Cohance Lifesciences Navigates Transition: Q3 & 9M FY26 Performance Review

Cohance Lifesciences Limited, a prominent player in the pharmaceutical CDMO and API+ segments, recently released its financial results for the third quarter and nine months ended December 31, 2025 (9M FY26). The period has been characterized by significant transitions, with the company facing headwinds from customer-led inventory normalisation and shifts in product portfolio mix. Despite these challenges, management remains focused on strategic execution, capacity expansion, and strengthening its core technological platforms, positioning the company for a return to growth in the upcoming fiscal year.

For 9M FY26, Cohance reported a consolidated revenue of INR 1649.4 crore, marking a 6.7% decline year-on-year. This performance was notably impacted by destocking in two large commercial products and volume moderation in certain mature products nearing patent expiry. Adjusted EBITDA for the nine-month period stood at INR 348 crore, a 43% decrease from the previous year, with adjusted EBITDA margins at 21.1%. The decline in profitability was attributed to a shift in business mix towards lower-margin commercial products and advanced CDMO programs, coupled with operating deleverage from lower revenue absorption. However, gross margins showed resilience, improving to 72.8%, supported by product mix and the consolidation of subsidiaries. The company also generated a healthy free cash flow of INR 175 crore, maintaining a strong liquidity position with INR 432 crore cash on books.

| Financial Metric (9M FY26) | Value (INR Crore) | | :------------------------- | :---------------- | | | Total Revenue | 1649.4 | | Adjusted EBITDA | 348 | | Adjusted PAT | 151.3 | | Free Cash Flow | 175 | | Cash on Books | 432 | | Capex Deployed | 161 |

Segmental Performance and Strategic Focus

The Pharma CDMO segment, contributing 39% of the 9M FY26 revenue, experienced a 12.7% year-on-year decline when adjusted for destocking. However, underlying growth remained in high double digits. The company is actively deepening customer engagement, with RFQ intensity doubling year-to-date and 16+ innovator and biotech audits conducted. A significant highlight is the progression of 9 Phase III assets, with 4 expected to enter commercial supply within the next 12-18 months, including two already USFDA-approved molecules. This pipeline is crucial for future revenue streams.

The API+ segment, accounting for 49% of revenue, saw a 7.9% decline year-on-year. This was primarily due to shipment delays, demand softness in select products, and temporary phasing impacts related to regulatory remediation at the Nacharam formulation plant. Despite this, Cohance completed 8 DMF/CEP filings and 5 formulation filings, strengthening its product pipeline and supporting diversification. The Nacharam FDF facility, which received a warning letter, has stabilized, and operations for non-US markets have resumed, with remediation actions underway.

Specialty Chemicals, contributing 12% to revenue, reported a strong 31.6% year-on-year growth. However, FY26 revenue growth is expected to be muted due to regulatory timing and longer qualification cycles. The company is onboarding new customers, including Japanese and multinational innovators, and is actively engaged with a large EU-based agrochemical customer, supporting medium-term pipeline visibility. Cohance is also exploring extending its chemistry platforms into new areas like semiconductor chip processing, showcasing its commitment to innovation.

| Segment (9M FY26) | Revenue (INR Crore) | Percentage of Total Revenue (%) | | :---------------- | :------------------ | :------------------------------ | | | Pharma CDMO | 643.5 | 39 | | API+ | 808.5 | 49 | | Spec Chem CDMO | 198 | 12 |

Navigating Challenges and Future Outlook

Management acknowledged that FY26 is a transition and bottoming phase, with revenue guidance revised to an early-to-mid double-digit decline. However, they expressed confidence in a return to revenue growth in FY27, driven by successful pipeline conversions and recovery in the API+ segment. The company remains committed to its long-term USD 1 billion sales target by FY30, although the timing might shift slightly due to current challenges.

Cohance's strategic investments in capacity expansion, particularly the USD 10 million US-based cGMP expansion for ADC and the nearing operationalisation of the Nacharam oligonucleotide facility, underscore its commitment to high-growth, niche technology platforms. The company's strong balance sheet, with reduced borrowings and healthy cash reserves, provides the necessary liquidity to fund these growth initiatives. While the short-term outlook presents challenges, Cohance Lifesciences is strategically positioning itself for the next growth cycle through disciplined capital allocation, enhanced quality systems, and a focus on customer-centric execution. The leadership team, now fully embedded, is driving a clear shift from restructuring to execution, aiming to convert the robust pipeline into sustainable long-term growth.