Catalent announced financial results for the third quarter of fiscal year 2019, which ended March 31, 2019. ASC 606, the new revenue accounting standard applies to our fiscal 2019 results, and the prior standard applies to fiscal 2018.
Third quarter 2019 revenue of $617.5 million decreased 2% as reported, but increased 2% in constant currency, from the $627.9 million reported in the third quarter a year ago, primarily driven by the Biologics and Specialty Drug Delivery segment and the impact of the Juniper Pharmaceuticals acquisition within the Oral Drug Delivery segment, partially offset by a reduction in revenue from comparator sourcing arrangements, due to the ASC 606 changes, pursuant to which we now record such revenue on a net versus the former gross basis. Excluding the impact of the change in accounting related to comparator sourcing arrangements and the impact of the Juniper Pharmaceuticals acquisition, revenue increased 3% in constant currency driven by strong organic growth within our Biologics and Specialty Drug Delivery segment. For the first nine months of fiscal year 2019, revenue was $1,792.3 million and increased 1% as reported and 3% in constant currency, compared to the $1,778.1 million in the prior-year period. The year-to-date revenue growth was driven by the Catalent Indiana (formerly Cook Pharmica) and Juniper Pharmaceuticals acquisitions, offset by the change in accounting related to comparator sourcing arrangements. Excluding the aforementioned acquisitions and the accounting change, year-to-date revenue increased 2% in constant currency.
Third quarter 2019 net earnings was $31.7 million, or $0.22 per diluted share, compared to net earnings of $19.0 million, or $0.14 per diluted share, in the third quarter a year ago. For the first nine months of fiscal year 2019, net earnings were $66.3 million, or $0.46 per diluted share, compared to net earnings of $0.9 million, or $0.01 per diluted share, in the prior-year period.
Third quarter 2019 EBITDA from operations of $135.4 million, as referenced in the GAAP to non-GAAP reconciliation provided later in this release, increased $21.1 million from $114.3 million in the third quarter a year ago. Third quarter 2019 Adjusted EBITDA was $154.3 million, or 25.0% of revenue, compared to $139.0 million, or 22.1% of revenue, in the third quarter a year ago. This represents an increase of 11% as reported, and an increase of 14% on a constant-currency basis.
Third quarter 2019 Adjusted Net Income was $71.2 million, or $0.49 per diluted share, compared to Adjusted Net Income of $55.2 million, or $0.41 per diluted share, in the third quarter a year ago.
“Our Biologics and Specialty Drug Delivery and Oral Drug Delivery segments continue to meet our overall expectations, and we are pleased with the progress we have made towards our margin expansion goals,” said John Chiminski, Chair and Chief Executive Officer of Catalent. “We are also excited by our pending acquisition of viral vector developer and manufacturer Paragon Bioservices, which we believe will bring extraordinary benefits to patients and accelerate Catalent’s financial growth.”
Fiscal Year 2019 Outlook
Management is tightening the range of its previously issued financial guidance due to increased visibility to our full-year results. For fiscal year 2019, Catalent expects revenue in the range of $2.50 billion to $2.52 billion, Adjusted EBITDA in the range of $605 million to $615 million, and Adjusted Net Income in the range of $268 million to $278 million. The Company expects self-funded capital expenditures in the range of $175 million to $185 million and fully diluted share count in the range of 146 million to 147 million shares on a weighted-average basis, taking into account the issuance of 11.4 million shares in the July 2018 equity offering. This guidance does not include the potential effects of the Paragon acquisition and related transactions.
Revenue Highlights
Revenue from the Softgel Technologies segment was $214.5 million for the third quarter of fiscal 2019, a decrease of 6% as reported, or 1% in constant currency, compared to the third quarter a year ago. The constant-currency decline was primarily driven by lower volume for prescription products in North America, and decreased volume in our consumer health business resulting from a shortage of ibuprofen supply, partially offset by strong demand for consumer health products in Europe.
Revenue from the Biologics and Specialty Drug Delivery segment was $172.1 million for the third quarter of fiscal 2019, an increase of 4% as reported, or 5% in constant currency, over the third quarter a year ago. The constant-currency growth was primarily driven by favorable end-customer demand for our biologics drug product offerings, partially offset by timing-related declines in our biologics drug substance offering and lower volumes associated with products utilizing our respiratory and ophthalmic drug delivery platforms.
Revenue from the Oral Drug Delivery segment was $161.7 million for the third quarter of fiscal 2019, an increase of 9% as reported, or 12% in constant currency, over the third quarter a year ago. The constant-currency increase was primarily driven by the Juniper acquisition, which closed in August 2018, and contributed 11 percentage points to the segment's revenue in constant currency. Excluding the impact of the Juniper acquisition, segment revenue increased 1% due to increased revenue from product participation related activities, partially offset by lower end-market demand for certain high-margin offerings, primarily in our U.S. commercial oral delivery solutions platform.
Revenue from the Clinical Supply Services segment was $77.8 million for the third quarter of fiscal 2019, a decrease of 25% as reported or 23% in constant currency, over the third quarter a year ago. The constant-currency decline resulted from the change to the way we record comparator sourcing revenue under ASC 606, which decreased third quarter revenue by 25 percentage points on a constant-currency basis. Excluding the impact of ASC 606, revenue increased 2% driven by increased volume related to our manufacturing and packaging services offering.
Segment EBITDA Highlights
Softgel Technologies segment EBITDA in the third quarter of fiscal 2019 was $48.4 million, a decrease of 7% as reported, or 2% in constant currency, versus the third quarter a year ago. The decrease was primarily driven by lower volume for prescription products within North America, and decreased volume in our consumer health business resulting from a shortage of ibuprofen supply, partially offset by strong demand for consumer health products within Europe.
Biologics and Specialty Drug Delivery segment EBITDA in the third quarter of fiscal 2019 was $41.8 million, an increase of 11% as reported, or 12% in constant currency. The constant-currency growth was driven by increased demand for our biologics drug product offering, partially offset by timing-related declines within our biologics drug substance offering.
Oral Drug Delivery segment EBITDA in the third quarter of fiscal 2019 was $50.9 million, an increase of 18% as reported, or 21% in constant currency, primarily driven by the Juniper acquisition, which closed in August 2018 and contributed 13 percentage points to the constant currency growth. Excluding Juniper, segment EBITDA increased 8%, driven by increased revenue from product participation related activities, partially offset by lower end-market demand for certain high-margin offerings, primarily in our U.S. commercial oral delivery solutions platform.
Clinical Supply Services segment EBITDA in the third quarter of fiscal 2019 was $20.3 million, an increase of 8% as reported, or 14% in constant currency. The increase was primarily attributable to increased manufacturing and packaging services volume, and improved capacity utilization across the network.
Additional Financial Highlights
Third quarter 2019 gross margin of 32.2% increased 170 basis points as-reported, from 30.5% in the third quarter a year ago. The increase was primarily attributable to the adoption of ASC 606, which drove the treatment of comparator sourcing revenue on a net basis rather than the former gross basis within our Clinical Supply Services segment. Favorable mix within our Biologics and Specialty Drug Delivery and Oral Drug Delivery segments also contributed to the third quarter gross margin expansion.
Backlog for the Clinical Supply Services segment, defined as estimated future service revenues from work not yet completed under signed contracts, was $346 million as of March 31, 2019, an 8% increase compared to the second quarter of fiscal 2019. The segment recorded net new business wins of $113 million during the third quarter, which is an increase of 40% compared to the net new business wins recorded in the same period of prior year. The segment’s trailing-twelve-month book-to-bill ratio was 1.2x. The backlog, net new business wins, and book-to-bill ratio are presented on the basis of ASC 606 revenue recognition.
Balance Sheet and Liquidity
As of March 31, 2019, Catalent had $2.2 billion in total debt, and $2.0 billion in total debt net of cash and short-term investments, which is in-line with the total debt and net debt as of December 31, 2018. Catalent’s total net leverage ratio as of March 31, 2019 was 3.3x, a modest sequential improvement compared to the total net leverage of 3.4x as of December 31, 2018.