(Bloomberg) -- Catalent Inc. shares rose after the troubled contract drug manufacturer gave investors some reassurance about a slashed fiscal full-year outlook and the third delay to its quarterly earnings report. 

Adjusted earnings before interest, taxes, depreciation and amortization will be $725 million to $775 million, down from the earlier view of $1.22 billion to $1.3 billion, Catalent said in a statement. That’s a bigger cut than the company warned of May 8 when it said it expected to reduce its adjusted Ebitda and revenue forecast by at least $400 million each. 

The company had been “overly optimistic” about annual growth, Chief Executive Officer Alessandro Maselli said on a call with investors, and failed to reduce costs quickly enough following its rapid expansion during the pandemic. Offsets to Covid revenue declines have been slower than expected, but the company is making progress.

The guidance “wasn’t any worse than feared,” Vital Knowledge’s Adam Crisafulli wrote in a note to clients, and “investors seem happy that the saga may be nearing its end stages.”  

The shares rose as much as 18%, their biggest intraday gain since Feb. 6. Still, Catalent remains the worst performer in May in the index of S&P 500 health care stocks, down 27% this month so far.

Catalent has been reeling since April 14, when the Somerset, New Jersey-based manufacturer said its financial results would be hurt by high costs and production constraints at three plants. That prompted the shares to sink nearly 29%, their biggest-ever drop. Catalent also named Ricky Hopson as interim chief financial officer, following Thomas Castellano’s departure from the role.

Significant challenges remain for the manufacturer, like lower biotech funding and financial adjustments regarding Covid-related inventory reserves, executives said on the call. Catalent said it still needs more time to complete its fiscal third-quarter report, according to a separate statement. The company received a notice from the New York Stock Exchange that it is out of compliance with continued listing requirements because of its delayed 10-Q form filing.

No Quick Fix

There is “still a ton to be disclosed but doesn’t feel like a quick fix in store here,” Baird analysts Evan Stover and Nicholas Mott wrote in a note to clients.

Revenue will be in a range from $4.25 billion to $4.35 billion, bringing the high end of the forecast down by more than $500 million. Adjusted net income is now expected to be $187 million to $228 million, compared to Catalent’s prior view that topped out at $648 million.

In a statement last week, the company noted “significant issues with its forecasts over the past year.” Revenues at its Bloomington, Indiana plant were incorrectly recognized in the quarters ending in June and September 2022, the company said May 11 in a securities filing.

The challenges have piled onto an already shaky future for Catalent, whose growth was largely driven by prominent partnerships on Covid-19 vaccines with AstraZeneca Plc, Johnson & Johnson and Moderna Inc. The shares closed Thursday at just $32.14, a fraction of their $140 peak during the pandemic.

Analysts say the events over the past weeks may have hurt takeover interest in Catalent. Danaher Corp. shelved a potential offer in April, after earlier making overtures that valued the company at a significant premium.

Investor sentiment is at an all-time low, wrote Jefferies Llc analysts led by David Windley in a note to clients last week. “The operational and forecasting challenges don’t inspire much confidence” for the coming fiscal year, especially as Covid vaccine revenues drop, they said. 

(Updates with analyst comment from fourth paragraph)

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