Shares of Evotec SE (EVO) are taking a beating on Tuesday, and it's not hard to see why. The drug discovery company just announced a sweeping strategic overhaul that involves cutting jobs, closing sites, and bracing for what it frankly calls a "transition year." It's the kind of news that makes investors nervous, even when management promises it's all for the best in the long run.
The new plan, dubbed "Horizon," is essentially a corporate makeover aimed at reshaping how Evotec operates. The goal? To improve profit margins and position the company for what it hopes will be a brighter future in the competitive drug discovery and preclinical development market. This isn't the first time Evotec has tried to hit the reset button; the Horizon initiative builds on earlier efforts like the "Priority Reset" from the past couple of years.
"Horizon positions Evotec for stronger performance through 2027 and lays the foundation for further optimization and intelligent scaling toward 2030," said CEO Christian Wojczewski. Translation: We're making some tough cuts now so we can grow smarter later.
Fewer Offices, Fewer People
So, what does this transformation actually involve? For starters, Evotec is simplifying its organizational chart. It plans to consolidate its global expertise into new "Centers of Excellence," which is corporate-speak for grouping smart people together to hopefully spark more innovation.
More concretely—and more painfully—the company is planning a significant reduction in its physical footprint. It currently operates out of 19 locations worldwide. Over the next two years, that number is set to shrink to just 10 sites. And with fewer offices come fewer jobs. The restructuring is expected to affect up to 800 positions across various locations.
The company says it has already started implementing Horizon, with the first operational effects expected in the second half of 2026. The whole transformation should be "substantially completed" by the end of 2027. That's a multi-year process of change, which is never easy.
The Financial Math: Savings Today, Costs Tomorrow
Every corporate restructuring comes with a promise of future savings, and Evotec's is no different. The company projects that Horizon will generate approximately €75 million (around $87.3 million) in annual run-rate cost savings by 2027.
But you don't get those savings for free. To make this happen, Evotec expects to take restructuring-related cash charges of roughly €100 million between 2026 and 2028. There could also be some non-cash impairment charges along the way. It's a classic case of spending money to (hopefully) save more money down the line.
A Bumpy Road to 2030
Alongside the restructuring news, Evotec shared some financial updates that paint a picture of the journey ahead. For the current fiscal year 2025, preliminary sales are about €788 million, with adjusted EBITDA around €41 million. Both figures are within the company's previously communicated guidance, so no surprises there.
The real story is in the outlook for 2026. The company expects revenue to be between €700 million and €780 million, which is roughly flat to down slightly. More notably, it forecasts adjusted EBITDA of €0 to €40 million. That's a razor-thin margin, and executives are openly calling 2026 a "transition year" as the restructuring takes hold.
The long-term vision, however, is much sunnier. Evotec expects its revenues to exceed €1 billion sometime between 2026 and 2030. More importantly for profitability, it projects adjusted EBITDA margins will reach 20% by 2028 and then surpass that level by the end of the decade. That's the pot of gold at the end of this rainbow—if the company can navigate the stormy weather first.
For now, the market's vote is clear. Evotec shares were down 10.40% at $2.71 at the time of publication, hitting a new 52-week low. Investors often hate uncertainty, and a multi-year restructuring with a designated "transition year" of weak profits is the definition of uncertainty. The company is betting that short-term pain will lead to long-term gain. On Tuesday, shareholders seemed focused squarely on the pain.
