a reduction in forecasted cash flows could eliminate this excess and result in a goodwill impairment.
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The estimated fair values of our remaining reporting units exceeded their respective carrying values by greater margins as of the testing date.
We continue to monitor internal and external factors that could affect the estimated fair value of our reporting units, including trends in our share price and market capitalization, macroeconomic conditions, and operating performance. If market conditions deteriorate further, including a continued decline in market capitalization or reductions to the financial projections for the VWR Distribution reporting unit, a material non-cash goodwill impairment charge could be required in a future reporting period.
Avantor Inc. published this content on April 29, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on April 29, 2026 at 13:04 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]