10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 ______________________________

FORM 10-Q

______________________________ 

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2022

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

001-36587

(Commission File Number)

 _____________________________

Catalent, Inc.

(Exact name of registrant as specified in its charter)

_____________________________ 

Delaware		20-8737688
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
14 Schoolhouse Road
Somerset,	New Jersey	08873
(Address of principal executive offices)_______		(Zip code)

(732) 537-6200

Registrant's telephone number, including area code

____________________________________ 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   ☒ Yes ¨  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).       ☒ Yes ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨
		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).       ¨ Yes    ☒ No 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbols(s)	Name of each exchange on which registered
Common Stock	CTLT	New York Stock Exchange

On January 31, 2023, there were 180,090,483 shares of the Registrant's common stock, par value $0.01 per share, issued and outstanding.

CATALENT, INC.

Index to Form 10-Q

For the Three and Six Months Ended December 31, 2022

 

Item		Page
Part I.	Financial Information
Item 1.	Financial Statements (unaudited)	5
	Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2022 and December 31, 2021	5
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended December 31, 2022 and December 31, 2021	6
	Consolidated Balance Sheets as of December 31, 2022 and June 30, 2022	7
	Consolidated Statement of Changes in Shareholders' Equity for the Three and Six Months Ended December 31, 2022 and December 31, 2021	8
	Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2022 and December 31, 2021	10
	Notes to Unaudited Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	46
Part II.	Other Information	47
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3.	Defaults Upon Senior Securities	47
Item 4.	Mine Safety Disclosures	47
Item 5.	Other Information	47
Item 6.	Exhibits	48
Signatures		49

2

Special Note Regarding Forward-Looking Statements

In addition to historical information, this Quarterly Report on Form 10-Q of Catalent, Inc. (“Catalent” or the “Company”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the “safe harbor” created by those sections. All statements, other than statements of historical facts, included in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words.

These statements are based on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments, and other factors they believe to be appropriate. Any forward-looking statement is subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements.

Some of the factors that may cause actual results, developments and business decisions to differ materially from those contemplated by such forward-looking statements include, but are not limited to, those described under the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2022 (the “Fiscal 2022 10-K”) and others, which are summarized below:

Risks Relating to Our Business and the Industry in Which We Operate

•Our business, financial condition, and operations may be adversely affected by global health developments, including the pandemic resulting from the SARS-Co-V-2 strain of coronavirus and its variants (“COVID-19”).

•The continually evolving nature of the COVID-19 pandemic and the resulting public health response, including the changing demand for various COVID-19 vaccines and treatments from both patients and governments around the world, may affect sales of our products and services, including the COVID-19 products we manufacture.

•We participate in a highly competitive market, and increased competition may adversely affect our business.

•The demand for our offerings depends in part on our customers’ research and development and the clinical and market success of their products.

•We are subject to product and other liability risks that could exceed our anticipated costs or adversely affect our results of operations, financial condition, liquidity, and cash flows.

•We are a part of the highly regulated healthcare industry, subject to stringent regulatory standards and other applicable laws and regulations, which can change unexpectedly and may adversely impact our business.

•Any failure to implement fully, monitor, and improve our quality management strategy could lead to quality or safety issues and expose us to significant costs, potential liability, and adverse publicity.

•If we cannot keep pace with rapid technological advances, our services may become uncompetitive or obsolete.

•Any failure to protect or maintain our intellectual property may adversely affect our competitive edge and result in loss of revenue and reputation.

•Future price fluctuations, material shortages of raw materials, or changes in healthcare policies may have an adverse effect on our results of operations and financial conditions.

•Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

•We may be unable to attract or retain key personnel.

•We may be unsuccessful in integrating our acquisitions, and we may expend substantial amounts of cash and incur debt in making acquisitions.

•Our global operations are subject to economic and political risks, including risks resulting from continuing inflation, from disruptions to global supply chains, or from the Ukrainian-Russian war, which could affect the profitability of our operations or require costly changes to our procedures.

•As a global enterprise, fluctuations in the exchange rates of the United States ("U.S.") dollar, our reporting currency, against other currencies could have a material adverse effect on our financial performance and results of operations.

•Tax legislative or regulatory initiatives, new interpretations or developments concerning existing tax laws, or challenges to our tax positions could adversely affect our results of operations and financial condition.

3

•We use advanced information and communication systems to run our operations, compile and analyze financial and operational data, and communicate among our employees, customers, and counter-parties, and the risks generally associated with information and communications systems could adversely affect our results of operations. We continuously work to install new, and upgrade existing systems and provide employee awareness training around phishing, malware, and other cyber security risks to enhance the protections available to us, but such protections may be inadequate to address malicious attacks or inadvertent compromises affecting data security or the operability of such systems.

•We provide services incorporating various advanced modalities, including protein and plasmid production and cell and gene therapies, and these modalities relate to relatively new modes of treatment that may be subject to changing public opinion, continuing research, and increased regulatory scrutiny, each of which may affect our customers' ability to conduct their businesses, or obtain regulatory approvals for their therapies, and thereby adversely affect these offerings.

Risks Relating to Our Indebtedness

•The size of our indebtedness and the obligations associated with it could limit our ability to operate our business and to finance future operations or acquisitions that would enhance our growth.

•Our interest expense on our variable-rate debt may continue to increase as policymakers combat inflation through interest-rate increases on benchmark financial products.

•Our debt agreements contain restrictions that may limit our flexibility in conducting certain current and future operations.

•We may not be able to pay our indebtedness when it becomes due.

•Our current and potential future use of derivative financial instruments may expose us to economic losses in the event of price or currency fluctuations.

Risks Relating to Ownership of Our Common Stock

•Our stock price has historically been and may continue to be volatile.

•Because we have no plan to pay cash dividends on our common stock, par value $0.01 (the “Common Stock”) for the foreseeable future, receiving a return on an investment in our Common Stock may require a sale for a net price greater than was paid for it.

•Provisions in our organizational documents could delay or prevent a change of control.

We caution you that the risks, uncertainties, and other factors referenced above may not contain all of the risks, uncertainties, and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits, or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. There can be no assurance that (i) we have correctly measured or identified all of the factors affecting our business or the extent of these factors’ likely impact, (ii) the available information with respect to these factors on which such analysis is based is complete or accurate, (iii) such analysis is correct, or (iv) our strategy, which is based in part on this analysis, will be successful. All forward-looking statements in this report apply only as of the date of this report or as of the date they were made and we undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by law.

Social Media

We use our website (catalent.com), our corporate Facebook page (https://facebook.com/CatalentPharmaSolutions), and our corporate Twitter account (@catalentpharma) as channels for the distribution of information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, Securities and Exchange Commission (“SEC”) filings, and public conference calls and webcasts. The contents of our website and social media channels are not, however, a part of this report.

4

PART I.    FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

Catalent, Inc.

Consolidated Statements of Operations

(Unaudited; dollars in millions, except per share data)

	Three Months Ended   December 31,				Six Months Ended   December 31,
	2022		2021		2022		2021
Net revenue	$	1,149	$	1,217	$	2,171	$	2,242
Cost of sales	762		812		1,526		1,513
Gross margin	387		405		645		729
Selling, general, and administrative expenses	226		228		422		411
Gain on sale of subsidiary	—		—		—		(1)
Other operating expense, net	23		16		25		20
Operating earnings	138		161		198		299
Interest expense, net	47		32		79		58
Other (income) expense, net	(23)		14		2		23
Earnings before income taxes	114		115		117		218
Income tax expense	33		18		36		28
Net earnings	81		97		81		190
Less: Net earnings attributable to preferred shareholders	—		(4)		—		(13)
Net earnings attributable to common shareholders	$	81	$	93	$	81	$	177
Earnings per share:
Basic
Net earnings	$	0.45	$	0.53	$	0.45	$	1.02
Diluted
Net earnings	$	0.44	$	0.52	$	0.45	$	1.01

The accompanying notes are an integral part of these unaudited consolidated financial statements.

5

Catalent, Inc.

Consolidated Statements of Comprehensive Income

(Unaudited; dollars in millions)

	Three Months Ended   December 31,				Six Months Ended   December 31,
	2022		2021		2022		2021
Net earnings	$	81	$	97	$	81	$	190
Other comprehensive (loss) income, net of tax
Foreign currency translation adjustments	118		(18)		(17)		(32)
Pension and other post-retirement adjustments	—		—		—		1
Net change in marketable securities	1		(1)		2		(1)
Derivatives and hedges	—		3		14		4
Other comprehensive income (loss), net of tax	119		(16)		(1)		(28)
Comprehensive income	$	200	$	81	$	80	$	162

The accompanying notes are an integral part of these unaudited consolidated financial statements.

6

Catalent, Inc.

Consolidated Balance Sheets

(Unaudited; in millions, except share and per share data)

 

	December 31, 2022		June 30, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	442	$	449
Trade receivables, net of allowance for credit losses of $26 and $29, respectively	916		1,051
Inventories	818		702
Prepaid expenses and other	714		625
Marketable securities	28		89
Total current assets	2,918		2,916
Property, plant, and equipment, net of accumulated depreciation of $1,465 and $1,347, respectively	3,579		3,127
Other assets:
Goodwill	3,215		3,006
Other intangibles, net	1,045		1,060
Deferred income taxes	55		49
Other long-term assets	335		349
Total assets	$	11,147	$	10,507
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term obligations and other short-term borrowings	$	632	$	31
Accounts payable	367		421
Other accrued liabilities	527		620
Total current liabilities	1,526		1,072
Long-term obligations, less current portion	4,221		4,171
Pension liability	103		103
Deferred income taxes	221		202
Other liabilities	164		164
Commitment and contingencies (see Note 14)	—		—
Total liabilities	6,235		5,712
Shareholders' equity:
Common stock, $0.01 par value; 1.00 billion shares authorized at December 31 and June 30, 2022; 180 million and 179 million issued and outstanding at December 31 and June 30, 2022, respectively	2		2
Preferred stock, $0.01 par value; 100 million shares authorized at December 31 and June 30, 2022;0 shares issued and outstanding at December 31 and June 30, 2022	—		—
Additional paid in capital	4,686		4,649
Retained earnings	619		538
Accumulated other comprehensive loss	(395)		(394)
Total shareholders' equity	4,912		4,795
Total liabilities and shareholders' equity	$	11,147	$	10,507

The accompanying notes are an integral part of these unaudited consolidated financial statements.

7

Catalent, Inc.

Consolidated Statement of Changes in Shareholders' Equity

(Unaudited; dollars in millions, except share data in thousands)

Three Months Ended December 31, 2022

	Shares of Common Stock	Common Stock		Additional Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders' Equity		Redeemable Preferred Stock
Balance at September 30, 2022	179,901	$	2	$	4,674	$	538	$	(514)	$	4,700	$	—
Share issuances related to stock-      based compensation	87	—		—		—		—		—		—
Stock-based compensation	—	—		10		—		—		10		—
Cash paid, in lieu of    equity, for tax withholding    obligations	—	—		(2)		—		—		(2)		—
Employee stock purchase plan	—	—		4		—		—		4		—
Net earnings	—	—		—		81		—		81		—
Other comprehensive income, net of tax	—	—		—		—		119		119		—
Balance at December 31, 2022	179,988	$	2	$	4,686	$	619	$	(395)	$	4,912	$	—

Three Months Ended December 31, 2021

	Shares of Common Stock	Common Stock		Additional Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders' Equity		Redeemable Preferred Stock
Balance at September 30, 2021	171,033	$	2	$	4,234	$	114	$	(329)	$	4,021	$	359
Share issuances related to stock-      based compensation	199	—		—		—		—		—		—
Conversion of redeemable      preferred stock	7,818	—		362		—		—		362		(359)
Stock-based compensation	—	—		11		—		—		11		—
Cash paid, in lieu of equity, for      tax withholding obligations	—	—		(5)		—		—		(5)		—
Exercise of stock options	—	—		11		—		—		11		—
Employee stock purchase plan	—	—		2		—		—		2		—
Preferred dividend ($12.50 per      share of redeemable preferred      stock)	—	—		—		(2)		—		(2)		—
Net earnings	—	—		—		97		—		97		—
Other comprehensive loss, net        of tax	—	—		—		—		(16)		(16)		—
Balance at December 31, 2021	179,050	$	2	$	4,615	$	209	$	(345)	$	4,481	$	—

The accompanying notes are an integral part of these unaudited consolidated financial statements.

8

Catalent, Inc.

Consolidated Statement of Changes in Shareholders' Equity

(Unaudited; dollars in millions, except share data in thousands)

Six months ended December 31, 2022

	Shares of Common Stock	Common Stock		Additional Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders' Equity		Redeemable Preferred Stock
Balance at June 30, 2022	179,302	$	2	$	4,649	$	538	$	(394)	$	4,795	$	—
Share issuances related to stock-      based compensation	686	—		—		—		—		—		—
Stock-based compensation	—	—		29		—		—		29		—
Exercise of stock options	—	—		1		—		—		1		—
Employee stock purchase plan	—	—		7		—		—		7		—
Net earnings	—	—		—		81		—		81		—
Other comprehensive loss, net of tax	—	—		—		—		(1)		(1)		—
Balance at December 31, 2022	179,988	$	2	$	4,686	$	619	$	(395)	$	4,912	$	—

Six Months Ended December 31, 2021

	Shares of Common Stock	Common Stock		Additional Paid in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Shareholders' Equity		Redeemable Preferred Stock
Balance at June 30, 2021	170,549	$	2	$	4,205	$	25	$	(317)	$	3,915	$	359
Share issuances related to stock-      based compensation	683	—		—		—		—		—		—
Conversion of redeemable      preferred stock	7,818	—		362		—		—		362		(359)
Stock-based compensation	—	—		32		—		—		32		—
Cash paid, in lieu of equity, for      tax withholding obligations	—	—		(9)		—		—		(9)		—
Exercise of stock options	—	—		19		—		—		19		—
Employee stock purchase plan	—	—		6		—		—		6		—
Preferred dividend ($12.50 per      share of redeemable preferred      stock)	—	—		—		(6)		—		(6)		—
Net earnings	—	—		—		190		—		190		—
Other comprehensive income, net of tax	—	—		—		—		(28)		(28)		—
Balance at December 31, 2021	179,050	$	2	$	4,615	$	209	$	(345)	$	4,481	$	—

The accompanying notes are an integral part of these unaudited consolidated financial statements.

9

Catalent, Inc.

Consolidated Statements of Cash Flows

(Unaudited; dollars in millions)

	Six Months Ended December 31,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	81	$	190
Adjustments to reconcile net earnings to net cash from operations:
Depreciation and amortization	202		179
Non-cash foreign currency transaction loss, net	1		25
Non-cash restructuring charges	7		—
Amortization of debt issuance costs	4		4
Impairments charges and loss/gain on sale of assets, net	(1)		19
Gain on sale of subsidiary	—		(1)
Financing-related charges	—		4
Gain on derivative instrument	—		(2)
Stock-based compensation	29		32
Provision for deferred income taxes	13		1
Provision for bad debts and inventory	67		9
Change in operating assets and liabilities:
Decrease in trade receivables	148		131
Increase in inventories	(180)		(148)
(Decrease) increase in accounts payable	(68)		3
Other assets/accrued liabilities, net—current and non-current	(181)		(214)
Net cash provided by operating activities	122		232
CASH FLOWS USED IN INVESTING ACTIVITIES:
Acquisition of property, equipment, and other productive assets	(317)		(277)
Proceeds from sale of marketable securities	61		4
Proceeds from sale of property and equipment	7		—
Settlement on sale of subsidiaries, net	—		(3)
Payment for acquisitions, net of cash acquired	(474)		(1,020)
Payment for investments	(1)		(3)
Net cash used in investing activities	(724)		(1,299)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowing	625		1,100
Payments related to long-term obligations	(32)		(64)
Financing fees paid	(4)		(15)
Dividends paid	—		(4)
Cash paid, in lieu of equity, for tax-withholding obligations	—		(9)
Exercise of stock options	1		19
Other financing activities	7		6
Net cash provided by financing activities	597		1,033
Effect of foreign currency exchange on cash and cash equivalents	(2)		(13)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(7)		(47)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	449		896
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	442	$	849
SUPPLEMENTARY CASH FLOW INFORMATION:
Interest paid	$	83	$	50
Income taxes paid, net	$	38	$	27

The accompanying notes are an integral part of these unaudited consolidated financial statements.

10

Catalent, Inc.

Notes to Unaudited Consolidated Financial Statements

1.    BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

Catalent, Inc. (“Catalent” or the “Company”) directly and wholly owns PTS Intermediate Holdings LLC (“Intermediate Holdings”). Intermediate Holdings directly and wholly owns Catalent Pharma Solutions, Inc. (“Operating Company”). The financial results of Catalent are comprised of the financial results of Operating Company and its subsidiaries on a consolidated basis.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six months ended December 31, 2022 are not necessarily indicative of the results that may be expected for the year ending June 30, 2023. The consolidated balance sheet at June 30, 2022 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information on the Company's accounting policies and footnotes, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2022 filed with the Securities and Exchange Commission (the “SEC”).

Reportable Segments

Effective July 1, 2022, in connection with the appointment of a new President and Chief Executive Officer, the Company changed its operating structure and reorganized its executive leadership team accordingly. This new organizational structure includes a shift from the four operating and reportable segments the Company disclosed during fiscal 2022 to two segments: (i) Biologics and (ii) Pharma and Consumer Health. Set forth below is a summary description of the Company's two current operating and reportable segments.

Biologics—The Biologics segment provides the same services as the Biologics segment the Company reported in fiscal 2022, with some organizational adjustments and the addition of analytical development and testing services for large molecules that were previously disclosed as part of the Company's prior Oral and Specialty Delivery segment. The Biologics segment as reorganized provides development and manufacturing for biologic proteins; cell, gene, and other nucleic acid therapies; plasmid DNA; induced pluripotent stem cells (iPSCs); and vaccines. It also provides formulation, development, and manufacturing for parenteral dose forms, including vials, prefilled syringes, and cartridges; and, as noted above, analytical development and testing services for large molecules.

Pharma and Consumer Health—The Pharma and Consumer Health segment encompasses, except as noted above, the offerings of three of the Company's prior reportable segments—Softgel and Oral Technologies, Oral and Specialty Delivery, and Clinical Supply Services—and comprises the Company’s market-leading capabilities for complex oral solids, softgel formulations, Zydis® fast-dissolve technologies, and gummy, soft chew, and lozenge dosage forms; formulation, development, and manufacturing platforms for oral, nasal, inhaled, and topical dose forms; and clinical trial development and supply services.

Each segment reports through a separate management team and ultimately reports to the Company's President and Chief Executive Officer, who is designated as the Chief Operating Decision Maker for segment reporting purposes. The Company's operating segments are the same as its reportable segments. All prior-period comparative segment information has been restated to reflect the current reportable segments in accordance with Accounting Standards Codification (“ASC”) 280, Segment Reporting, promulgated by the Financial Accounting Standards Board (the “FASB”).

Reclassifications

Consequent to the reorganization noted above, certain prior-period amounts were reclassified to conform to the current period presentation.

Foreign Currency Translation

11

The financial statements of the Company’s operations are generally measured using the local currency as the functional currency. Adjustments to translate the assets and liabilities of operations outside the United States (“U.S.”) into U.S. dollars are accumulated as a component of other comprehensive income utilizing period-end exchange rates. Since July 1, 2018, the Company has accounted for its Argentine operations as highly inflationary.

Concentrations of Credit Risk and Major Customers

Concentration of credit risk, with respect to accounts receivable, is limited due to the large number of customers and their dispersion across different geographic areas. The customers are primarily concentrated in the pharmaceutical and consumer products industries. The Company does not normally require collateral or any other security to support credit sales. The Company performs ongoing credit evaluations of its customers’ financial conditions and maintains reserves for credit losses. Such losses historically have been within the Company’s expectations. As of December 31, 2022, the Company had one customer that represented approximately 24% of its aggregate net trade receivables and current contract asset values, primarily associated with the Company's gene therapy offerings, and another customer that represented approximately 11% of its aggregate net trade receivables and current contract asset values. After performing a risk assessment of these customers, the Company has determined that a reserve is not warranted as of December 31, 2022. Additionally, the Company had one customer that represented approximately 13% of net revenue and another customer that represented approximately 10% of net revenue during the three months ended December 31, 2022, primarily in the Biologics segment.

Depreciation

Depreciation expense was $69 million and $64 million for the three months ended December 31, 2022 and 2021, respectively. Depreciation expense was $135 million and $122 million for the six months ended December 31, 2022 and 2021, respectively. Depreciation expense includes amortization of assets related to finance leases. The Company charges repairs and maintenance costs to expense as incurred.

Amortization

Amortization expense related to other intangible assets was $34 million and $34 million for the three months ended December 31, 2022 and 2021, respectively. Amortization expense related to other intangible assets was $67 million and $57 million for the six months ended December 31, 2022 and 2021, respectively.

Research and Development Costs

The Company expenses research and development costs as incurred. Research and development costs amounted to $4 million and $6 million for the three months ended December 31, 2022 and 2021, respectively. Research and development costs amounted to $9 million and $12 million for the six months ended December 31, 2022 and 2021, respectively.

Marketable Securities

The Company classifies its marketable securities as available-for-sale, because it may sell certain of its marketable securities prior to the stated maturity for various reasons, including management of liquidity, credit risk, duration, relative return, and asset allocation. The Company determines the fair value of each marketable security in its portfolio at each period end and recognizes gains and losses in the portfolio in other comprehensive income. As of December 31, 2022, the amortized cost basis of marketable securities approximates fair value and all outstanding marketable securities mature within one year.

Recent Financial Accounting Standards

New Accounting Standards Not Adopted as of December 31, 2022

In March 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance to ease the potential burden in accounting for the discontinuation of a reference rate such as LIBOR, formerly known as the London Interbank Offered Rate, because of reference rate reform. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which delayed the effective date from December 31, 2022 to December 31, 2024. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements.

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2.    REVENUE RECOGNITION

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. The Company generally earns its revenue by supplying goods or providing services under contracts with its customers in two primary revenue streams: (i) manufacturing and commercial product supply, and (ii) development and clinical supply services. The Company measures the revenue from customers based on the consideration specified in its contracts, excluding any sales incentive or amount collected on behalf of a third party that the Company expects to be entitled in exchange for transferring the promised goods to and/or performing services for the customer (the “Transaction Price”). To the extent the Transaction Price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the Transaction Price utilizing either the expected value method or the most likely amount method depending on which method is expected to better predict the amount of consideration to which the Company will be entitled. The value of variable consideration is included in the Transaction Price if, and to the extent, it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. These estimates are re-assessed each reporting period, as required, and any adjustments required are recorded on a cumulative catch-up basis, which affects revenue and net income in the period of adjustment.

The Company’s customer contracts generally include provisions entitling the Company to a termination penalty when the customer invokes its contractual right to terminate prior to the contract’s nominal end date. The termination penalties in the customer contracts vary but are generally considered substantive for accounting purposes and create enforceable rights and obligations throughout the stated duration of the contract. The Company accounts for a contract cancellation as a contract modification in the period in which the customer invokes the termination provision. The determination of the contract termination penalty is based on the terms stated in the relevant customer agreement. As of the modification date, the Company updates its estimate of the transaction price using the expected value method, subject to constraints, and to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. These estimates are re-assessed each reporting period, as required, and any adjustments required are recorded on a cumulative catch-up basis, which would affect revenue and net income in the period of adjustment.

Manufacturing & Commercial Product Supply Revenue

Manufacturing and commercial product supply revenue consists of revenue earned by manufacturing products supplied to customers under long-term commercial supply arrangements. In these arrangements, the customer typically owns and supplies the active pharmaceutical ingredient, or API, that is used in the manufacturing process. The contract generally includes the terms of the manufacturing services and related product quality assurance procedures to comply with regulatory requirements. Due to the regulated nature of the Company’s business, these contract terms are highly interdependent and, therefore, are considered to be a single combined performance obligation. The transaction price is generally stated in the agreement as a fixed price per unit, with no contractual provision for a refund or price concession. Control is transferred to the customer over time, creating a corresponding right to recognize the related revenue, because there is no alternative use to the Company for the asset created and the Company has an enforceable right to payment for performance completed as of that date. Progress is measured based on the units of product that have successfully completed the contractually required product quality assurance process, as the conclusion of that process generally defines the time when the applicable contract and the related regulatory requirements permit the customer to exercise control over the product’s disposition. The customer is typically responsible for arranging the shipping and handling of product following completion of the quality assurance process. Payment is typically due 30 to 45 days after the goods are delivered as requested by the customer, based on the payment terms set forth in the applicable customer agreement.

Development Services and Clinical Supply Revenue

Development services and clinical supply contracts generally take the form of short-term, fee-for-service arrangements. Performance obligations vary, but frequently include biologic cell-line development, performing formulation, analytical stability, or other services related to product development, and providing manufacturing services for products that are under development or otherwise not intended for commercial sale. They can also include a combination of the following services: the manufacturing, packaging, storage, distribution, destruction, inventory management of customer clinical trial material and the sourcing of comparator drug products on behalf of customers to be used in clinical trials to compare performance with the drug under clinical investigation. The transaction prices for these arrangements are fixed and include amounts stated in the contracts for each promised service, and each service is generally considered to be a separate performance obligation. In most instances, the Company recognizes revenue over time because there is no alternative use to the Company for the asset created and the Company has an enforceable right to payment for performance completed as of that date.

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The Company measures progress toward the completion of its performance obligations satisfied over time based on the nature of the services to be performed. For certain types of arrangements, revenue is recognized over time and measured using an output method based on the completion of tasks and activities that are performed to satisfy a performance obligation. For certain types of arrangements, revenue is recognized over time and measured using an input method based on effort expended. Each of these methods provides an appropriate depiction of the Company’s progress toward fulfilling its performance obligations for its respective arrangement. In certain development services arrangements that require a portion of the contract consideration to be received in advance at the commencement of the contract, such advance payment is initially recorded as a contract liability. In certain clinical supply arrangements, revenue is recognized at the point in time when control transfers, which occurs upon either the delivery of the related output of the service to the customer or the completion of quality testing with respect to the product, and the Company has an enforceable right to payment based on the terms of the arrangement.

The Company allocates consideration to each performance obligation using the “relative standalone selling price” as defined under ASC 606. Generally, the Company utilizes observable standalone selling prices in its allocations of consideration. If observable standalone selling prices are not available, the Company estimates the applicable standalone selling price using a cost-plus-margin approach or an adjusted market assessment approach, in each case, representing the amount that the Company believes the market is willing to pay for the applicable service. Payment is typically due 30 to 45 days following the completion of services provided to the customer, based on the payment terms set forth in the applicable customer agreement.

The Company records revenue for comparator sourcing arrangements on a net basis because it is acting as an agent that does not control the product or service before it is transferred to the customer. Payment for comparator sourcing activity is typically received in advance at the commencement of the contract and is initially recorded as a contract liability.

The Company generally expenses sales commissions as incurred because either the amortization period is one year or less, or the balance with an amortization period greater than one year is not material.

The following tables reflect net revenue for the three and six months ended December 31, 2022 and 2021, by type of activity and reportable segment (in millions):

Three Months Ended December 31, 2022	Biologics		Pharma and Consumer Health		Total
Manufacturing & commercial product supply	$	75	$	340	$	415
Development services & clinical supply	505		230		735
Total	$	580	$	570	$	1,150
Inter-segment revenue elimination					(1)
Combined net revenue					$	1,149

Three Months Ended December 31, 2021	Biologics		Pharma and Consumer Health		Total
Manufacturing & commercial product supply	$	169	$	359	$	528
Development services & clinical supply	472		218		690
Total	$	641	$	577	$	1,218
Inter-segment revenue elimination					(1)
Combined net revenue					$	1,217

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Six Months Ended December 31, 2022	Biologics		Pharma and Consumer Health		Total
Manufacturing & commercial product supply	$	169	$	632	$	801
Development services & clinical supply	934		437		1,371
Total	$	1,103	$	1,069	$	2,172
Inter-segment revenue elimination					(1)
Combined net revenue					$	2,171

Six Months Ended December 31, 2021	Biologics		Pharma and Consumer Health		Total
Manufacturing & commercial product supply	$	303	$	635	$	938
Development services & clinical supply	886		419		1,305
Total	$	1,189	$	1,054	$	2,243
Inter-segment revenue elimination					(1)
Combined net revenue					$	2,242

The following table allocates revenue by the location where the goods were made or the service performed:

	Three Months Ended   December 31,				Six Months Ended   December 31,
(Dollars in millions)	2022		2021		2022		2021
United States	$	734	$	793	$	1,432	$	1,423
Europe	356		370		630		722
Other	88		83		169		155
Elimination of revenue attributable to multiple locations	(29)		(29)		(60)		(58)
Total	$	1,149	$	1,217	$	2,171	$	2,242

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Contract Liabilities

Contract liabilities relate to cash consideration that the Company receives in advance of satisfying the related performance obligations. The contract liabilities balances (current and non-current) as of December 31, 2022 and June 30, 2022 are as follows:

(Dollars in millions)
Balance at June 30, 2022	$	194
Balance at December 31, 2022	$	186
Revenue recognized in the period from amounts included in contracts liability at the beginning of the period:	$	(113)

Contract liabilities that will be recognized within 12 months of December 31, 2022 are accounted for in Other accrued liabilities and those that will be recognized longer than 12 months after December 31, 2022 are accounted for within Other liabilities.

Contract Assets

Contract assets primarily relate to the Company's conditional right to receive consideration for services that have been performed for customers as of December 31, 2022 relating to the Company's development services but had not yet been invoiced as of December 31, 2022. Contract assets are transferred to trade receivables, net when the Company’s right to receive the consideration becomes unconditional. Contract assets totaled $513 million and $441 million as of December 31, 2022 and June 30, 2022, respectively. Contract assets expected to transfer to trade receivables within 12 months are accounted for within Prepaid expenses and other. Contract assets expected to transfer to trade receivables longer than 12 months are accounted for within Other long-term assets.

3.    BUSINESS COMBINATIONS

Metrics Contract Services Acquisition

In October 2022, the Company acquired 100% of Metrics Contract Services (“Metrics”) from Mayne Pharma Group Limited for $474 million in cash, subject to customary adjustments. Metrics, based in Greenville, North Carolina, is an oral solids development and manufacturing business specializing in the manufacture of drugs containing highly potent active pharmaceutical ingredients. The operations and facility acquired have become part of the Company’s Pharma and Consumer Health segment.

The Company accounted for the Metrics transaction using the acquisition method in accordance with ASC 805, Business Combinations. The Company funded this acquisition with a portion of the proceeds of an October 2022 drawdown from its senior secured revolving credit facility. The Company estimated fair values at the date of acquisition for the preliminary allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed. The Company has not completed its analysis regarding the assets acquired and liabilities assumed. Therefore, the allocation to property, plant, and equipment, intangible assets, goodwill, and income taxes are preliminary and subject to finalization. During the measurement period ending no later than one year after the acquisition date, the Company will continue to obtain information to assist in finalizing the fair values of the net assets acquired, which may differ materially from these preliminary estimates. If any measurement period adjustment is material, the Company will record such adjustment, including any related impact on net income, in the reporting period in which the adjustment is determined.

The preliminary purchase price allocation to assets acquired and liabilities assumed in the transaction, subject to finalization, is as follows:

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(Dollars in millions)	Preliminary Purchase Price Allocation
Trade receivables, net	$	15
Inventories	6
Property, plant, and equipment	192
Other intangibles, net	53
Other assets	2
Current liabilities	(9)
Goodwill	215
Total assets acquired and liabilities assumed	$	474

The carrying value of trade receivables, inventory, and trade payables, as well as certain other current and non-current assets and liabilities generally represented the fair value at the date of acquisition.

Other intangibles, net consists of customer relationships of $53 million, which were valued using the multi-period, excess-earnings method, a method that values the intangible asset using the present value of the after-tax cash flows attributable to the intangible asset only. The significant assumptions used in developing the valuation included the estimated annual net cash flows (including application of an appropriate margin to forecasted revenue, selling and marketing costs, return on working capital, contributory asset charges, and other factors), the discount rate that appropriately reflects the risk inherent in each future cash flow stream, and an assessment of the asset’s life cycle, as well as other factors. The assumptions used in the financial forecasts were based on historical data, supplemented by current and anticipated growth rates, management plans, and market-comparable information. Fair-value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. Preliminary assumptions may change and may result in significant changes to the final valuation. The customer relationship intangible asset has a weighted average useful life of 12 years.

Property, plant, and equipment was valued using the cost approach, which is based on current replacement and/or reproduction cost of the asset as new, less depreciation attributable to physical, functional, and economic factors. The Company then determined the remaining useful life based on the anticipated life of the asset and Company policy for similar assets.

Goodwill has been allocated to the Pharma and Consumer Health segment as shown in Note 4, Goodwill. Goodwill is mainly comprised of the growth from an expected increase in capacity utilization and potential new customers. The goodwill resulting from the Metrics acquisition is not deductible for tax purposes.

Results of the business acquired were not material to the Company's consolidated statement of operations, financial position, or cash flows for the three and six months ended December 31, 2022.

Bettera Holdings, LLC Acquisition

In October 2021, the Company acquired 100% of the equity interest in Bettera Holdings, LLC (“Bettera Wellness”) for approximately $1 billion. Bettera Wellness is a manufacturer of nutraceuticals and nutritional supplements in gummy, soft chew, and lozenge delivery formats.

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4.    GOODWILL

The following table summarizes the changes between June 30, 2022 and December 31, 2022 in the carrying amount of goodwill in total and by segment:

(Dollars in millions)	Biologics		Pharma and Consumer Health		Total
Balance at June 30, 2022 (1)	$	1,535	$	1,471	$	3,006
Additions(2)	—		215		215
Reallocation	16		(16)		—
Foreign currency translation adjustments	1		(7)		(6)
Balance at December 31, 2022	$	1,552	$	1,663	$	3,215

(1) As of result of the organizational realignments which were effective July 1, 2022, (described in Note 1, Basis of Presentation and Summary of Significant Accounting Policies), beginning balances have been reclassified to conform with the current period presentation.

(2) The addition to goodwill is a result of the Metrics acquisition. For further details, see Note 3, Business Combinations.

As part of the business reorganization discussed in Note 1, Basis of Presentation and Summary of Significant Accounting Policies, the goodwill from the previous Biologics, Softgel and Oral Technologies, Oral and Specialty Delivery, and Clinical Supply Services segments was reallocated between the current Biologics and Pharma and Consumer Health segments.

As a result of this realignment, the Company performed an interim quantitative goodwill impairment test for all of its reporting units as of July 1, 2022, which did not result in any goodwill impairment charges.

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5.    LONG-TERM OBLIGATIONS AND SHORT-TERM BORROWINGS

Long-term obligations and short-term borrowings consisted of the following at December 31, 2022 and June 30, 2022:

(Dollars in millions)	Maturity	December 31, 2022		June 30, 2022
Senior secured credit facilities
Term loan facility B-3 (6.375% as of December 31)	February 2028	$	1,426	$	1,433
Revolving credit facility (1) (6.032% as of December 31)	November 2027	600		—
5.000% senior notes due 2027	July 2027	500		500
2.375% euro senior notes due 2028(2)	March 2028	879		874
3.125% senior notes due 2029	February 2029	550		550
3.500% senior notes due 2030	April 2030	650		650
Financing lease obligations	2022 to 2038	289		234
Other obligations	2022 to 2028	2		2
Unamortized discount and debt issuance costs		(43)		(41)
Total debt		$	4,853	$	4,202
Less: current portion of long-term obligations and other short-term      borrowings (1)		632		31
Long-term obligations, less current portion		$	4,221	$	4,171

(1) During the six months ended December 31, 2022, the Company drew down $625 million on its revolving credit facility to fund the acquisition of Metrics and supplement operating cash flows, of which $25 million was repaid during three months ended December 31, 2022. The Company has elected to classify the borrowing on its revolving credit facility as current as it intends to repay a portion of the borrowing using cash flow from operations and/or refinance the borrowing through a senior notes offering within the next twelve months.

(2) The change in euro-denominated debt was due to fluctuations in foreign currency exchange rates.

Seventh Amendment to the Credit Agreement

In November 2022, Operating Company entered into Amendment No. 7 (the “Seventh Amendment”) to its Amended and Restated Credit Agreement, dated May 20, 2014 (as subsequently amended, the “Credit Agreement”). Pursuant to the Seventh Amendment, Operating Company (i) terminated its existing revolving credit commitments (and the related outstanding revolving borrowings), which is part of its senior secured credit facilities, and (ii) obtained $1.10 billion aggregate amount of new revolving credit commitments, borrowing thereunder an amount equal to the previously outstanding borrowings under the terminated commitments (as amended, the “Revolving Credit Facility”). The Revolving Credit Facility has an interest rate margin, at Operating Company’s option, based on a (1) prime rate, plus a margin ranging from 0.75% to 1.25% based on Operating Company’s consolidated leverage ratio or (2) Secured Overnight Financing Rate, plus 0.10%, plus a margin ranging from 1.75% to 2.25% based on Operating Company’s consolidated leverage ratio. The Revolving Credit Facility has a maturity date that is the earlier of (A) five years after November 22, 2027, and (B) the 91st day prior to the maturity of Operating Company’s $500 million 5.000% senior unsecured notes due 2027 (the “2027 Notes”) or any permitted refinancing thereof, if on such 91st day, any of the 2027 Notes remains outstanding. Otherwise, the Revolving Credit Facility under the Seventh Amendment has the same principal terms as the previously existing revolving credit commitments under the Credit Agreement.

The availability of capacity under the Revolving Credit Facility is reduced by the aggregate value of all outstanding letters of credit under the Credit Agreement. As of December 31, 2022, Operating Company had $496 million of unutilized capacity under the Revolving Credit Facility due to $4 million of outstanding letters of credit.

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Measurement of the Estimated Fair Value of Debt

The estimated fair value of the Company’s senior secured credit facilities and other senior indebtedness is classified as a Level 2 determination (see Note 10, Fair Value Measurements, for a description of the method by which fair value classifications are determined) in the fair-value hierarchy and is calculated by using a discounted cash flow model with a market interest rate as a significant input. The carrying amounts and the estimated fair values of the Company’s principal categories of debt as of December 31, and June 30, 2022 are as follows:

		December 31, 2022				June 30, 2022
(Dollars in millions)	Fair Value Measurement	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
5.000% senior notes due 2027	Level 2	$	500	$	483	$	500	$	483
2.375% Euro senior notes due 2028	Level 2	879		755		874		744
3.125% senior notes due 2029	Level 2	550		469		550		476
3.500% senior notes due 2030	Level 2	650		551		650		561
Senior secured credit facilities & other	Level 2	2,317		2,111		1,669		1,575
Subtotal		$	4,896	$	4,369	$	4,243	$	3,839
Unamortized discount and debt issuance costs		(43)		—		(41)		—
Total debt		$	4,853	$	4,369	$	4,202	$	3,839

6.    EARNINGS PER SHARE

Effective as of the first quarter of fiscal 2023, the Company computes earnings per share of the Company’s common stock, par value $0.01 (the “Common Stock”) using the treasury stock method. Prior to fiscal 2023, the Company computed earnings per share of the Common Stock using the two-class method required due to the participating nature of the previously outstanding Series A Preferred Stock (as defined and discussed in Note 13, Equity and Accumulated Other Comprehensive Loss).

Diluted net earnings per share is computed using the weighted average number of shares of Common Stock outstanding plus the weighted average number of shares of Common Stock that would be issued assuming exercise or conversion of all potentially dilutive instruments. Dilutive securities having an anti-dilutive effect on diluted net earnings per share are excluded from the calculation. The dilutive effect of the securities that are issuable under the Company’s equity incentive plans are reflected in diluted earnings per share by application of the treasury stock method. Prior to fiscal 2023, the Company applied the if-converted method to compute the potentially dilutive effect of the previously outstanding Series A Preferred Stock. The reconciliations between basic and diluted earnings per share attributable to Catalent common shareholders for the three and six months ended December 31, 2022 and 2021, respectively, are as follows:

	Three Months Ended   December 31,				Six Months Ended   December 31,
(In millions except per share data)	2022		2021		2022		2021
Net earnings	$	81	$	97	$	81	$	190
Less: Net earnings attributable to preferred shareholders	—		(4)		—		(13)
Net earnings attributable to common shareholders	$	81	$	93	$	81	$	177
Weighted average shares outstanding - basic	181		175		180		173
Weighted average dilutive securities issuable - stock plans	—		2		1		2
Weighted average shares outstanding - diluted	181		177		181		175
Earnings per share:
Basic	$	0.45	$	0.53	$	0.45	$	1.02
Diluted	$	0.44	$	0.52	$	0.45	$	1.01

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The Company's Series A Preferred Stock was deemed a participating security, meaning that it had the right to participate in undistributed earnings with the Company's Common Stock. On November 23, 2020, the holders of Series A Preferred Stock converted 265,223 shares of Series A Preferred Stock and $2 million of unpaid accrued dividends into shares of Common Stock. On November 18, 2021, the holders of Series A Preferred Stock converted the remaining 384,777 shares of Series A Preferred Stock and $2 million of unpaid accrued dividends into shares of Common Stock.

Shares with an antidilutive effect on the weighted average shares outstanding for the three and six months ended December 31, 2022 and 2021 were not material.

7.    OTHER (INCOME) EXPENSE, NET

The components of other expense, net for the three and six months ended December 31, 2022 and 2021 are as follows:

	Three Months Ended   December 31,				Six Months Ended  December 31,
(Dollars in millions)	2022		2021		2022		2021
Debt financing costs (1)	$	—	$	—	$	—	$	4
Foreign currency (gains) losses (2)	(25)		15		(1)		24
Other (3)	2		(1)		3		(5)
Total other (income) expense, net	$	(23)	$	14	$	2	$	23

(1)    Debt financing costs for the six months ended December 31, 2021 includes $4 million of financing charges related to $450 million of U.S. dollar-denominated term loans borrowed in that period under the Company’s senior secured credit facilities.

(2)    Foreign currency remeasurement gains/losses include both cash and non-cash transactions.

(3)    Other, for the six months ended December 31, 2021, includes a gain of $2 million related to the fair value of the derivative liability associated with the formerly outstanding Series A Preferred Stock.

8.     RESTRUCTURING COSTS

From time to time, the Company has implemented plans to restructure certain operations, both domestically and internationally. The restructuring plans focused on various aspects of operations, including closing and consolidating certain manufacturing operations, rationalizing headcount and aligning operations in a strategic and more cost-efficient structure. In addition, the Company may incur restructuring charges in the future in cases where a material change in the scope of operation with its business occurs. Employee-related costs consist primarily of severance costs and also include outplacement services provided to employees who have been involuntarily terminated and duplicate payroll costs during transition periods. Facility exit and other costs consist of equipment relocation costs and costs associated with planned facility expansions and closures to streamline Company operations.

During the three months ended December 31, 2022, the Company adopted plans to reduce costs, consolidate facilities, and optimize its infrastructure across the organization. In connection with these restructuring plans, the Company plans to reduce its headcount between 670 and 730 employees and incur cumulative employee-related charges between $14 million and $20 million, primarily associated with cash severance programs.

Restructuring costs for the three and six months ended December 31, 2022 and 2021 were recorded in Other Operating Expense in the Consolidated Statement of Operations.

The following table summarizes the charges recorded within restructuring costs:

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	Three Months Ended   December 31,				Six Months Ended  December 31,
(Dollars in millions)	2022		2021		2022		2021
Restructuring costs:
Employee-related reorganization	$	12	$	1	$	14	$	2
Facility exit and other costs	11		—		13		—
Total restructuring costs	$	23	$	1	$	27	$	2

The following table summarizes the charges recorded within restructuring costs by segment. These amounts are excluded from Segment EBITDA as described in Note 15, Segment Information.

	Three Months Ended   December 31,				Six Months Ended  December 31,
(Dollars in millions)	2022		2021		2022		2021
Restructuring costs:
Biologics	$	18	$	—	$	18	$	—
Pharma and Consumer Health	1		1		4		2
Corporate	4		—		5		—
Total restructuring costs	$	23	$	1	$	27	$	2

9.    DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Risk Management Objective of Using Derivatives

The Company is exposed to fluctuations in the currency exchange rates applicable to its investments in operations outside the U.S. While the Company does not actively hedge against changes in foreign currency, the Company has mitigated exposure from its investments in its European operations by denominating a portion of its debt in euros. At December 31, 2022, the Company had euro-denominated debt outstanding of $879 million (U.S. dollar equivalent), which is designated and qualifies as a hedge against its net investment in its European operations. For non-derivatives designated and qualifying as net investment hedges, the effective portion of translation gains or losses are reported in accumulated other comprehensive loss as part of the cumulative translation adjustment. The unhedged portions of the euro-denominated debt translation gains or losses are reported in the consolidated statements of operations. The following table summarizes net investment hedge activity during the three and six months ended December 31, 2022 and 2021.

	Three Months Ended   December 31,				Six Months Ended   December 31,
(Dollars in millions)	2022		2021		2022		2021
Unrealized foreign exchange gain (loss) within other comprehensive income	$	(85)	$	40	$	(4)	$	62
Unrealized foreign exchange gain (loss) within statement of operations	$	—	$	(8)	$	—	$	(11)

The net accumulated gain on the instrument designated as a hedge as of December 31, 2022 within other comprehensive loss was approximately $123 million. Amounts are reclassified out of accumulated other comprehensive loss into earnings when the entity to which the gains and losses relate is either sold or substantially liquidated.

Interest-Rate Swap

In April 2020, pursuant to its interest rate and risk management strategy, the Company entered into an interest-rate swap agreement with Bank of America N.A. (the “2020 Rate Swap”) as a hedge against the economic effect of a portion of the variable interest obligation associated with its U.S. dollar-denominated term loans under its senior secured credit facilities.

In February 2021, in connection with an amendment to the Credit Agreement, the Company paid $2 million in cash to Bank of America N.A to settle the 2020 Rate Swap. This loss is deferred in stockholders’ equity, net of income taxes, as a component of accumulated other comprehensive loss, and amortized as an adjustment to interest expense, net over the original

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term of the formerly outstanding term loans. The net amount of deferred losses on cash flow hedges that is expected to be reclassified from accumulated other comprehensive loss into interest expense, net within the next twelve months is not material.

In February 2021, the Company entered into a new interest-rate swap agreement with Bank of America N.A. (the “2021 Rate Swap”) as a hedge against the economic effect of a portion of the variable interest obligation associated with its Term B-3 Loans. The 2021 Rate Swap effectively fixed the rate of interest payable on that portion of the Term B-3 Loans, thereby reducing the impact of future interest rate changes on future interest expense. As a result of the 2021 Rate Swap, the variable portion of the applicable interest rate on $500 million of the Term B-3 Loans is now effectively fixed at 0.9985%.

The 2021 Rate Swap qualifies for and is designated as a cash-flow hedge. The Company evaluates hedge effectiveness at the inception of the hedge and on an ongoing basis. The cash flows associated with the 2021 Rate Swap is reported in cash provided by operating activities in the consolidated statements of cash flows. The unrealized gain recorded in stockholder's equity from marking the 2021 Rate Swap to market during the six months ended December 31, 2022 was $18 million.

A summary of the estimated fair value of the 2021 Rate Swap reported in the consolidated balance sheets is stated in the table below:

	December 31, 2022			June 30, 2022
(Dollars in millions)	Balance Sheet Classification	Estimated Fair Value		Balance Sheet Classification	Estimated Fair Value
Interest-rate swap	Other long-term assets	$	54	Other long-term assets	$	36

10. FAIR VALUE MEASUREMENTS

ASC 820, Fair Value Measurement, defines fair value as the exit price that would be received to sell an asset or paid to transfer a liability. Fair value is a market-based measurement that should be determined using assumptions that market participants would use in pricing an asset or liability. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which Level 1 and Level 2 are considered observable and Level 3 is considered unobservable:

Level 1 – Quoted prices in active markets for identical assets or liabilities.                      

Level 2 – Inputs other than Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means.                      

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Value is determined using pricing models, discounted cash flow methodologies, or similar techniques and also includes instruments for which the determination of fair value requires significant judgment or estimation.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses of the Company approximate fair value based on the short maturities of these instruments.

The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level of classification as of the end of each reporting period. The following table sets forth the Company’s financial assets and liabilities that were measured at fair value on a recurring basis and the fair value measurement for such assets and liabilities at December 31, and June 30, 2022:

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(Dollars in millions)	Basis of Fair Value Measurement
December 31, 2022	Total		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	28	$	28	$	—	$	—
Interest-rate swap	54		—		54		—
Trading securities	1		1		—		—
June 30, 2022
Assets:
Marketable securities	$	89	$	89	$	—	$	—
Interest-rate swap	36		—		36		—
Trading securities	2		2		—		—

The fair value of the 2021 Rate Swap is determined at the end of each reporting period based on valuation models that use interest rate yield curves and discount rates as inputs. The discount rates are based on U.S. deposit or U.S. Treasury rates. The significant inputs used in the valuation models are readily available in public markets or can be derived from observable market transactions, and the valuation is therefore classified as Level 2 in the fair-value hierarchy.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

Long-lived assets, goodwill, and other intangible assets are subject to non-recurring fair value measurement for the evaluation of potential impairment. There was no non-recurring fair value measurement during the six months ended December 31, 2022.

11.    INCOME TAXES

The Company accounts for income taxes in accordance with ASC 740, Income Taxes. Generally, fluctuations in the effective tax rate are due to changes in relative amounts of U.S. and non-U.S. pretax income, the tax impact of special items, and other discrete tax items. Discrete items include, but are not limited to, changes in non-U.S. statutory tax rates, amortization of certain assets, changes in the Company’s reserve for uncertain tax positions, and tax impact of certain equity compensation.

In the normal course of business, the Company is subject to examination by taxing authorities around the world. The Company is presently under audit in select jurisdictions in the United States and in Europe, but no material impact is expected to the financial results once these audits are completed.

ASC 740 provides guidance for the accounting of uncertain income tax positions recognized in the Company's tax filings. This guidance provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that, based on technical merits, the position will be sustained upon examination, including resolution of any related appeal or litigation process. As of December 31, and June 30, 2022, the Company's reserve against uncertain income tax positions was $4 million and $5 million, respectively. The majority of the reduction is attributable to the expiration of the statute of limitations on certain of the reserves. Interest and penalties related to uncertain tax positions are recognized as a component of income tax expense.

The Company recorded a provision for income taxes for the three months ended December 31, 2022 of $33 million relative to earnings before income taxes of $114 million. The Company recorded a provision for income taxes for the three months ended December 31, 2021 of $18 million relative to earnings before income taxes of $115 million. The relatively higher income tax provision on lower earnings before income taxes is the result of decreased pretax income in tax jurisdictions with favorable tax rates, equity related compensation benefits in the prior-year quarter, and foreign tax credits claimed in the prior-year quarter resulting from amended returns. Generally, fluctuations in the effective tax rate are due to changes in the geographic distribution of the Company's pretax income resulting from its business mix, changes in the tax impact of permanent differences, restructuring, special items, certain equity related compensation, and other discrete tax items that may have unique tax implications depending on the nature of the item.

The Company recorded a provision for income taxes for the six months ended December 31, 2022 of $36 million relative to earnings before income taxes of $117 million. The Company recorded a provision for income taxes for the six months ended

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December 31, 2021 of $28 million relative to earnings before income taxes of $218 million. The relatively higher income tax provision on lower earnings before income taxes is the result of decreased pretax income in tax jurisdictions with favorable tax rates and foreign tax credits claimed in the prior-year quarter resulting from amended returns. Generally, fluctuations in the effective tax rate are due to changes in the geographic distribution of the Company's pretax income resulting from its business mix, changes in the tax impact of permanent differences, restructuring, special items, certain equity related compensation, and other discrete tax items that may have unique tax implications depending on the nature of the item.

12.    EMPLOYEE RETIREMENT BENEFIT PLANS

Components of the Company’s net periodic benefit costs are as follows:

	Three Months Ended   December 31,				Six Months Ended   December 31,
(Dollars in millions)	2022		2021		2022		2021
Components of net periodic benefit cost:
Selling, general, and administrative expenses:
Service cost	$	1	$	1	$	2	$	2
Other expense, net:
Interest cost	2		1		4		2
Expected return on plan assets	(2)		(3)		(4)		(5)
Amortization (1)	—		1		—		2
Net amount recognized	$	1	$	—	$	2	$	1

(1) Amount represents the amortization of unrecognized actuarial losses.

As previously disclosed, the Company notified the trustees of a multi-employer pension plan of its withdrawal from participation in such plan in fiscal 2012. The actuarial review process administered by the plan trustees ended in fiscal 2015. The liability reported reflects the present value of the Company’s expected future long-term obligations. The estimated discounted value of the projected contributions related to such plans was $38 million as of December 31, 2022 and June 30, 2022, and is included within pension liability on the consolidated balance sheets. The annual cash impact associated with the Company’s obligations in such plan is approximately $2 million.    

13.    EQUITY AND ACCUMULATED OTHER COMPREHENSIVE LOSS

Description of Capital Stock

The Company is authorized to issue 1.00 billion shares of its Common Stock and 100 million shares of preferred stock, par value $0.01 per share. In accordance with the Company’s amended and restated certificate of incorporation, each share of Common Stock has one vote, and the Common Stock votes together as a single class. In 2019, the Company designated 1,000,000 shares of its preferred stock, par value $0.01, as its Series A Convertible Preferred Stock (the “Series A Preferred Stock”) and issued and sold 650,000 shares of the Series A Preferred Stock to affiliates of Leonard Green & Partners, L.P. In November 2021, the holders of the Series A Preferred Stock converted all then-outstanding shares of Series A Preferred Stock and $2 million of related unpaid accrued dividends into shares of Common Stock.

Accumulated Other Comprehensive Loss

The components of the changes in the cumulative translation adjustment, derivatives and hedges, minimum pension liability, and marketable securities for the three and six months ended December 31, 2022 and 2021 are presented below.

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	Three Months Ended   December 31,				Six Months Ended   December 31,
(Dollars in millions)	2022		2021		2022		2021
Foreign currency translation adjustments:
Net investment hedge	$	(85)	$	40	$	(4)	$	62
Long-term intercompany loans	31		(4)		(10)		(7)
Translation adjustments	155		(45)		(5)		(73)
Total foreign currency translation adjustment, pretax	101		(9)		(19)		(18)
Tax (benefit) expense	(17)		9		(2)		14
Total foreign currency translation adjustment, net of tax	$	118	$	(18)	$	(17)	$	(32)
Net change in derivatives and hedges:
Net gain recognized during the period	$	—	$	4	$	18	$	5
Total derivatives and hedges, pretax	—		4		18		5
Tax expense	—		1		4		1
Net change in derivatives and hedges, net of tax	$	—	$	3	$	14	$	4
Net change in minimum pension liability:
Net gain recognized during the period	$	—	$	—	$	—	$	1
Total pension liability, pretax	—		—		—		1
Tax benefit	—		—		—		—
Net change in minimum pension liability, net of tax	$	—	$	—	$	—	$	1
Net change in marketable securities:
Net gain (loss) recognized during the period	$	1	$	(1)	$	1	$	(1)
Amounts reclassified from accumulated other     comprehensive loss	1		—		2		—
Net change in marketable securities, pretax	2		(1)		3		(1)
Tax expense	1		$	—	1		$	—
Net change in marketable securities, net of tax	$	1	$	(1)	$	2	$	(1)

For the three months ended December 31, 2022 and 2021, the changes in accumulated other comprehensive loss, net of tax by component are as follows:    

(Dollars in millions)	Foreign Exchange Translation Adjustments		Pension and Liability Adjustments		Derivatives and Hedges		Marketable Securities		Other		Total
Balance at September 30, 2022	$	(513)	$	(38)	$	41	$	(3)	$	(1)	$	(514)
Other comprehensive income before     reclassifications	118		—		—		—		—		118
Amounts reclassified from accumulated other     comprehensive loss	—		—		—		1		—		1
Net current period other comprehensive     income	118		—		—		1		—		119
Balance at December 31, 2022	$	(395)	$	(38)	$	41	$	(2)	$	(1)	$	(395)

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(Dollars in millions)	Foreign Exchange Translation Adjustments		Pension and Liability Adjustments		Derivatives and Hedges		Marketable Securities		Other		Total
Balance at September 30, 2021	$	(282)	$	(46)	$	1	$	(1)	$	(1)	$	(329)
Other comprehensive (loss) income before     reclassifications	(18)		—		3		(1)		—		(16)
Amounts reclassified from accumulated other     comprehensive loss	—		—		—		—		—		—
Net current period other comprehensive (loss)     income	(18)		—		3		(1)		—		(16)
Balance at December 31, 2021	$	(300)	$	(46)	$	4	$	(2)	$	(1)	$	(345)

For the six months ended December 31, 2022 and 2021, the changes in accumulated other comprehensive loss, net of tax by component are as follows:

(Dollars in millions)	Foreign Exchange Translation Adjustments		Pension and Liability Adjustments		Derivatives and Hedges		Marketable Securities		Other		Total
Balance at June 30, 2022	$	(378)	$	(38)	$	27	$	(4)	$	(1)	$	(394)
Other comprehensive (loss) income before     reclassifications	(17)		—		14		—		—		(3)
Amounts reclassified from accumulated other     comprehensive loss	—		—		—		2		—		2
Net current period other comprehensive (loss)     income	(17)		—		14		2		—		(1)
Balance at December 31, 2022	$	(395)	$	(38)	$	41	$	(2)	$	(1)	$	(395)

(Dollars in millions)	Foreign Exchange Translation Adjustments		Pension and Liability Adjustments		Derivatives and Hedges		Marketable Securities		Other		Total
Balance at June 30, 2021	$	(268)	$	(47)	$	—	$	(1)	$	(1)	$	(317)
Other comprehensive (loss) income before     reclassifications	(32)		—		4		(1)		—		(29)
Amounts reclassified from accumulated other     comprehensive loss	—		1		—		—		—		1
Net current period other comprehensive (loss)     income	(32)		1		4		(1)		—		(28)
Balance at December 31, 2021	$	(300)	$	(46)	$	4	$	(2)	$	(1)	$	(345)

14.    COMMITMENTS AND CONTINGENCIES

From time to time, the Company may be involved in legal proceedings arising in the ordinary course of business, including, without limitation, inquiries and claims concerning environmental contamination as well as litigation and allegations in connection with acquisitions, product liability, manufacturing or packaging defects, and claims for reimbursement for the cost of lost or damaged active pharmaceutical ingredients, the cost of any of which could be significant. The Company intends to vigorously defend itself against any such litigation and does not currently believe that the outcome of any such litigation will have a material adverse effect on the Company’s consolidated financial statements. In addition, the healthcare industry is highly regulated and government agencies continue to scrutinize certain practices affecting government programs and otherwise.

From time to time, the Company receives subpoenas or requests for information relating to the business practices and activities of customers or suppliers from various governmental agencies or private parties, including from state attorneys general, the U.S. Department of Justice, and private parties engaged in patent infringement, antitrust, tort, and other litigation. The Company generally responds to such subpoenas and requests in a timely and thorough manner, which responses sometimes

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require considerable time and effort and can result in considerable costs being incurred. The Company expects to incur costs in future periods in connection with future requests.

15.    SEGMENT INFORMATION

The Company evaluates the performance of its segments based on segment earnings before other (expense) income, impairments, restructuring costs, interest expense, income tax expense, and depreciation and amortization (“Segment EBITDA”).

Segment EBITDA is subject to important limitations. These consolidated financial statements include information concerning Segment EBITDA (a) because Segment EBITDA is an operational measure used by management in the assessment of the operating segments, the allocation of resources to the segments, and the setting of strategic goals and annual goals for the segments, and (b) in order to provide supplemental information that the Company considers relevant for the readers of the consolidated financial statements. The Company’s presentation of Segment EBITDA may not be comparable to similarly titled measures used by other companies.

The following tables include Segment EBITDA for each of the Company's current reportable segments during the three and six months ended December 31, 2022 and 2021:

(Dollars in millions)	Three Months Ended   December 31,				Six Months Ended   December 31,
	2022		2021		2022		2021
Segment EBITDA reconciled to net earnings:
Biologics	$	181	$	199	$	294	$	366
Pharma and Consumer Health	135		147		243		246
Sub-Total	$	316	$	346	$	537	$	612
Reconciling items to net earnings
Unallocated costs (1)	(52)		(101)		(139)		(157)
Depreciation and amortization	(103)		(98)		(202)		(179)
Interest expense, net	(47)		(32)		(79)		(58)
Income tax expense	(33)		(18)		(36)		(28)
Net earnings	$	81	$	97	$	81	$	190

(1) Unallocated costs include restructuring and special items, stock-based compensation, gain on sale of subsidiary, impairment charges, certain other corporate directed costs, and other costs that are not allocated to the segments as follows:                                                        

(Dollars in millions)	Three Months Ended   December 31,				Six Months Ended   December 31,
	2022		2021		2022		2021
Impairment charges and gain/loss on sale of assets(a)	$	(1)	$	(16)	$	1	$	(19)
Stock-based compensation	(10)		(11)		(29)		(32)
Restructuring and other special items(b)	(33)		(23)		(42)		(31)
Gain on sale of subsidiary(c)	—		—		—		1
Other income (expense), net(d)	23		(14)		(2)		(23)
Unallocated corporate costs, net	(31)		(37)		(67)		(53)
Total unallocated costs	$	(52)	$	(101)	$	(139)	$	(157)

(a) Impairment charges and gain/loss on sale of assets during the three and six months ended December 31, 2021 include fixed asset impairment charges associated with a product in the Pharma and Consumer Health segment.

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(b)    Restructuring and other special items during the three months ended December 31, 2022 include (i) restructuring charges associated with our plans to reduce costs, consolidate facilities, and optimize our infrastructure across the organization and (ii) transaction and integration costs associated with our Metrics acquisition. Restructuring and other special items for the six months ended December 31, 2022 also includes warehouse exit costs for a product the Company no longer manufactures in its Pharma and Consumer Health segment. For further details on restructuring charges, see Note 8, Restructuring Costs.

Restructuring and other special items during the three months ended December 31, 2021 include (a) transaction and integration costs primarily associated with the Bettera Wellness acquisition and (b) restructuring costs associated with the closure of the previously owned Bolton facility. Restructuring and other special items during the six months ended December 31, 2021 include (c) transaction and integration costs associated with the Delphi Genetics SA, Hepatic Cell Therapy Support SA, RheinCell Therapeutics GmbH, and Bettera Wellness acquisitions.

(c)    Gain on sale of subsidiary for the six months ended December 31, 2021 was due to the sale of the Company's facility in Woodstock, Illinois and the associated business.

(d)    Other income (expense), net during the three and six months ended December 31, 2022 and 2021 primarily includes foreign currency remeasurement losses/gains.

The following table includes total assets for each segment, as well as reconciling items necessary to total the amounts reported in the consolidated financial statements.

(Dollars in millions)	December 31, 2022		June 30, 2022
Assets:
Biologics	$	5,902	$	5,770
Pharma and Consumer Health	4,992		4,355
Corporate and eliminations	253		382
Total assets	$	11,147	$	10,507

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16. SUPPLEMENTAL BALANCE SHEET INFORMATION

Supplemental balance sheet information at December 31, 2022 and June 30, 2022 is detailed in the following tables.

Inventories

Work-in-process and inventories include raw materials, labor, and overhead. Total inventories consist of the following:

(Dollars in millions)	December 31, 2022		June 30, 2022
Raw materials and supplies	$	803	$	651
Work-in-process	144		109
Total inventories, gross	947		760
Inventory cost adjustment (1)	(129)		(58)
Total inventories	$	818	$	702

(1) Increase in inventory cost adjustment is primarily associated with the settlement of certain take-or-pay arrangements.

Prepaid expenses and other

Prepaid expenses and other consist of the following:

(Dollars in millions)	December 31, 2022		June 30, 2022
Prepaid expenses	$	67	$	61
Short-term contract assets	497		398
Spare parts supplies	23		22
Prepaid income tax	31		26
Non-U.S. value-added tax	37		48
Other current assets	59		70
Total prepaid expenses and other	$	714	$	625

Other accrued liabilities

Other accrued liabilities consist of the following:

(Dollars in millions)	December 31, 2022		June 30, 2022
Contract liabilities	$	175	$	185
Accrued employee-related expenses	143		198
Accrued expenses	123		140
Operating lease liabilities	12		14
Restructuring accrual	7		1
Accrued interest	33		32
Accrued income tax	34		50
Total other accrued liabilities	$	527	$	620

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company

We provide differentiated development and manufacturing solutions for drugs, protein-based biologics, cell and gene therapies, vaccines, and consumer health products at over fifty facilities across four continents under rigorous quality and operational standards. Our oral, injectable, and respiratory delivery technologies, along with our state-of-the-art protein and cell and gene therapy manufacturing capacity, address a wide and growing range of modalities and therapeutic and other categories across the biopharmaceutical and consumer health industries. Through our extensive capabilities, growth-enabling capacity, and

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deep expertise in product development, regulatory compliance, and clinical trial supply, we can help our customers take products to market faster, and have done so for nearly half of new drug products approved by the U.S. Food and Drug Administration (the “FDA”) in the last decade. Our development and manufacturing platforms, our proven formulation, supply, and regulatory expertise, and our broad and deep development and manufacturing know-how enable our customers to advance and then bring to market more products and better treatments for patients and consumers. Our commitment to reliably supply our customers’ and their patients’ needs is the foundation for the value we provide; annually, we produce more than 80 billion doses for nearly 8,000 customer products, or approximately 1 in every 23 doses of such products taken each year by patients and consumers around the world. We believe that through our investments in state-of-the-art facilities and capacity expansion, including investments in facilities focused on new treatment modalities and other attractive market segments, our continuous improvement activities devoted to operational and quality excellence, the sales of existing and introduction of new customer products, and, in some cases, our innovation activities and patents, we will continue to attract premium opportunities and realize the growth potential from these areas.

At the commencement of the first quarter of fiscal 2023, in connection with our change in Chief Executive Officer and Chief Operating Decision Maker, we adopted a new operating structure with two operating and reportable segments: (i) Biologics, and (ii) Pharma and Consumer Health. Our Biologics segment provides the same services as the segment we reported in fiscal 2022, with some organizational adjustments and the addition of analytical development and testing services for large molecules that we previously disclosed as part of our prior Oral and Specialty Delivery segment. The Biologics segment as reorganized provides development and manufacturing for biologic proteins; cell, gene, and other nucleic acid therapies; plasmid DNA; induced pluripotent stem cells (iPSCs); and vaccines. It also provides formulation, development, and manufacturing for parenteral dose forms, including vials, prefilled syringes, and cartridges; and, as noted above, analytical development and testing services for large molecules. Our Pharma and Consumer Health segment, except as noted above, comprises the offerings of three of our prior reportable segments—Softgel and Oral Technologies, Oral and Specialty Delivery and Clinical Supply Services—and comprises the Company’s market-leading capabilities for complex oral solids, softgel formulations, Zydis® fast-dissolve technologies, and gummy, soft chew, and lozenge dosage forms; formulation, development, and manufacturing platforms for oral, nasal, inhaled, and topical dose forms; and clinical trial development and supply services. Prior-period segment results were reclassified to conform to the current period presentation.

Critical Accounting Policies and Estimates

We prepare our financial statements in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). Management made certain estimates and assumptions during the preparation of the consolidated financial statements in accordance with U.S. GAAP. These estimates and assumptions affect the reported amount of assets and liabilities and disclosures of contingent assets and liabilities in the consolidated financial statements. These estimates also affect the reported amount of net earnings during the reporting periods. Actual results could differ from those estimates. Because of the size of the financial statement elements to which they relate, some of our accounting policies and estimates have a more significant impact on the consolidated financial statements than others.

There was no material change to our critical accounting policies or in the underlying accounting assumptions and estimates from those described in our Fiscal 2022 10-K.

Non-GAAP Metrics

EBITDA from operations

Management measures operating performance based on consolidated earnings from operations before interest expense, expense for income taxes, and depreciation and amortization, adjusted for the income or loss attributable to non-controlling interests (“EBITDA from operations”). EBITDA from operations is not defined under U.S. GAAP, is not a measure of operating income, operating performance, or liquidity presented in accordance with U.S. GAAP, and is subject to important limitations.

We believe that the presentation of EBITDA from operations enhances an investor’s understanding of our financial performance. We believe this measure is a useful financial metric to assess our operating performance from period to period by excluding certain items that we believe are not representative of our core business and use this measure for business planning purposes. In addition, given the significant historical investments that we have made in property, plant, and equipment, depreciation and amortization expenses represent a meaningful portion of our cost structure. We believe that EBITDA from operations will provide investors with a useful tool for assessing the comparability between periods of our ability to generate cash from operations sufficient to pay taxes, to service debt, and to undertake capital expenditures because it eliminates depreciation and amortization expense. We present EBITDA from operations in order to provide supplemental information that we consider relevant for the readers of our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q (the “Consolidated Financial Statements”), and such information is not meant to replace or supersede

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U.S. GAAP measures. Our definition of EBITDA from operations may not be the same as similarly titled measures used by other companies. The most directly comparable measure to EBITDA from operations defined under U.S. GAAP is net earnings. Included in this Management’s Discussion and Analysis is a reconciliation of net earnings to EBITDA from operations.

In addition, we evaluate the performance of our segments based on segment earnings before non-controlling interests, other expense (income), impairments, restructuring costs, interest expense, income tax expense, and depreciation and amortization (“Segment EBITDA”).

Use of Constant Currency

As exchange rates are an important factor in understanding period-to-period comparisons, we believe the presentation of results on a constant-currency basis in addition to reported results helps improve investors’ ability to understand our operating results and evaluate our performance in comparison to prior periods. Constant-currency information compares results between periods as if exchange rates had remained constant period-over-period. We use results on a constant-currency basis as one measure to evaluate our performance. In this Quarterly Report on Form 10-Q, we compute constant currency by calculating current-year results using prior-year foreign currency exchange rates. We generally refer to such amounts calculated on a constant-currency basis as excluding the impact of foreign currency exchange. These results should be considered in addition to, not as a substitute for, results reported in accordance with U.S. GAAP. Results on a constant-currency basis, as we present them, may not be comparable to similarly titled measures used by other companies and are not measures of performance presented in accordance with U.S. GAAP.

Other Non-GAAP Measures

Organic revenue growth and Segment EBITDA growth are measures we use to explain the underlying results and trends in the business. Organic revenue growth and Segment EBITDA growth are measures used to show current year sales and earnings from existing operations. Organic revenue growth and Segment EBITDA growth exclude the impact of foreign currency exchange, acquisitions of operating or legal entities, and divestitures within the year. These measures should be considered in addition to, not as a substitute for, performance measures reported in accordance with U.S. GAAP. These measures, as we present them, may not be comparable to similarly titled measures used by other companies and are not measures of performance presented in accordance with U.S. GAAP.

Restructuring Program

The pharmaceutical contract manufacturing industry is labor intensive. In addition, we incur significant fixed costs for facilities and other infrastructure required to obtain, manufacture, transport and test our products. Therefore, relatively small changes in demand can have a significant impact on short-term profitability.

In the second quarter of fiscal 2023, we engaged in a restructuring effort, which is designed to reduce our cost structure, consolidate facilities, and optimize our infrastructure across the organization. As the detailed plans of action were executed, it has resulted in charges to earnings. A material portion of the total estimated pre-tax charges expected to be incurred in fiscal 2023 are expected to result in cash expenditures. The actual charges incurred in connection with the course of action in 2023 could be materially different from these estimates.

In connection with these restructuring plans, we plan to reduce our headcount between 670 and 730 employees and incur cumulative employee-related charges between $14 and $20 million, primarily associated with cash severance programs. As a result of our restructuring plans, our goal is to deliver an annualized run-rate savings of $75 to $85 million as we exit fiscal 2023.

During the six months ended December 31, 2022, the cumulative charges recorded in connection with the adopted restructuring plans were $27 million of cumulative pre-tax employee separation costs and other restructuring related costs.

For further details regarding restructuring costs, see Note 8, Restructuring Costs, to the consolidated financial statements.

Three Months Ended December 31, 2022 Compared to the Three Months Ended December 31, 2021

The below tables summarize several financial metrics we use to measure performance for the three months ended December 31, 2022 and 2021. Refer to the discussions below regarding performance and use of key financial metrics.

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Results for the three months ended December 31, 2022 compared to the three months ended December 31, 2021 were as follows:        

	Three Months Ended   December 31,				FX Impact		Constant Currency Increase (Decrease)
(Dollars in millions)	2022		2021				Change $		Change %
Net revenue	$	1,149	$	1,217	$	(42)	$	(26)	(2)	%
Cost of sales	762		812		(30)		(20)		(2)	%
Gross margin	387		405		(12)		(6)		(2)	%
Selling, general, and administrative expenses	226		228		(3)		1		1	%
Other operating expense, net	23		16		(2)		9		44	%
Operating earnings	138		161		(7)		(16)		(10)	%
Interest expense, net	47		32		(1)		16		49	%
Other (income) expense, net	(23)		14		(1)		(36)		(256)	%
Earnings before income taxes	114		115		(5)		4		4	%
Income tax expense	33		18		(2)		17		102	%
Net earnings	$	81	$	97	$	(3)	$	(13)	(13)	%

Change % calculations are based on amounts prior to rounding

Net Revenue

	2022 vs. 2021
Year-Over-Year Change	Three Months Ended   December 31,
	Net Revenue
Organic	(4)	%
Impact of acquisitions	2	%
Constant-currency change	(2)	%
Foreign currency translation impact on reporting	(4)	%
Total % change	(6)	%

Net revenue decreased $26 million, or 2%, excluding the impact of foreign exchange, compared to the three months ended December 31, 2021. Net revenue decreased 4% organically primarily due to a significant decline in demand for COVID-19 related programs and a decline in revenue from the manufacture of prescription products, partially offset by

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amounts due under certain take-or-pay arrangements in our Biologics segment, strong growth in non-COVID programs, particularly, our gene therapy offerings, as well as growth in our clinical development services.

Net revenue increased 2% inorganically as a result of acquisitions. We acquired a cell therapy commercial manufacturing facility and operations near Princeton, New Jersey in April 2022 and Metrics Contract Services (“Metrics”) in October 2022.

Gross Margin

Gross margin decreased $6 million, or 2%, compared to the three months ended December 31, 2021, excluding the impact of foreign exchange, primarily due to an unfavorable shift in product mix, and inflationary pressures. On a constant-currency basis, gross margin, as a percentage of revenue, increased 20 basis points to 33.5% in the three months ended December 31, 2022, compared to 33.3% in the prior-year period, primarily due to amounts due under certain take-or-pay arrangements, partially offset by an unfavorable shift in product mix and inflationary pressures.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses increased $1 million, or 1%, compared to the three months ended December 31, 2021, excluding the impact of foreign exchange. The year-over-year increase in selling, general, and administrative expenses was primarily due to $7 million in net incremental expenses from acquired companies and a $4 million increase in our provision for bad debt, partially offset by a $10 million decline in acquisition, transaction, and integration costs.

Other Operating Expense, net

Other operating expense for the three months ended December 31, 2022 increased by $9 million, or 44%, compared to the three months ended December 31, 2021, when excluding the impact of foreign exchange. The year-over-year increase in other operating expense, net was primarily due to a $22 million increase in restructuring charges primarily associated with our plan to reduce costs, consolidate facilities and optimize infrastructure across the organization, partially offset by a $15 million decrease in asset impairment charges.

Interest Expense, net

Interest expense, net of $47 million for the three months ended December 31, 2022 increased $16 million, or 49%, compared to the three months ended December 31, 2021, excluding the impact of foreign exchange. The increase was primarily attributable to incremental interest expense on our most recent tranche of term loans and our borrowing on our revolving credit facility.

For additional information concerning our debt and financing arrangements, including the changing mix of debt and equity in our capital structure, see “Liquidity and Capital Resources” below and Note 5, Long-Term Obligations and Short-Term Borrowings to our Consolidated Financial Statements.

Other Income (Expense), net

Other income, net of $23 million for the three months ended December 31, 2022 was primarily driven by $25 million of foreign currency gains.

Other expense, net of $14 million for the three months ended December 31, 2021 was primarily driven by $15 million of foreign currency losses.

Income Tax Expense

Our provision for income taxes for the three months ended December 31, 2022 was $33 million relative to earnings before taxes of $114 million. Our provision for income taxes for the three months ended December 31, 2021 was $18 million relative to earnings before income taxes of $115 million. The relatively higher income tax provision on lower earnings before income taxes is the result of decreased pretax income in tax jurisdictions with favorable tax rates, equity related compensation benefits in the prior-year quarter, and foreign tax credits claimed in the prior-year quarter resulting from amended returns. Generally, fluctuations in the effective tax rate are due to changes in the geographic distribution of the Company's pretax income resulting from our business mix, changes in the tax impact of permanent differences, restructuring, special items, certain equity related compensation, and other discrete tax items that may have unique tax implications depending on the nature of the item.

Segment Review

The following charts depict the percentages of net revenue from each of our two reportable segments for the three months ended December 31, 2022 compared to the three months ended December 31, 2021. Refer below for discussions regarding each

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segment’s net revenue and EBITDA performance and to “Non-GAAP Metrics” for a discussion of our use of Segment EBITDA, a measure that is not defined under U.S. GAAP.

Our results on a segment basis for the three months ended December 31, 2022 compared to the three months ended December 31, 2021 were as follows:

	Three Months Ended   December 31,				FX Impact		Constant Currency Increase (Decrease)
(Dollars in millions)	2022		2021				Change $		Change %
Biologics
Net revenue	$	580	$	641	$	(15)	$	(46)	(7)	%
Segment EBITDA	181		199		(5)		(13)		(7)	%
Pharma Consumer Health
Net revenue	570		577		(27)		20		3	%
Segment EBITDA	135		147		(8)		(4)		(3)	%
Inter-segment revenue elimination	(1)		(1)		—		—		30	%
Unallocated Costs (1)	(52)		(101)		5		44		(44)	%
Combined totals
Net revenue	$	1,149	$	1,217	$	(42)	$	(26)	(2)	%
EBITDA from operations	$	264	$	245	$	(8)	$	27	11	%

Change % calculations are based on amounts prior to rounding

(1)    Unallocated costs include restructuring and special items, stock-based compensation, impairment charges, certain other corporate directed costs, and other costs that are not allocated to the segments as follows:

	Three Months Ended   December 31,
(Dollars in millions)	2022		2021
Impairment charges and gain/loss on sale of assets(a)	$	(1)	$	(16)
Stock-based compensation	(10)		(11)
Restructuring and other special items (b)	(33)		(23)
Other income (expense), net (c)	23		(14)
Unallocated corporate costs, net	(31)		(37)
Total unallocated costs	$	(52)	$	(101)

(a)    Impairment charges and gain/loss on sale of assets during the three months ended December 31, 2021 were primarily due to fixed asset impairment charges associated with dedicated equipment for a product that we no longer manufacture in our Pharma and Consumer Health segment.

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(b)    Restructuring and other special items during the three months ended December 31, 2022 include (i) restructuring charges associated with our plans to reduce costs, consolidate facilities, and optimize infrastructure across the organization and (ii) transaction and integration costs associated with our Metrics acquisition. Restructuring and other special items during the three months ended December 31, 2021 include (a) transaction and integration costs primarily associated with the acquisition of Bettera Holdings, LLC (“Bettera Wellness”) in October 2021, and (b) restructuring costs associated with the closure of our former facility in Bolton, U.K.

(c)    Refer to Note 7, Other (Income) Expense, Net for details recorded within other expense, net in our Consolidated Financial Statements.

Provided below is a reconciliation of net earnings to EBITDA from operations:

	Three Months Ended   December 31,
(Dollars in millions)	2022		2021
Net earnings	$	81	$	97
Depreciation and amortization	103		98
Interest expense, net	47		32
Income tax expense	33		18
EBITDA from operations	$	264	$	245

Biologics segment

	2022 vs. 2021
Year-Over-Year Change	Three Months Ended   December 31,
	Net Revenue		Segment EBITDA
Organic	(7)	%	(5)	%
Impact of acquisitions	—	%	(2)	%
Constant-currency change	(7)	%	(7)	%
Foreign exchange translation impact on reporting	(3)	%	(2)	%
Total % change	(10)	%	(9)	%

    

Biologics net revenue decreased by $46 million, or 7%, excluding the impact of foreign exchange, compared to the three months ended December 31, 2021. The decrease was primarily driven by a significant decline in demand for COVID-19 related programs, partially offset by amounts due under certain take-or-pay agreements and strong growth in non-COVID programs, particularly, our gene therapy offerings.

Biologics Segment EBITDA decreased by $13 million, or 7%, excluding the impact of foreign exchange, compared to the three months ended December 31, 2021. The decrease was primarily driven by a significant decline in demand for COVID-19 related programs, which was partially offset by (i) strong growth in non-COVID programs, particularly for our gene therapy offerings, and (ii) amounts due under certain take-or-pay agreements.

We completed the acquisition of our Princeton facility and operations in April 2022. For the three months ended December 31, 2022, this acquisition had an immaterial impact on our net revenue and Segment EBITDA.

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Pharma and Consumer Health segment

	2022 vs. 2021
Year-Over-Year Change	Three Months Ended   December 31,
	Net Revenue		Segment EBITDA
Organic	—	%	(7)	%
Impact of acquisitions	3	%	4	%
Constant-currency change	3	%	(3)	%
Foreign currency translation impact on reporting	(4)	%	(5)	%
Total % change	(1)	%	(8)	%

Pharma and Consumer Health net revenue increased by $20 million, or 3%, excluding the impact of foreign exchange, compared to the three months ended December 31, 2021. Organic revenue was consistent with the prior-year period. Growth in our clinical development services was offset by a decline in revenue from the manufacture of prescription products.

Pharma and Consumer Health Segment EBITDA decreased $4 million, or 3%, excluding the impact of foreign exchange, compared to the three months ended December 31, 2021. The organic portion of the decrease was driven by inflationary pressures and a decline in prescription products revenue, partially offset by growth in our clinical development services.

We acquired Metrics in October 2022, which increased net revenue and Segment EBITDA on an inorganic basis by 3% and 4%, respectively, in the three months ended December 31, 2022, compared to the corresponding prior-year period.

Six Months Ended December 31, 2022 Compared to the Six Months Ended December 31, 2021

The below tables summarize several financial metrics we use to measure performance for the six months ended December 31, 2022 and six months ended December 31, 2021. Refer to the discussions below regarding performance and use of key financial metrics.

Results for the six months ended December 31, 2022 compared to the six months ended December 31, 2021 were as follows:

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	Six Months Ended   December 31,				FX Impact		Constant Currency Increase (Decrease)
(Dollars in millions)	2022		2021				Change $		Change %
Net revenue	$	2,171	$	2,242	$	(90)	$	19	1	%
Cost of sales	1,526		1,513		(65)		78		5	%
Gross margin	645		729		(25)		(59)		(8)	%
Selling, general, and administrative expenses	422		411		(10)		21		5	%
Gain on sale of subsidiary	—		(1)		—		1		*
Other operating expense	25		20		(1)		6		25	%
Operating earnings	198		299		(14)		(87)		(29)	%
Interest expense, net	79		58		(1)		22		39	%
Other expense, net	2		23		(9)		(12)		(53)	%
Earnings before income taxes	117		218		(4)		(97)		(45)	%
Income tax expense	36		28		(3)		11		42	%
Net earnings	$	81	$	190	$	(1)	$	(108)	(57)	%

* Not meaningful

Change % calculations are based on amounts prior to rounding 

Net Revenue

	2022 vs. 2021
Year-Over-Year Change	Six Months Ended   December 31,
	Net Revenue
Organic	(2)	%
Impact of acquisitions	3	%
Constant-currency change	1	%
Foreign currency translation impact on reporting	(4)	%
Total % change	(3)	%

Net revenue increased by $19 million, or 1%, excluding the impact of foreign exchange, compared to the six months ended December 31, 2021. Net revenue decreased 2% organically on a constant-currency basis, primarily related to a significant decline in demand for COVID-19 related programs and a decline in revenue from the manufacture of prescription products, partially offset by amounts due under certain take-or-pay arrangements in our Biologics segment, a strong growth in non-COVID programs, particularly, our gene therapy offerings, as well as growth in our clinical development services.

Net revenue increased 3% inorganically as a result of acquisitions. We acquired RheinCell Therapeutics GmbH (“RheinCell”) in August 2021, Bettera Wellness in October 2021, our Princeton facility and operations in April 2022 and Metrics in October 2022.

Gross Margin

Gross margin decreased by $59 million, or 8%, compared to the six months ended December 31, 2021, excluding the impact of foreign exchange, primarily due to an unfavorable shift in product mix, lower levels of utilization across the network, the impact from remediation-related activities at our Brussels facility, and inflationary pressures. On a constant-currency basis, gross margin, as a percentage of revenue, decreased 290 basis points to 29.6% in the six months ended December 31, 2022, compared to the corresponding prior-year period, primarily due to the factors described in the immediately preceding sentence.

Selling, General, and Administrative Expense

Selling, general, and administrative expense increased by $21 million, or 5%, compared to the six months ended December 31, 2021, excluding the impact of foreign exchange. The year-over-year increase in selling, general, and administrative expense was primarily due to $20 million in net incremental expenses from acquired companies and a $16 million increase for employee-related costs, partially offset by a $10 million decline in acquisition, transaction and integration costs and $11 million decrease of bad debt expense.

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Other Operating Expense

Other operating expense of $25 million for the six months ended December 31, 2022 increased by $6 million, or 25%, compared to the six months ended December 31, 2021, excluding the impact of foreign exchange. The year-over-year increase was primarily due to a $25 million increase in restructuring charges, partially offset by $15 million decrease in fixed asset impairment charges and a $4 million gain from sale of our former facility in Bolton, U.K.

Interest Expense, net

Interest expense, net of $79 million for the six months ended December 31, 2022 increased by $22 million, or 39%, compared to the six months ended December 31, 2021, excluding the impact of foreign exchange. The increase was primarily attributable to incremental interest expense on our most recent tranche of term loans, our U.S. dollar-denominated 3.500% senior notes due 2030, and our borrowings on our revolving credit facility.

Other (Income) Expense, net

Other expense, net of $2 million for the six months ended December 31, 2022 includes miscellaneous non-operating expenses.

Other expense, net for the six months ended December 31, 2021 of $23 million was primarily driven by $24 million of foreign currency losses, $4 million of financing charges related to our outstanding term loans, partially offset by a $2 million gain related to the change in fair value of the derivative liability arising from the dividend-adjustment mechanism of our formerly outstanding series A preferred stock.

Income Tax Expense

Our provision for income taxes for the six months ended December 31, 2022 was $36 million relative to earnings before income taxes of $117 million. Our provision for income taxes for the six months ended December 31, 2021 was $28 million relative to earnings before income taxes of $218 million. The relatively higher income tax provision on lower earnings before income taxes is the result of decreased pretax income in tax jurisdictions with favorable tax rates and foreign tax credits claimed in the prior-year quarter resulting from amended returns. Generally, fluctuations in the effective tax rate are due to changes in the geographic distribution of our pretax income resulting from our business mix, changes in the tax impact of permanent differences, restructuring, special items, certain equity related compensation, and other discrete tax items that may have unique tax implications depending on the nature of the item.

Segment Review

The following charts depict the percentage of net revenue for each of our two reportable segments for the six months ended December 31, 2022 compared to the six months ended December 31, 2021. Refer below for discussions regarding each segment's net revenue and EBITDA performance and to “Non-GAAP Metrics” for discussions of our use of Segment EBITDA and EBITDA from operations, measures that are not defined under U.S. GAAP.

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Our results on a segment basis for the six months ended December 31, 2022 compared to the six months ended December 31, 2021 were as follows:

	Six Months Ended   December 31,				FX Impact		Constant Currency Increase (Decrease)
(Dollars in millions)	2022		2021				Change $		Change %
Biologics
Net revenue	$	1,103	$	1,189	$	(29)	$	(57)	(5)	%
Segment EBITDA	294		366		(4)		(68)		(19)	%
Pharma Consumer Health
Net revenue	1,069		1,054		(61)		76		7	%
Segment EBITDA	243		246		(18)		15		6	%
Inter-segment revenue elimination	(1)		(1)		—		—		*
Unallocated Costs (1)	(139)		(157)		10		8		(5)	%
Combined totals
Net revenue	$	2,171	$	2,242	$	(90)	$	19	1	%
EBITDA from operations	$	398	$	455	$	(12)	$	(45)	(10)	%

Change % calculations are based on amounts prior to rounding

*Percentage not meaningful

(1) Unallocated costs include restructuring and special items, stock-based compensation, gain on sale of subsidiary, impairment charges, certain other corporate-directed costs, and other costs that are not allocated to the segments as follows:

	Six Months Ended   December 31,
(Dollars in millions)	2022		2021
Impairment charges and gain/loss on sale of assets (a)	$	1	$	(19)
Stock-based compensation	(29)		(32)
Restructuring and other special items (b)	(42)		(31)
Gain on sale of subsidiary (c)	—		1
Other expense, net (d)	(2)		(23)
Non-allocated corporate costs, net	(67)		(53)
Total unallocated costs	$	(139)	$	(157)

(a) Impairment charges and gain/loss on sale of assets during the six months ended December 31, 2021 include fixed asset impairment charges associated with a product we no longer manufacture in our Pharma and Consumer Health Segment.

(b) Restructuring and other special items during the six months ended December 31, 2022 include (i) restructuring charges associated with our plans to reduce costs, consolidate facilities, and optimize our infrastructure across the organization, (ii) transaction and integration costs associated with the Metrics acquisition and (iii) warehouse exit costs for a product we no longer manufacture in our Pharma and Consumer Health segment.

Restructuring and other special items during the six months ended December 31, 2021 include (i) transaction and integration costs associated with the acquisitions of Delphi Genetics SA, Hepatic Cell Therapy Support SA, RheinCell, and Bettera Wellness and (ii) restructuring costs associated with the closure of our former facility in Bolton U.K.

(c) For the six months ended December 31, 2021, gain on sale of subsidiary was due to the divestiture of our former facility in Woodstock, Illinois and the associated business.

(d)    Refer to Note 7, Other (Income) Expense, Net for details of financing charges and foreign currency translation adjustments recorded within other expense, net in our Consolidated Financial Statements.

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Provided below is a reconciliation of net earnings to EBITDA from operations:

	Six Months Ended   December 31,
(Dollars in millions)	2022		2021
Net earnings	$	81	$	190
Depreciation and amortization	202		179
Interest expense, net	79		58
Income tax expense	36		28
EBITDA from operations	$	398	$	455

Biologics segment

	2022 vs. 2021
Year-Over-Year Change	Six Months Ended   December 31,
	Net Revenue		Segment EBITDA
Organic	(5)	%	(17)	%
Impact of acquisitions	—	%	(2)	%
Constant-currency change	(5)	%	(19)	%
Foreign exchange translation impact on reporting	(2)	%	(1)	%
Total % change	(7)	%	(20)	%

Net revenue in our Biologics segment decreased by $57 million, or 5%, excluding the impact of foreign exchange, compared to the six months ended December 31, 2021. The decrease was primarily driven by a significant decline in demand for COVID-19 related programs, partially offset by strong growth in non-COVID programs, particularly, our gene therapy offerings.

Biologics Segment EBITDA decreased by $68 million, or 19%, excluding the impact of foreign exchange, compared to the six months ended December 31, 2021. Segment EBITDA decreased 17%, compared to the six months ended December 31, 2021, excluding the impact of acquisitions. The decrease was primarily driven by a significant decline in demand for COVID-19 related programs, lower levels of utilization across the Biologics network, as well as an unfavorable impact from remediation-related activities at our Brussels facility, which were partially offset by strong growth in non-COVID programs, particularly, for our gene therapy offerings.

We completed the acquisitions of RheinCell in August 2021 and our Princeton facility and operations in April 2022. For the six months ended December 31, 2022, these acquisitions decreased Segment EBITDA on an inorganic basis by 2% compared to the corresponding prior-year period and had an immaterial impact on our net revenue.

Pharma and Consumer Health segment

	2022 vs. 2021
Year-Over-Year Change	Six Months Ended   December 31,
	Net Revenue		Segment EBITDA
Organic	—	%	(1)	%
Impact of acquisitions	7	%	7	%
Constant-currency change	7	%	6	%
Foreign exchange translation impact on reporting	(6)	%	(7)	%
Total % change	1	%	(1)	%

Pharma and Consumer Health net revenue increased $76 million, or 7%, excluding the impact of foreign exchange, compared to the six months ended December 31, 2021. Net revenue was flat compared to the six months ended December 31, 2021, excluding the impact of acquisitions. Growth in our clinical development services was offset by a decline in revenue from the manufacture of prescription products.

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Pharma and Consumer Health Segment EBITDA increased $15 million, or 6%, excluding the impact of foreign exchange, compared to the six months ended December 31, 2021. Segment EBITDA decreased 1%, compared to the six months ended December 31, 2021, excluding the impact of acquisitions. The decrease in organic Segment EBITDA was primarily driven by inflationary pressures and a decline in revenue from the manufacture of prescription products, which were partially offset by growth in our clinical development services.

We completed the Bettera Wellness acquisition in October 2021 and the Metrics acquisition in October 2022, which together increased net revenue and Segment EBITDA on an inorganic basis by 7% during the six months ended December 31, 2022, compared to the corresponding prior-year period.

Liquidity and Capital Resources

Sources and Uses of Cash

Our principal sources of liquidity have been cash flows generated from operations and occasional capital market activities. The principal uses of cash are to fund operating and capital expenditures, business or asset acquisitions, interest payments on our debt, and any mandatory or discretionary principal payment on our debt. As of December 31, 2022, Catalent Pharma Solutions, Inc., our principal operating subsidiary (“Operating Company”), following the November 2022 execution of Amendment No. 7 to the amended and restated credit agreement, dated as of May 20, 2014, governing our senior secured credit facilities (as amended, the “Credit Agreement”), which increased the capacity of our revolving credit facility to $1.10 billion and extended its maturity to November 2027, had available $496 million in borrowing capacity under our revolving credit facility, due to $600 million in short-term borrowings outstanding and $4 million in letters of credit outstanding as of December 31, 2022. We have elected to classify the borrowing on our revolving credit facility as current as we intend to repay a portion of the borrowing using cash flow from operations and/or refinance the borrowing through a senior notes offering within the next twelve months.

We believe that our cash on hand, cash from operations, and available borrowings under our revolving credit facility will be adequate to meet our liquidity needs for at least the next 12 months, as well as the amounts expected to become due with respect to our pending capital projects.

Cash Flows

The following table summarizes our consolidated statements of cash flows:

	Six Months Ended   December 31,
(Dollars in millions)	2022		2021		$ Change
Net cash provided by (used in):
Operating activities	$	122	$	232	$	(110)
Investing activities	$	(724)	$	(1,299)	$	575
Financing activities	$	597	$	1,033	$	(436)

Operating Activities

For the six months ended December 31, 2022, cash provided by operations was $122 million compared to $232 million in cash provided by operating activities for the six months ended December 31, 2021. The year-over-year change was primarily due to a decrease in operating earnings, an unfavorable impact from the growth in inventory, an unfavorable timing impact on the disbursements of accounts payable, an increase in interest payments and an increase in severance payments related to our newly adopted restructuring plans, partially offset by a favorable impact from the collection of trade receivables.

Investing Activities

For the six months ended December 31, 2022, cash used in investing activities was $724 million, compared to $1.30 billion for the six months ended December 31, 2021. The decrease in cash used in investing activities was primarily driven by the decrease in payment for acquisitions and an increase in proceeds from the sale of marketable securities.

Financing Activities

For the six months ended December 31, 2022, cash provided by financing activities was $597 million, compared to cash provided by financing activities of $1.03 billion for the six months ended December 31, 2021. The decrease in cash provided by financing activities was primarily driven by a $475 million decline in proceeds from borrowings.

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Debt Covenants

Senior Secured Credit Facilities

The Credit Agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, our (and our restricted subsidiaries’) ability to incur additional indebtedness or issue certain preferred shares; create liens on assets; engage in mergers and consolidations; sell assets; pay dividends and distributions or repurchase capital stock; repay subordinated indebtedness; engage in certain transactions with affiliates; make investments, loans, or advances; make certain acquisitions; enter into sale and leaseback transactions; amend material agreements governing our subordinated indebtedness; and change our lines of business.

The Credit Agreement also contains change-of-control provisions and certain customary affirmative covenants and events of default. The revolving credit facility requires compliance with a net leverage covenant when there is a 30% or more draw outstanding at a period end. As of December 31, 2022, we were in compliance with all material covenants under the Credit Agreement.

Subject to certain exceptions, the Credit Agreement permits us and our restricted subsidiaries to incur certain additional indebtedness, including secured indebtedness. None of our non-U.S. subsidiaries or our Puerto Rico subsidiary is a guarantor of the loans.

Under the Credit Agreement, our ability to engage in certain activities such as incurring certain additional indebtedness, making certain investments, and paying certain dividends is tied to ratios based on Adjusted EBITDA (which is defined as “Consolidated EBITDA” in the Credit Agreement). Adjusted EBITDA is based on the definitions in the Credit Agreement, is not defined under U.S. GAAP, and is subject to important limitations.

The Senior Notes

The several indentures governing each series of our outstanding senior notes (collectively, the “Indentures”) contain certain covenants that, among other things, limit our ability to incur or guarantee more debt or issue certain preferred shares; pay dividends on, repurchase, or make distributions in respect of their capital stock or make other restricted payments; make certain investments; sell certain assets; create liens; consolidate, merge, sell; or otherwise dispose of all or substantially all of their assets; enter into certain transactions with their affiliates, and designate their subsidiaries as unrestricted subsidiaries. These covenants are subject to a number of exceptions, limitations, and qualifications as set forth in the Indentures. The Indentures also contain customary events of default, including, but not limited to, nonpayment, breach of covenants, and payment or acceleration defaults in certain other indebtedness of Operating Company or certain of its subsidiaries. Upon an event of default, either the holders of at least 30% in principal amount of each of the then-outstanding series of Senior Notes, or the applicable Trustee under the Indentures, may declare the applicable senior notes immediately due and payable; or in certain circumstances, the applicable senior notes will become automatically immediately due and payable. As of December 31, 2022, Operating Company was in compliance with all material covenants under the Indentures.

Capital Resources

As market conditions warrant, we and our affiliates may from time to time seek to purchase our outstanding debt in privately negotiated or open-market transactions, by tender offer or otherwise. Subject to any applicable limitation contained in the Credit Agreement, any purchase made by us may be funded by the use of cash on hand or the incurrence of new secured or unsecured debt. The amounts involved in any such purchase transaction, individually or in the aggregate, may be material. Any such purchase may be with respect to a substantial amount of a particular class or series of debt, with the attendant reduction in the trading liquidity of such class or series. In addition, any such purchase made at prices below the “adjusted issue price” (as defined for U.S. federal income tax purposes) may result in taxable cancellation of indebtedness income to us, which amounts may be material, or in related adverse tax consequences to us.

Geographic Allocation of Cash

As of December 31, 2022 and June 30, 2022, our non-U.S. subsidiaries held cash and cash equivalents of $301 million and $377 million, respectively, out of the total consolidated cash and cash equivalents of $442 million and $449 million, respectively. These balances are dispersed across many locations around the world.

Interest Rate Risk Management

A portion of the debt used to finance our operations is exposed to interest-rate fluctuations. We may use various hedging strategies and derivative financial instruments to create an appropriate mix of fixed- and floating-rate assets and liabilities. In February 2021, we entered into an interest-rate swap agreement with Bank of America N.A. that acts as a hedge against the

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economic effect of a portion of the variable-interest obligation associated with our U.S. dollar-denominated term loans under our senior secured credit facilities, so that the interest payable on that portion of the debt becomes fixed at a certain rate, thereby reducing the impact of future interest-rate changes on future interest expense. The applicable rate for the U.S. dollar-denominated term loan under the Credit Agreement was LIBOR (subject to a floor of 0.50%) plus 2.00% as of December 31, 2022; however, as a result of this interest-rate swap agreement, the variable portion of the applicable rate on $500 million of the term loan was effectively fixed at 0.9985% as of February 2021.

Currency Risk Management

We are exposed to fluctuations in the euro-U.S. dollar exchange rate on our investments in our operations in Europe. While we do not actively hedge against changes in foreign currency, we have mitigated the exposure of our investments in our European operations by denominating a portion of our debt in euros. At December 31, 2022, we had $879 million of euro-denominated debt outstanding that qualifies as a hedge of a net investment in European operations. Refer to Note 9, Derivative Instruments and Hedging Activities, to our Consolidated Financial Statements for further discussion of net investment hedge activity in the period.

From time to time, we may use forward foreign currency exchange contracts to manage our exposure to the variability of cash flows primarily related to the foreign exchange rate changes of future foreign currency transaction costs. In addition, we may use such contracts to protect the value of existing foreign currency assets and liabilities. Currently, we do not use any forward foreign currency exchange contracts. We continue to evaluate hedging opportunities for foreign currency in the future.

Off-Balance Sheet Arrangements

Other than short-term operating leases and outstanding letters of credit as discussed above, we do not have any material off-balance sheet arrangement as of December 31, 2022.

44

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a discussion of our quantitative and qualitative disclosures about market risks, see the section titled Quantitative and Qualitative Disclosures About Market Risks in our Fiscal 2022 10-K. As of December 31, 2022, there has been no material change in this information.

45

ITEM 4.    CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Senior Vice President and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any control or procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management, with the participation of our Chief Executive Officer and our Senior Vice President and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our Chief Executive Officer and our Senior Vice President and Chief Financial Officer concluded that, as of December 31, 2022, our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There was no change that materially affected, or is reasonably likely to materially affect, Catalent’s internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q.

46

PART II.    OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

From time to time, we may be involved in legal proceedings arising in the ordinary course of business, including, without limitation, inquiries and claims concerning environmental contamination as well as litigation and allegations in connection with acquisitions, product liability, manufacturing or packaging defects, and claims for reimbursement for the cost of lost or damaged active pharmaceutical ingredients, the cost of any of which could be significant. We intend to vigorously defend ourselves against any such litigation and do not currently believe that the outcome of any such litigation will have a material adverse effect on our consolidated financial statements. In addition, the healthcare industry is highly regulated, and government agencies continue to scrutinize certain practices affecting government programs and otherwise.

From time to time, we receive subpoenas or requests for information relating to the business practices and activities of customers or suppliers from various governmental agencies or private parties, including from state attorneys general, the U.S. Department of Justice, and private parties engaged in patent infringement, antitrust, tort, and other litigation. We generally respond to such subpoenas and requests in a timely and thorough manner, which responses sometimes require considerable time and effort and can result in considerable costs being incurred. We expect to incur costs in future periods in connection with future requests.

ITEM 1A.    RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in the section entitled “Risk Factors” in our Fiscal 2022 10-K, which could materially affect our business, financial condition, or future results. The risks described in such report are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, or operating results.

Other than what was disclosed in the Special Note Regarding Forward-Looking Statements, there has been no material change to the risk factors disclosed in our Fiscal 2022 10-K.

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

Purchase of Equity Securities

None.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.    MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.    OTHER INFORMATION

Not applicable.

47

ITEM 6.    EXHIBITS

Exhibits:

10.1	Amendment No. 7 to Amended and Restated Credit Agreement, dated as of November 22, 2022, by and among Catalent Pharma Solutions, Inc., PTS Intermediate Holdings LLC, JP Morgan Chase Bank, N.A., as the administrative agent, collateral agent, swing line lender, and letter of credit issuer, and the lenders and other parties thereto, which amends that certain Amended and Restated Credit Agreement, dated as of May 20, 2014 (as amended), by and among Catalent Pharma Solutions, Inc., PTS Intermediate Holdings LLC, JP Morgan Chase Bank, N.A., as the successor administrative agent, collateral agent, swing line lender, and letter of credit issuer, and the lenders and other parties thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 22, 2022).
31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended. *
31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended. *
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
101	The following financial information from Catalent, Inc.’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2022 formatted in inline XBRL: (i) Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2022 and 2021; (ii) Consolidated Statements of Comprehensive Income for the Three and Six Months Ended December 31, 2022 and 2021 (iii) Consolidated Balance Sheets as of December 31, 2022 and June 30, 2022; (iv) Consolidated Statement of Changes in Shareholders’ Equity for the Three and Six Months Ended December 31, 2022 and 2021; (v) Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2022 and 2021; and (vi) Notes to Unaudited Consolidated Financial Statements.
104	The cover page of this Quarterly Report on Form 10-Q, formatted as Inline XBRL and contained in Exhibit 101.

*	Filed herewith
**	Furnished herewith
†	Represents a management contract, compensatory plan or arrangement in which directors and/or executive officers are eligible to participate.

48

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

		CATALENT, INC. (Registrant)
Date:	February 7, 2023	By:	/s/ KAREN SANTIAGO
			Karen Santiago
			Vice President and Chief Accounting Officer

49

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Alessandro Maselli, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the period ended December 31, 2022 of Catalent, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ ALESSANDRO MASELLI

Alessandro Maselli

President and Chief Executive Officer

(Principal Executive Officer)

Date: February 7, 2023

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Thomas Castellano, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the period ended December 31, 2022 of Catalent, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ THOMAS CASTELLANO

Thomas Castellano

Senior Vice President and

Chief Financial Officer

(Principal Financial Officer)

Date: February 7, 2023

EX-32.1

Exhibit 32.1

Certification of the Chief Executive Officer

Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Catalent, Inc. (the “Company”) on Form 10-Q for the period ended December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alessandro Maselli, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 7, 2023

/s/ ALESSANDRO MASELLI

Alessandro Maselli

President and Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification of the Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Catalent, Inc. (the “Company”) on Form 10-Q for the period ended December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas Castellano, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 7, 2023

/s/ THOMAS CASTELLANO

Thomas Castellano

Senior Vice President and

Chief Financial Officer

XML

Document and Entity Information - shares	6 Months Ended
	Dec. 31, 2022	Jan. 31, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Dec. 31, 2022
Document Transition Report	false
Entity File Number	001-36587
Entity Registrant Name	Catalent, Inc.
Entity Incorporation, State or Country Code	DE
Entity Address, State or Province	NJ
Entity Tax Identification Number	20-8737688
Entity Address, Address Line One	14 Schoolhouse Road
Entity Address, City or Town	Somerset,
Entity Address, Postal Zip Code	08873
City Area Code	(732)
Local Phone Number	537-6200
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Title of 12(b) Security	Common Stock
Trading Symbol	CTLT
Security Exchange Name	NYSE
Amendment Flag	false
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Entity Central Index Key	0001596783
Current Fiscal Year End Date	--06-30
Entity Common Stock, Shares Outstanding (shares)		180,090,483

XML

Consolidated Statements of Operations - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Income Statement [Abstract]
Net revenue		$ 1,149.0	$ 1,217.0	$ 2,171.0	$ 2,242.0
Cost of sales		762.0	812.0	1,526.0	1,513.0
Gross margin		387.0	405.0	645.0	729.0
Selling, general, and administrative expenses		226.0	228.0	422.0	411.0
Payments for (Proceeds from) Businesses and Interest in Affiliates	[1]	0.0	0.0	0.0	(1.0)
Other Cost and Expense, Operating		23.0	16.0	25.0	20.0
Operating earnings		138.0	161.0	198.0	299.0
Interest expense, net		47.0	32.0	79.0	58.0
Other (income)/expense, net	[2]	(23.0)	14.0	2.0	23.0
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest, Total		114.0	115.0	117.0	218.0
Income tax expense		33.0	18.0	36.0	28.0
Net earnings/(loss)		81.0	97.0	81.0	190.0
Participating Securities, Distributed and Undistributed Earnings (Loss), Basic		0.0	4.0	0.0	13.0
Net Income (Loss) Available to Common Stockholders, Basic		$ 81.0	$ 93.0	$ 81.0	$ 177.0
Earnings Per Share, Basic		$ 0.45	$ 0.53	$ 0.45	$ 1.02
Earnings Per Share, Diluted		$ 0.44	$ 0.52	$ 0.45	$ 1.01

[1] Gain on sale of subsidiary for the six months ended December 31, 2021

[2] Other income (expense), net during the three and six months ended December 31, 2022 and 2021 primarily includes foreign currency remeasurement losses/gains.

XML

Consolidated Statements of Comprehensive Income / (Loss) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Other comprehensive income/(loss), net of tax
Net earnings/(loss)	$ 81.0	$ 97.0	$ 81.0	$ 190.0
Foreign currency translation adjustments	118.0	(18.0)	(17.0)	(32.0)
Pension and other post-retirement adjustments	0.0	0.0	0.0	1.0
Available for sale investments	1.0	(1.0)	2.0	(1.0)
Net change in derivatives and hedges, net of tax	0.0	3.0	14.0	4.0
Other comprehensive income/(loss), net of tax	119.0	(16.0)	(1.0)	(28.0)
Comprehensive income/(loss)	$ 200.0	$ 81.0	$ 80.0	$ 162.0

XML

Consolidated Balance Sheets - USD ($) $ in Millions	Dec. 31, 2022	Jun. 30, 2022
Current assets:
Cash and cash equivalents	$ 442	$ 449
Trade receivables, net	916	1,051
Inventories	818	702
Prepaid expenses and other	714	625
Marketable Securities	28	89
Total current assets	2,918	2,916
Property, plant, and equipment, net	3,579	3,127
Other assets:
Goodwill	3,215	3,006
Other intangibles, net	1,045	1,060
Deferred Income Tax Assets, Net	55	49
Other Assets, Noncurrent	335	349
Total assets	11,147	10,507
Current Liabilities:
Debt, Current	632	31
Accounts payable	367	421
Other accrued liabilities	527	620
Total current liabilities	1,526	1,072
Long-term obligations, less current portion	4,221	4,171
Pension liability	103	103
Deferred Income Taxes	221	202
Other liabilities	164	164
Total liabilities	6,235	$ 5,712
Temporary Equity, Carrying Amount, Attributable to Parent	$ 0
Common Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Common Stock, Shares Authorized	1,000,000,000	1,000,000,000
Common Stock, Value, Outstanding	$ 2	$ 2
Preferred Stock, Value, Outstanding	0	0
Additional paid in capital	4,686	4,649
Accumulated deficit	619	538
Accumulated other comprehensive income/(loss)	(395)	(394)
Total shareholders' equity	4,912	4,795
Total liabilities, redeemable preferred stock, and shareholders’ equity	$ 11,147	$ 10,507
Common stock, shares issued (shares)	180,000,000	179,000,000

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Dec. 31, 2022	Jun. 30, 2022
Statement of Financial Position [Abstract]
Common Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Common Stock, Shares Authorized	1,000,000,000	1,000,000,000
Common stock, shares issued (shares)	180,000,000	179,000,000
Common Stock, Shares, Outstanding	180,000,000	179,000,000
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	100,000,000	100,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Accounts Receivable, Allowance for Credit Loss, Current	$ 26	$ 29
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	$ 1,465	$ 1,347

XML

Consolidated Statement of Changes in Shareholder's Equity - USD ($)	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Income/(Loss)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Temporary Equity, Carrying Amount, Attributable to Parent	$ 359,000,000
Common Stock, Shares, Outstanding		170,549,000,000
Temporary Equity, Carrying Amount, Attributable to Parent	359,000,000
Beginning Balance at Jun. 30, 2021	3,915,000,000	$ 2,000,000	$ 4,205,000,000	$ 25,000,000	$ (317,000,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock Issued During Period, Value, Conversion of Convertible Securities	362,000,000		362,000,000
Stock-based compensation	32,000,000		32,000,000
Stock Issued During Period, Shares, Conversion of Convertible Securities		7,818,000,000
Cash paid, in lieu of equity, for tax withholding	(9,000,000)		(9,000,000)
APIC, Share-based Payment Arrangement, Option, Increase for Cost Recognition	6,000,000		6,000,000
Non-qualified stock	19,000,000		(19,000,000)
Dividends, Preferred Stock	6,000,000			(6,000,000)
Net earnings/(loss)	190,000,000			190,000,000
Other comprehensive income/(loss), net of tax	(28,000,000)				(28,000,000)
Ending Balance at Dec. 31, 2021	4,481,000,000	$ 2,000,000	4,615,000,000	209,000,000	(345,000,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture		683,000,000
Temporary Equity, Carrying Amount, Period Increase (Decrease)	(359,000,000)
Temporary Equity, Carrying Amount, Period Increase (Decrease)	(359,000,000)
Stock Issued During Period, Shares, Conversion of Convertible Securities		7,818,000,000
Temporary Equity, Carrying Amount, Attributable to Parent	359,000,000
Common Stock, Shares, Outstanding		171,033,000,000
Temporary Equity, Carrying Amount, Attributable to Parent	359,000,000
Beginning Balance at Sep. 30, 2021	4,021,000,000	$ 2,000,000	4,234,000,000	114,000,000	(329,000,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock Issued During Period, Value, Stock Options Exercised	0	0	0
Stock Issued During Period, Value, Conversion of Convertible Securities	362,000,000	$ 0	362,000,000
Stock-based compensation	11,000,000		11,000,000
Stock Issued During Period, Shares, Conversion of Convertible Securities		7,818,000,000
Cash paid, in lieu of equity, for tax withholding	(5,000,000)		(5,000,000)
APIC, Share-based Payment Arrangement, ESPP, Increase for Cost Recognition	2,000,000		2,000,000
Non-qualified stock			(11,000,000)
Dividends, Preferred Stock	2,000,000			2,000,000
Net earnings/(loss)	97,000,000			97,000,000
Other comprehensive income/(loss), net of tax	(16,000,000)				(16,000,000)
Ending Balance at Dec. 31, 2021	4,481,000,000	$ 2,000,000	4,615,000,000	209,000,000	(345,000,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Temporary Equity, Carrying Amount, Period Increase (Decrease)	(359,000,000)
Share issuances related to stock-based compensation		199,000,000
Temporary Equity, Carrying Amount, Period Increase (Decrease)	(359,000,000)
Stock Issued During Period, Shares, Conversion of Convertible Securities		7,818,000,000
Temporary Equity, Carrying Amount, Attributable to Parent	0
Common Stock, Shares, Outstanding		179,050,000,000
Temporary Equity, Carrying Amount, Attributable to Parent	$ 0
Common Stock, Shares, Outstanding	179,000,000	179,302,000,000
Beginning Balance at Jun. 30, 2022	$ 4,795,000,000	$ 2,000,000	4,649,000,000	538,000,000	(394,000,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	29,000,000		29,000,000
Proceeds from Tax Withholding Obligations	0		(1,000,000)
APIC, Share-based Payment Arrangement, ESPP, Increase for Cost Recognition	7,000,000
APIC, Share-based Payment Arrangement, Option, Increase for Cost Recognition	1,000,000		7,000,000
Net earnings/(loss)	81,000,000			81,000,000
Other comprehensive income/(loss), net of tax	(1,000,000)				(1,000,000)
Ending Balance at Dec. 31, 2022	4,912,000,000	$ 2,000,000	4,686,000,000	619,000,000	(395,000,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture		686,000,000
Temporary Equity, Carrying Amount, Attributable to Parent	0
Common Stock, Shares, Outstanding		179,901,000,000
Temporary Equity, Carrying Amount, Attributable to Parent	0
Beginning Balance at Sep. 30, 2022	4,700,000,000	$ 2,000,000	4,674,000,000	538,000,000	(514,000,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity offering, sale of common stock,		0
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture	0
Stock-based compensation	10,000,000		10,000,000
Proceeds from Tax Withholding Obligations	(2,000,000)
Cash paid, in lieu of equity, for tax withholding			(2,000,000)
APIC, Share-based Payment Arrangement, ESPP, Increase for Cost Recognition	4,000,000		4,000,000
Non-qualified stock	11,000,000
Net earnings/(loss)	81,000,000			81,000,000
Other comprehensive income/(loss), net of tax	119,000,000				119,000,000
Ending Balance at Dec. 31, 2022	4,912,000,000	$ 2,000,000	$ 4,686,000,000	$ 619,000,000	$ (395,000,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture		87,000,000
Temporary Equity, Carrying Amount, Attributable to Parent	$ 0
Common Stock, Shares, Outstanding	180,000,000	179,988,000,000
Temporary Equity, Carrying Amount, Attributable to Parent	$ 0

XML

Consolidated Statements of Cash Flows - USD ($)		6 Months Ended
		Dec. 31, 2022	Dec. 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings/(loss)		$ 81,000,000	$ 190,000,000
Adjustments to reconcile earnings/(loss) from operations to net cash from operations:
Depreciation and amortization		202,000,000	179,000,000
Non-cash foreign currency transaction (gain)/loss, net		1,000,000	25,000,000
Restructuring and Related Cost, Incurred Cost		7,000,000	0
Amortization and write-off of debt financing costs		4,000,000	4,000,000
Asset impairments charges and (gain)/loss on sale of assets		(1,000,000)	19,000,000
Payments for (Proceeds from) Businesses and Interest in Affiliates	[1]	0	(1,000,000)
Debt Call Premium Fees		0	4,000,000
Derivative, Gain (Loss) on Derivative, Net		0	(2,000,000)
Share issuances related to stock-based compensation		29,000,000	32,000,000
Provision/(benefit) for deferred income taxes		13,000,000	1,000,000
Provision for bad debts and inventory		67,000,000	9,000,000
Change in operating assets and liabilities:
Decrease/(increase) in trade receivables		148,000,000	131,000,000
Decrease/(increase) in inventories		(180,000,000)	(148,000,000)
Increase/(decrease) in accounts payable		(68,000,000)	3,000,000
Other assets/accrued liabilities, net — current and non-current		(181,000,000)	(214,000,000)
Net Cash Provided by (Used in) Operating Activities, Total		122,000,000	232,000,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment and other productive assets		(317,000,000)	(277,000,000)
Proceeds from Sale and Maturity of Marketable Securities		61,000,000	4,000,000
Proceeds from Sale of Property, Plant, and Equipment		7,000,000	0
Settlement on sale of subsidiaries, net		0	3,000,000
Payment for acquisitions, net of cash acquired		(474,000,000)	(1,020,000,000)
Payments to Acquire Investments			3,000,000
Proceeds from Sale and Maturity of Other Investments		(1,000,000)
Net cash (used in) investing activities		(724,000,000)	(1,299,000,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Issuance of Debt		625,000,000	1,100,000,000
Payments related to long-term obligations		(32,000,000)	(64,000,000)
Payments of Debt Issuance Costs		(4,000,000)	(15,000,000)
Dividends and Interest Paid		0	(4,000,000)
Proceeds from Tax Withholding Obligations		0
Cash paid, in lieu of equity, for tax withholding			(9,000,000)
Proceeds from (Repurchase of) Equity [Abstract]
Proceeds from Stock Options Exercised		1,000,000	19,000,000
Proceeds from (Payments for) Other Financing Activities		7,000,000	6,000,000
Net cash (used in)/provided by financing activities		597,000,000	1,033,000,000
Effect of Exchange Rate on Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents		(2,000,000)	(13,000,000)
NET INCREASE/(DECREASE) IN CASH AND EQUIVALENTS		(7,000,000)	(47,000,000)
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents		442,000,000	849,000,000
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD		449,000,000
CASH AND EQUIVALENTS AT END OF PERIOD		442,000,000
SUPPLEMENTARY CASH FLOW INFORMATION:
Interest paid		83,000,000	50,000,000
Income taxes paid, net		$ 38,000,000	$ 27,000,000

[1] Gain on sale of subsidiary for the six months ended December 31, 2021

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Basis of Presentation and Summary of Significant Accounting Policies

6 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Basis of Presentation and Summary of Significant Accounting Policies

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

Catalent, Inc. (“Catalent” or the “Company”) directly and wholly owns PTS Intermediate Holdings LLC (“Intermediate Holdings”). Intermediate Holdings directly and wholly owns Catalent Pharma Solutions, Inc. (“Operating Company”). The financial results of Catalent are comprised of the financial results of Operating Company and its subsidiaries on a consolidated basis.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six months ended December 31, 2022 are not necessarily indicative of the results that may be expected for the year ending June 30, 2023. The consolidated balance sheet at June 30, 2022 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information on the Company's accounting policies and footnotes, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2022 filed with the Securities and Exchange Commission (the “SEC”).

Reportable Segments

Effective July 1, 2022, in connection with the appointment of a new President and Chief Executive Officer, the Company changed its operating structure and reorganized its executive leadership team accordingly. This new organizational structure includes a shift from the four operating and reportable segments the Company disclosed during fiscal 2022 to two segments: (i) Biologics and (ii) Pharma and Consumer Health. Set forth below is a summary description of the Company's two current operating and reportable segments.

Biologics—The Biologics segment provides the same services as the Biologics segment the Company reported in fiscal 2022, with some organizational adjustments and the addition of analytical development and testing services for large molecules that were previously disclosed as part of the Company's prior Oral and Specialty Delivery segment. The Biologics segment as reorganized provides development and manufacturing for biologic proteins; cell, gene, and other nucleic acid therapies; plasmid DNA; induced pluripotent stem cells (iPSCs); and vaccines. It also provides formulation, development, and manufacturing for parenteral dose forms, including vials, prefilled syringes, and cartridges; and, as noted above, analytical development and testing services for large molecules.

Pharma and Consumer Health—The Pharma and Consumer Health segment encompasses, except as noted above, the offerings of three of the Company's prior reportable segments—Softgel and Oral Technologies, Oral and Specialty Delivery, and Clinical Supply Services—and comprises the Company’s market-leading capabilities for complex oral solids, softgel formulations, Zydis® fast-dissolve technologies, and gummy, soft chew, and lozenge dosage forms; formulation, development, and manufacturing platforms for oral, nasal, inhaled, and topical dose forms; and clinical trial development and supply services.

Each segment reports through a separate management team and ultimately reports to the Company's President and Chief Executive Officer, who is designated as the Chief Operating Decision Maker for segment reporting purposes. The Company's operating segments are the same as its reportable segments. All prior-period comparative segment information has been restated to reflect the current reportable segments in accordance with Accounting Standards Codification (“ASC”) 280, Segment Reporting, promulgated by the Financial Accounting Standards Board (the “FASB”).

Reclassifications

Consequent to the reorganization noted above, certain prior-period amounts were reclassified to conform to the current period presentation.

Foreign Currency Translation

The financial statements of the Company’s operations are generally measured using the local currency as the functional currency. Adjustments to translate the assets and liabilities of operations outside the United States (“U.S.”) into U.S. dollars are accumulated as a component of other comprehensive income utilizing period-end exchange rates. Since July 1, 2018, the Company has accounted for its Argentine operations as highly inflationary.

Concentrations of Credit Risk and Major Customers

Concentration of credit risk, with respect to accounts receivable, is limited due to the large number of customers and their dispersion across different geographic areas. The customers are primarily concentrated in the pharmaceutical and consumer products industries. The Company does not normally require collateral or any other security to support credit sales. The Company performs ongoing credit evaluations of its customers’ financial conditions and maintains reserves for credit losses. Such losses historically have been within the Company’s expectations. As of December 31, 2022, the Company had one customer that represented approximately 24% of its aggregate net trade receivables and current contract asset values, primarily associated with the Company's gene therapy offerings, and another customer that represented approximately 11% of its aggregate net trade receivables and current contract asset values. After performing a risk assessment of these customers, the Company has determined that a reserve is not warranted as of December 31, 2022. Additionally, the Company had one customer that represented approximately 13% of net revenue and another customer that represented approximately 10% of net revenue during the three months ended December 31, 2022, primarily in the Biologics segment.

Depreciation

Depreciation expense was $69 million and $64 million for the three months ended December 31, 2022 and 2021, respectively. Depreciation expense was $135 million and $122 million for the six months ended December 31, 2022 and 2021, respectively. Depreciation expense includes amortization of assets related to finance leases. The Company charges repairs and maintenance costs to expense as incurred.

Amortization

Amortization expense related to other intangible assets was $34 million and $34 million for the three months ended December 31, 2022 and 2021, respectively. Amortization expense related to other intangible assets was $67 million and $57 million for the six months ended December 31, 2022 and 2021, respectively.

Research and Development Costs

The Company expenses research and development costs as incurred. Research and development costs amounted to $4 million and $6 million for the three months ended December 31, 2022 and 2021, respectively. Research and development costs amounted to $9 million and $12 million for the six months ended December 31, 2022 and 2021, respectively.

Marketable Securities

The Company classifies its marketable securities as available-for-sale, because it may sell certain of its marketable securities prior to the stated maturity for various reasons, including management of liquidity, credit risk, duration, relative return, and asset allocation. The Company determines the fair value of each marketable security in its portfolio at each period end and recognizes gains and losses in the portfolio in other comprehensive income. As of December 31, 2022, the amortized cost basis of marketable securities approximates fair value and all outstanding marketable securities mature within one year.

Recent Financial Accounting Standards

New Accounting Standards Not Adopted as of December 31, 2022

In March 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance to ease the potential burden in accounting for the discontinuation of a reference rate such as LIBOR, formerly known as the London Interbank Offered Rate, because of reference rate reform. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which delayed the effective date from December 31, 2022 to December 31, 2024. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements.

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Revenue Recognition

6 Months Ended

Dec. 31, 2022

Revenue Recognition [Abstract]

Revenue from Contract with Customer [Policy Text Block]

REVENUE RECOGNITION

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. The Company generally earns its revenue by supplying goods or providing services under contracts with its customers in two primary revenue streams: (i) manufacturing and commercial product supply, and (ii) development and clinical supply services. The Company measures the revenue from customers based on the consideration specified in its contracts, excluding any sales incentive or amount collected on behalf of a third party that the Company expects to be entitled in exchange for transferring the promised goods to and/or performing services for the customer (the “Transaction Price”). To the extent the Transaction Price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the Transaction Price utilizing either the expected value method or the most likely amount method depending on which method is expected to better predict the amount of consideration to which the Company will be entitled. The value of variable consideration is included in the Transaction Price if, and to the extent, it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. These estimates are re-assessed each reporting period, as required, and any adjustments required are recorded on a cumulative catch-up basis, which affects revenue and net income in the period of adjustment.

The Company’s customer contracts generally include provisions entitling the Company to a termination penalty when the customer invokes its contractual right to terminate prior to the contract’s nominal end date. The termination penalties in the customer contracts vary but are generally considered substantive for accounting purposes and create enforceable rights and obligations throughout the stated duration of the contract. The Company accounts for a contract cancellation as a contract modification in the period in which the customer invokes the termination provision. The determination of the contract termination penalty is based on the terms stated in the relevant customer agreement. As of the modification date, the Company updates its estimate of the transaction price using the expected value method, subject to constraints, and to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. These estimates are re-assessed each reporting period, as required, and any adjustments required are recorded on a cumulative catch-up basis, which would affect revenue and net income in the period of adjustment.

Manufacturing & Commercial Product Supply Revenue

Manufacturing and commercial product supply revenue consists of revenue earned by manufacturing products supplied to customers under long-term commercial supply arrangements. In these arrangements, the customer typically owns and supplies the active pharmaceutical ingredient, or API, that is used in the manufacturing process. The contract generally includes the terms of the manufacturing services and related product quality assurance procedures to comply with regulatory requirements. Due to the regulated nature of the Company’s business, these contract terms are highly interdependent and, therefore, are considered to be a single combined performance obligation. The transaction price is generally stated in the agreement as a fixed price per unit, with no contractual provision for a refund or price concession. Control is transferred to the customer over time, creating a corresponding right to recognize the related revenue, because there is no alternative use to the Company for the asset created and the Company has an enforceable right to payment for performance completed as of that date. Progress is measured based on the units of product that have successfully completed the contractually required product quality assurance process, as the conclusion of that process generally defines the time when the applicable contract and the related regulatory requirements permit the customer to exercise control over the product’s disposition. The customer is typically responsible for arranging the shipping and handling of product following completion of the quality assurance process. Payment is typically due 30 to 45 days after the goods are delivered as requested by the customer, based on the payment terms set forth in the applicable customer agreement.

Development Services and Clinical Supply Revenue

Development services and clinical supply contracts generally take the form of short-term, fee-for-service arrangements. Performance obligations vary, but frequently include biologic cell-line development, performing formulation, analytical stability, or other services related to product development, and providing manufacturing services for products that are under development or otherwise not intended for commercial sale. They can also include a combination of the following services: the manufacturing, packaging, storage, distribution, destruction, inventory management of customer clinical trial material and the sourcing of comparator drug products on behalf of customers to be used in clinical trials to compare performance with the drug under clinical investigation. The transaction prices for these arrangements are fixed and include amounts stated in the contracts for each promised service, and each service is generally considered to be a separate performance obligation. In most instances, the Company recognizes revenue over time because there is no alternative use to the Company for the asset created and the Company has an enforceable right to payment for performance completed as of that date.

The Company measures progress toward the completion of its performance obligations satisfied over time based on the nature of the services to be performed. For certain types of arrangements, revenue is recognized over time and measured using an output method based on the completion of tasks and activities that are performed to satisfy a performance obligation. For certain types of arrangements, revenue is recognized over time and measured using an input method based on effort expended. Each of these methods provides an appropriate depiction of the Company’s progress toward fulfilling its performance obligations for its respective arrangement. In certain development services arrangements that require a portion of the contract consideration to be received in advance at the commencement of the contract, such advance payment is initially recorded as a contract liability. In certain clinical supply arrangements, revenue is recognized at the point in time when control transfers, which occurs upon either the delivery of the related output of the service to the customer or the completion of quality testing with respect to the product, and the Company has an enforceable right to payment based on the terms of the arrangement.

The Company allocates consideration to each performance obligation using the “relative standalone selling price” as defined under ASC 606. Generally, the Company utilizes observable standalone selling prices in its allocations of consideration. If observable standalone selling prices are not available, the Company estimates the applicable standalone selling price using a cost-plus-margin approach or an adjusted market assessment approach, in each case, representing the amount that the Company believes the market is willing to pay for the applicable service. Payment is typically due 30 to 45 days following the completion of services provided to the customer, based on the payment terms set forth in the applicable customer agreement.

The Company records revenue for comparator sourcing arrangements on a net basis because it is acting as an agent that does not control the product or service before it is transferred to the customer. Payment for comparator sourcing activity is typically received in advance at the commencement of the contract and is initially recorded as a contract liability.

The Company generally expenses sales commissions as incurred because either the amortization period is one year or less, or the balance with an amortization period greater than one year is not material.

The following tables reflect net revenue for the three and six months ended December 31, 2022 and 2021, by type of activity and reportable segment (in millions):

Three Months Ended December 31, 2022	Biologics		Pharma and Consumer Health		Total
Manufacturing & commercial product supply	$	75	$	340	$	415
Development services & clinical supply	505		230		735
Total	$	580	$	570	$	1,150
Inter-segment revenue elimination					(1)
Combined net revenue					$	1,149

Three Months Ended December 31, 2021	Biologics		Pharma and Consumer Health		Total
Manufacturing & commercial product supply	$	169	$	359	$	528
Development services & clinical supply	472		218		690
Total	$	641	$	577	$	1,218
Inter-segment revenue elimination					(1)
Combined net revenue					$	1,217

Six Months Ended December 31, 2022	Biologics		Pharma and Consumer Health		Total
Manufacturing & commercial product supply	$	169	$	632	$	801
Development services & clinical supply	934		437		1,371
Total	$	1,103	$	1,069	$	2,172
Inter-segment revenue elimination					(1)
Combined net revenue					$	2,171

Six Months Ended December 31, 2021	Biologics		Pharma and Consumer Health		Total
Manufacturing & commercial product supply	$	303	$	635	$	938
Development services & clinical supply	886		419		1,305
Total	$	1,189	$	1,054	$	2,243
Inter-segment revenue elimination					(1)
Combined net revenue					$	2,242

The following table allocates revenue by the location where the goods were made or the service performed:

	Three Months Ended   December 31,				Six Months Ended   December 31,
(Dollars in millions)	2022		2021		2022		2021
United States	$	734	$	793	$	1,432	$	1,423
Europe	356		370		630		722
Other	88		83		169		155
Elimination of revenue attributable to multiple locations	(29)		(29)		(60)		(58)
Total	$	1,149	$	1,217	$	2,171	$	2,242

Contract Liabilities

Contract liabilities relate to cash consideration that the Company receives in advance of satisfying the related performance obligations. The contract liabilities balances (current and non-current) as of December 31, 2022 and June 30, 2022 are as follows:

(Dollars in millions)
Balance at June 30, 2022	$	194
Balance at December 31, 2022	$	186
Revenue recognized in the period from amounts included in contracts liability at the beginning of the period:	$	(113)

Contract liabilities that will be recognized within 12 months of December 31, 2022 are accounted for in Other accrued liabilities and those that will be recognized longer than 12 months after December 31, 2022 are accounted for within Other liabilities.

Contract Assets

Contract assets primarily relate to the Company's conditional right to receive consideration for services that have been performed for customers as of December 31, 2022 relating to the Company's development services but had not yet been invoiced as of December 31, 2022. Contract assets are transferred to trade receivables, net when the Company’s right to receive the consideration becomes unconditional. Contract assets totaled $513 million and $441 million as of December 31, 2022 and June 30, 2022, respectively. Contract assets expected to transfer to trade receivables within 12 months are accounted for within Prepaid expenses and other. Contract assets expected to transfer to trade receivables longer than 12 months are accounted for within Other long-term assets.

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Business Combinations	3 Months Ended
	Dec. 31, 2022
Business Combinations [Abstract]
Business Combination Disclosure [Text Block]	BUSINESS COMBINATIONS

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Goodwill

6 Months Ended

Dec. 31, 2022

Goodwill Disclosure [Abstract]

Goodwill

GOODWILL

The following table summarizes the changes between June 30, 2022 and December 31, 2022 in the carrying amount of goodwill in total and by segment:

(Dollars in millions)	Biologics		Pharma and Consumer Health		Total
Balance at June 30, 2022 (1)	$	1,535	$	1,471	$	3,006
Additions(2)	—		215		215
Reallocation	16		(16)		—
Foreign currency translation adjustments	1		(7)		(6)
Balance at December 31, 2022	$	1,552	$	1,663	$	3,215

(1) As of result of the organizational realignments which were effective July 1, 2022, (described in Note 1, Basis of Presentation and Summary of Significant Accounting Policies), beginning balances have been reclassified to conform with the current period presentation.

(2) The addition to goodwill is a result of the Metrics acquisition. For further details, see Note 3, Business Combinations.

As part of the business reorganization discussed in Note 1, Basis of Presentation and Summary of Significant Accounting Policies, the goodwill from the previous Biologics, Softgel and Oral Technologies, Oral and Specialty Delivery, and Clinical Supply Services segments was reallocated between the current Biologics and Pharma and Consumer Health segments.

As a result of this realignment, the Company performed an interim quantitative goodwill impairment test for all of its reporting units as of July 1, 2022, which did not result in any goodwill impairment charges.

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Long-Term Obligations and Other Short-Term Borrowings

6 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Long-Term Obligations and Other Short-Term Borrowings

LONG-TERM OBLIGATIONS AND SHORT-TERM BORROWINGS

Long-term obligations and short-term borrowings consisted of the following at December 31, 2022 and June 30, 2022:

(Dollars in millions)	Maturity	December 31, 2022		June 30, 2022
Senior secured credit facilities
Term loan facility B-3 (6.375% as of December 31)	February 2028	$	1,426	$	1,433
Revolving credit facility (1) (6.032% as of December 31)	November 2027	600		—
5.000% senior notes due 2027	July 2027	500		500
2.375% euro senior notes due 2028(2)	March 2028	879		874
3.125% senior notes due 2029	February 2029	550		550
3.500% senior notes due 2030	April 2030	650		650
Financing lease obligations	2022 to 2038	289		234
Other obligations	2022 to 2028	2		2
Unamortized discount and debt issuance costs		(43)		(41)
Total debt		$	4,853	$	4,202
Less: current portion of long-term obligations and other short-term      borrowings (1)		632		31
Long-term obligations, less current portion		$	4,221	$	4,171

(1) During the six months ended December 31, 2022, the Company drew down $625 million on its revolving credit facility to fund the acquisition of Metrics and supplement operating cash flows, of which $25 million was repaid during three months ended December 31, 2022. The Company has elected to classify the borrowing on its revolving credit facility as current as it intends to repay a portion of the borrowing using cash flow from operations and/or refinance the borrowing through a senior notes offering within the next twelve months.

(2) The change in euro-denominated debt was due to fluctuations in foreign currency exchange rates.

Seventh Amendment to the Credit Agreement

In November 2022, Operating Company entered into Amendment No. 7 (the “Seventh Amendment”) to its Amended and Restated Credit Agreement, dated May 20, 2014 (as subsequently amended, the “Credit Agreement”). Pursuant to the Seventh Amendment, Operating Company (i) terminated its existing revolving credit commitments (and the related outstanding revolving borrowings), which is part of its senior secured credit facilities, and (ii) obtained $1.10 billion aggregate amount of new revolving credit commitments, borrowing thereunder an amount equal to the previously outstanding borrowings under the terminated commitments (as amended, the “Revolving Credit Facility”). The Revolving Credit Facility has an interest rate margin, at Operating Company’s option, based on a (1) prime rate, plus a margin ranging from 0.75% to 1.25% based on Operating Company’s consolidated leverage ratio or (2) Secured Overnight Financing Rate, plus 0.10%, plus a margin ranging from 1.75% to 2.25% based on Operating Company’s consolidated leverage ratio. The Revolving Credit Facility has a maturity date that is the earlier of (A) five years after November 22, 2027, and (B) the 91st day prior to the maturity of Operating Company’s $500 million 5.000% senior unsecured notes due 2027 (the “2027 Notes”) or any permitted refinancing thereof, if on such 91st day, any of the 2027 Notes remains outstanding. Otherwise, the Revolving Credit Facility under the Seventh Amendment has the same principal terms as the previously existing revolving credit commitments under the Credit Agreement.

The availability of capacity under the Revolving Credit Facility is reduced by the aggregate value of all outstanding letters of credit under the Credit Agreement. As of December 31, 2022, Operating Company had $496 million of unutilized capacity under the Revolving Credit Facility due to $4 million of outstanding letters of credit.

Measurement of the Estimated Fair Value of Debt

The estimated fair value of the Company’s senior secured credit facilities and other senior indebtedness is classified as a Level 2 determination (see Note 10, Fair Value Measurements, for a description of the method by which fair value classifications are determined) in the fair-value hierarchy and is calculated by using a discounted cash flow model with a market interest rate as a significant input. The carrying amounts and the estimated fair values of the Company’s principal categories of debt as of December 31, and June 30, 2022 are as follows:

		December 31, 2022				June 30, 2022
(Dollars in millions)	Fair Value Measurement	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
5.000% senior notes due 2027	Level 2	$	500	$	483	$	500	$	483
2.375% Euro senior notes due 2028	Level 2	879		755		874		744
3.125% senior notes due 2029	Level 2	550		469		550		476
3.500% senior notes due 2030	Level 2	650		551		650		561
Senior secured credit facilities & other	Level 2	2,317		2,111		1,669		1,575
Subtotal		$	4,896	$	4,369	$	4,243	$	3,839
Unamortized discount and debt issuance costs		(43)		—		(41)		—
Total debt		$	4,853	$	4,369	$	4,202	$	3,839

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Earnings Per Share

6 Months Ended

Dec. 31, 2022

Earnings Per Share [Abstract]

Earnings Per Share

EARNINGS PER SHARE

Effective as of the first quarter of fiscal 2023, the Company computes earnings per share of the Company’s common stock, par value $0.01 (the “Common Stock”) using the treasury stock method. Prior to fiscal 2023, the Company computed earnings per share of the Common Stock using the two-class method required due to the participating nature of the previously outstanding Series A Preferred Stock (as defined and discussed in Note 13, Equity and Accumulated Other Comprehensive Loss).

Diluted net earnings per share is computed using the weighted average number of shares of Common Stock outstanding plus the weighted average number of shares of Common Stock that would be issued assuming exercise or conversion of all potentially dilutive instruments. Dilutive securities having an anti-dilutive effect on diluted net earnings per share are excluded from the calculation. The dilutive effect of the securities that are issuable under the Company’s equity incentive plans are reflected in diluted earnings per share by application of the treasury stock method. Prior to fiscal 2023, the Company applied the if-converted method to compute the potentially dilutive effect of the previously outstanding Series A Preferred Stock. The reconciliations between basic and diluted earnings per share attributable to Catalent common shareholders for the three and six months ended December 31, 2022 and 2021, respectively, are as follows:

	Three Months Ended   December 31,				Six Months Ended   December 31,
(In millions except per share data)	2022		2021		2022		2021
Net earnings	$	81	$	97	$	81	$	190
Less: Net earnings attributable to preferred shareholders	—		(4)		—		(13)
Net earnings attributable to common shareholders	$	81	$	93	$	81	$	177
Weighted average shares outstanding - basic	181		175		180		173
Weighted average dilutive securities issuable - stock plans	—		2		1		2
Weighted average shares outstanding - diluted	181		177		181		175
Earnings per share:
Basic	$	0.45	$	0.53	$	0.45	$	1.02
Diluted	$	0.44	$	0.52	$	0.45	$	1.01

The Company's Series A Preferred Stock was deemed a participating security, meaning that it had the right to participate in undistributed earnings with the Company's Common Stock. On November 23, 2020, the holders of Series A Preferred Stock converted 265,223 shares of Series A Preferred Stock and $2 million of unpaid accrued dividends into shares of Common Stock. On November 18, 2021, the holders of Series A Preferred Stock converted the remaining 384,777 shares of Series A Preferred Stock and $2 million of unpaid accrued dividends into shares of Common Stock.

Shares with an antidilutive effect on the weighted average shares outstanding for the three and six months ended December 31, 2022 and 2021 were not material.

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Other (Income)/ Expense, Net

6 Months Ended

Dec. 31, 2022

Other Income and Expenses [Abstract]

Other Income and Other Expense Disclosure [Text Block]

OTHER (INCOME) EXPENSE, NET

The components of other expense, net for the three and six months ended December 31, 2022 and 2021 are as follows:

	Three Months Ended   December 31,				Six Months Ended  December 31,
(Dollars in millions)	2022		2021		2022		2021
Debt financing costs (1)	$	—	$	—	$	—	$	4
Foreign currency (gains) losses (2)	(25)		15		(1)		24
Other (3)	2		(1)		3		(5)
Total other (income) expense, net	$	(23)	$	14	$	2	$	23

(1)    Debt financing costs for the six months ended December 31, 2021 includes $4 million of financing charges related to $450 million of U.S. dollar-denominated term loans borrowed in that period under the Company’s senior secured credit facilities.

(2)    Foreign currency remeasurement gains/losses include both cash and non-cash transactions.

(3)    Other, for the six months ended December 31, 2021, includes a gain of $2 million related to the fair value of the derivative liability associated with the formerly outstanding Series A Preferred Stock.

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Derivative Instruments and Hedging Activities

6 Months Ended

Dec. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Risk Management Objective of Using Derivatives

The Company is exposed to fluctuations in the currency exchange rates applicable to its investments in operations outside the U.S. While the Company does not actively hedge against changes in foreign currency, the Company has mitigated exposure from its investments in its European operations by denominating a portion of its debt in euros. At December 31, 2022, the Company had euro-denominated debt outstanding of $879 million (U.S. dollar equivalent), which is designated and qualifies as a hedge against its net investment in its European operations. For non-derivatives designated and qualifying as net investment hedges, the effective portion of translation gains or losses are reported in accumulated other comprehensive loss as part of the cumulative translation adjustment. The unhedged portions of the euro-denominated debt translation gains or losses are reported in the consolidated statements of operations. The following table summarizes net investment hedge activity during the three and six months ended December 31, 2022 and 2021.

	Three Months Ended   December 31,				Six Months Ended   December 31,
(Dollars in millions)	2022		2021		2022		2021
Unrealized foreign exchange gain (loss) within other comprehensive income	$	(85)	$	40	$	(4)	$	62
Unrealized foreign exchange gain (loss) within statement of operations	$	—	$	(8)	$	—	$	(11)

The net accumulated gain on the instrument designated as a hedge as of December 31, 2022 within other comprehensive loss was approximately $123 million. Amounts are reclassified out of accumulated other comprehensive loss into earnings when the entity to which the gains and losses relate is either sold or substantially liquidated.

Interest-Rate Swap

In April 2020, pursuant to its interest rate and risk management strategy, the Company entered into an interest-rate swap agreement with Bank of America N.A. (the “2020 Rate Swap”) as a hedge against the economic effect of a portion of the variable interest obligation associated with its U.S. dollar-denominated term loans under its senior secured credit facilities.

In February 2021, in connection with an amendment to the Credit Agreement, the Company paid $2 million in cash to Bank of America N.A to settle the 2020 Rate Swap. This loss is deferred in stockholders’ equity, net of income taxes, as a component of accumulated other comprehensive loss, and amortized as an adjustment to interest expense, net over the original

term of the formerly outstanding term loans. The net amount of deferred losses on cash flow hedges that is expected to be reclassified from accumulated other comprehensive loss into interest expense, net within the next twelve months is not material.

In February 2021, the Company entered into a new interest-rate swap agreement with Bank of America N.A. (the “2021 Rate Swap”) as a hedge against the economic effect of a portion of the variable interest obligation associated with its Term B-3 Loans. The 2021 Rate Swap effectively fixed the rate of interest payable on that portion of the Term B-3 Loans, thereby reducing the impact of future interest rate changes on future interest expense. As a result of the 2021 Rate Swap, the variable portion of the applicable interest rate on $500 million of the Term B-3 Loans is now effectively fixed at 0.9985%.

The 2021 Rate Swap qualifies for and is designated as a cash-flow hedge. The Company evaluates hedge effectiveness at the inception of the hedge and on an ongoing basis. The cash flows associated with the 2021 Rate Swap is reported in cash provided by operating activities in the consolidated statements of cash flows. The unrealized gain recorded in stockholder's equity from marking the 2021 Rate Swap to market during the six months ended December 31, 2022 was $18 million.

A summary of the estimated fair value of the 2021 Rate Swap reported in the consolidated balance sheets is stated in the table below:

	December 31, 2022			June 30, 2022
(Dollars in millions)	Balance Sheet Classification	Estimated Fair Value		Balance Sheet Classification	Estimated Fair Value
Interest-rate swap	Other long-term assets	$	54	Other long-term assets	$	36

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Fair Value Measures and Disclosures

6 Months Ended

Dec. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value Disclosures

FAIR VALUE MEASUREMENTS

ASC 820, Fair Value Measurement, defines fair value as the exit price that would be received to sell an asset or paid to transfer a liability. Fair value is a market-based measurement that should be determined using assumptions that market participants would use in pricing an asset or liability. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which Level 1 and Level 2 are considered observable and Level 3 is considered unobservable:

Level 1 – Quoted prices in active markets for identical assets or liabilities.                      

Level 2 – Inputs other than Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means.                      

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Value is determined using pricing models, discounted cash flow methodologies, or similar techniques and also includes instruments for which the determination of fair value requires significant judgment or estimation.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses of the Company approximate fair value based on the short maturities of these instruments.

The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level of classification as of the end of each reporting period. The following table sets forth the Company’s financial assets and liabilities that were measured at fair value on a recurring basis and the fair value measurement for such assets and liabilities at December 31, and June 30, 2022:

(Dollars in millions)	Basis of Fair Value Measurement
December 31, 2022	Total		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	28	$	28	$	—	$	—
Interest-rate swap	54		—		54		—
Trading securities	1		1		—		—
June 30, 2022
Assets:
Marketable securities	$	89	$	89	$	—	$	—
Interest-rate swap	36		—		36		—
Trading securities	2		2		—		—

The fair value of the 2021 Rate Swap is determined at the end of each reporting period based on valuation models that use interest rate yield curves and discount rates as inputs. The discount rates are based on U.S. deposit or U.S. Treasury rates. The significant inputs used in the valuation models are readily available in public markets or can be derived from observable market transactions, and the valuation is therefore classified as Level 2 in the fair-value hierarchy.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

Long-lived assets, goodwill, and other intangible assets are subject to non-recurring fair value measurement for the evaluation of potential impairment. There was no non-recurring fair value measurement during the six months ended December 31, 2022.

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Income Taxes

6 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The Company accounts for income taxes in accordance with ASC 740, Income Taxes. Generally, fluctuations in the effective tax rate are due to changes in relative amounts of U.S. and non-U.S. pretax income, the tax impact of special items, and other discrete tax items. Discrete items include, but are not limited to, changes in non-U.S. statutory tax rates, amortization of certain assets, changes in the Company’s reserve for uncertain tax positions, and tax impact of certain equity compensation.

In the normal course of business, the Company is subject to examination by taxing authorities around the world. The Company is presently under audit in select jurisdictions in the United States and in Europe, but no material impact is expected to the financial results once these audits are completed.

ASC 740 provides guidance for the accounting of uncertain income tax positions recognized in the Company's tax filings. This guidance provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that, based on technical merits, the position will be sustained upon examination, including resolution of any related appeal or litigation process. As of December 31, and June 30, 2022, the Company's reserve against uncertain income tax positions was $4 million and $5 million, respectively. The majority of the reduction is attributable to the expiration of the statute of limitations on certain of the reserves. Interest and penalties related to uncertain tax positions are recognized as a component of income tax expense.

The Company recorded a provision for income taxes for the three months ended December 31, 2022 of $33 million relative to earnings before income taxes of $114 million. The Company recorded a provision for income taxes for the three months ended December 31, 2021 of $18 million relative to earnings before income taxes of $115 million. The relatively higher income tax provision on lower earnings before income taxes is the result of decreased pretax income in tax jurisdictions with favorable tax rates, equity related compensation benefits in the prior-year quarter, and foreign tax credits claimed in the prior-year quarter resulting from amended returns. Generally, fluctuations in the effective tax rate are due to changes in the geographic distribution of the Company's pretax income resulting from its business mix, changes in the tax impact of permanent differences, restructuring, special items, certain equity related compensation, and other discrete tax items that may have unique tax implications depending on the nature of the item.

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Employee Retirement Benefit Plans

6 Months Ended

Dec. 31, 2022

Retirement Benefits [Abstract]

Employee Retirement Benefit Plans

EMPLOYEE RETIREMENT BENEFIT PLANS

Components of the Company’s net periodic benefit costs are as follows:

	Three Months Ended   December 31,				Six Months Ended   December 31,
(Dollars in millions)	2022		2021		2022		2021
Components of net periodic benefit cost:
Selling, general, and administrative expenses:
Service cost	$	1	$	1	$	2	$	2
Other expense, net:
Interest cost	2		1		4		2
Expected return on plan assets	(2)		(3)		(4)		(5)
Amortization (1)	—		1		—		2
Net amount recognized	$	1	$	—	$	2	$	1

(1) Amount represents the amortization of unrecognized actuarial losses.

As previously disclosed, the Company notified the trustees of a multi-employer pension plan of its withdrawal from participation in such plan in fiscal 2012. The actuarial review process administered by the plan trustees ended in fiscal 2015. The liability reported reflects the present value of the Company’s expected future long-term obligations. The estimated discounted value of the projected contributions related to such plans was $38 million as of December 31, 2022 and June 30, 2022, and is included within pension liability on the consolidated balance sheets. The annual cash impact associated with the Company’s obligations in such plan is approximately $2 million.

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Equity and Accumulated Other Comprehensive Income (Loss)

6 Months Ended

Dec. 31, 2022

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Equity, Redeemable Preferred Stock and Accumulated Other Comprehensive Loss

EQUITY AND ACCUMULATED OTHER COMPREHENSIVE LOSS

Description of Capital Stock

The Company is authorized to issue 1.00 billion shares of its Common Stock and 100 million shares of preferred stock, par value $0.01 per share. In accordance with the Company’s amended and restated certificate of incorporation, each share of Common Stock has one vote, and the Common Stock votes together as a single class. In 2019, the Company designated 1,000,000 shares of its preferred stock, par value $0.01, as its Series A Convertible Preferred Stock (the “Series A Preferred Stock”) and issued and sold 650,000 shares of the Series A Preferred Stock to affiliates of Leonard Green & Partners, L.P. In November 2021, the holders of the Series A Preferred Stock converted all then-outstanding shares of Series A Preferred Stock and $2 million of related unpaid accrued dividends into shares of Common Stock.

Accumulated Other Comprehensive Loss

The components of the changes in the cumulative translation adjustment, derivatives and hedges, minimum pension liability, and marketable securities for the three and six months ended December 31, 2022 and 2021 are presented below.

	Three Months Ended   December 31,				Six Months Ended   December 31,
(Dollars in millions)	2022		2021		2022		2021
Foreign currency translation adjustments:
Net investment hedge	$	(85)	$	40	$	(4)	$	62
Long-term intercompany loans	31		(4)		(10)		(7)
Translation adjustments	155		(45)		(5)		(73)
Total foreign currency translation adjustment, pretax	101		(9)		(19)		(18)
Tax (benefit) expense	(17)		9		(2)		14
Total foreign currency translation adjustment, net of tax	$	118	$	(18)	$	(17)	$	(32)
Net change in derivatives and hedges:
Net gain recognized during the period	$	—	$	4	$	18	$	5
Total derivatives and hedges, pretax	—		4		18		5
Tax expense	—		1		4		1
Net change in derivatives and hedges, net of tax	$	—	$	3	$	14	$	4
Net change in minimum pension liability:
Net gain recognized during the period	$	—	$	—	$	—	$	1
Total pension liability, pretax	—		—		—		1
Tax benefit	—		—		—		—
Net change in minimum pension liability, net of tax	$	—	$	—	$	—	$	1
Net change in marketable securities:
Net gain (loss) recognized during the period	$	1	$	(1)	$	1	$	(1)
Amounts reclassified from accumulated other     comprehensive loss	1		—		2		—
Net change in marketable securities, pretax	2		(1)		3		(1)
Tax expense	1		$	—	1		$	—
Net change in marketable securities, net of tax	$	1	$	(1)	$	2	$	(1)

For the three months ended December 31, 2022 and 2021, the changes in accumulated other comprehensive loss, net of tax by component are as follows:    

(Dollars in millions)	Foreign Exchange Translation Adjustments		Pension and Liability Adjustments		Derivatives and Hedges		Marketable Securities		Other		Total
Balance at September 30, 2022	$	(513)	$	(38)	$	41	$	(3)	$	(1)	$	(514)
Other comprehensive income before     reclassifications	118		—		—		—		—		118
Amounts reclassified from accumulated other     comprehensive loss	—		—		—		1		—		1
Net current period other comprehensive     income	118		—		—		1		—		119
Balance at December 31, 2022	$	(395)	$	(38)	$	41	$	(2)	$	(1)	$	(395)

(Dollars in millions)	Foreign Exchange Translation Adjustments		Pension and Liability Adjustments		Derivatives and Hedges		Marketable Securities		Other		Total
Balance at September 30, 2021	$	(282)	$	(46)	$	1	$	(1)	$	(1)	$	(329)
Other comprehensive (loss) income before     reclassifications	(18)		—		3		(1)		—		(16)
Amounts reclassified from accumulated other     comprehensive loss	—		—		—		—		—		—
Net current period other comprehensive (loss)     income	(18)		—		3		(1)		—		(16)
Balance at December 31, 2021	$	(300)	$	(46)	$	4	$	(2)	$	(1)	$	(345)

For the six months ended December 31, 2022 and 2021, the changes in accumulated other comprehensive loss, net of tax by component are as follows:

(Dollars in millions)	Foreign Exchange Translation Adjustments		Pension and Liability Adjustments		Derivatives and Hedges		Marketable Securities		Other		Total
Balance at June 30, 2022	$	(378)	$	(38)	$	27	$	(4)	$	(1)	$	(394)
Other comprehensive (loss) income before     reclassifications	(17)		—		14		—		—		(3)
Amounts reclassified from accumulated other     comprehensive loss	—		—		—		2		—		2
Net current period other comprehensive (loss)     income	(17)		—		14		2		—		(1)
Balance at December 31, 2022	$	(395)	$	(38)	$	41	$	(2)	$	(1)	$	(395)

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Commitments and Contingencies

6 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

From time to time, the Company may be involved in legal proceedings arising in the ordinary course of business, including, without limitation, inquiries and claims concerning environmental contamination as well as litigation and allegations in connection with acquisitions, product liability, manufacturing or packaging defects, and claims for reimbursement for the cost of lost or damaged active pharmaceutical ingredients, the cost of any of which could be significant. The Company intends to vigorously defend itself against any such litigation and does not currently believe that the outcome of any such litigation will have a material adverse effect on the Company’s consolidated financial statements. In addition, the healthcare industry is highly regulated and government agencies continue to scrutinize certain practices affecting government programs and otherwise.

From time to time, the Company receives subpoenas or requests for information relating to the business practices and activities of customers or suppliers from various governmental agencies or private parties, including from state attorneys general, the U.S. Department of Justice, and private parties engaged in patent infringement, antitrust, tort, and other litigation. The Company generally responds to such subpoenas and requests in a timely and thorough manner, which responses sometimes

require considerable time and effort and can result in considerable costs being incurred. The Company expects to incur costs in future periods in connection with future requests.

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Segment Information

6 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

The Company evaluates the performance of its segments based on segment earnings before other (expense) income, impairments, restructuring costs, interest expense, income tax expense, and depreciation and amortization (“Segment EBITDA”).

Segment EBITDA is subject to important limitations. These consolidated financial statements include information concerning Segment EBITDA (a) because Segment EBITDA is an operational measure used by management in the assessment of the operating segments, the allocation of resources to the segments, and the setting of strategic goals and annual goals for the segments, and (b) in order to provide supplemental information that the Company considers relevant for the readers of the consolidated financial statements. The Company’s presentation of Segment EBITDA may not be comparable to similarly titled measures used by other companies.

The following tables include Segment EBITDA for each of the Company's current reportable segments during the three and six months ended December 31, 2022 and 2021:

(Dollars in millions)	Three Months Ended   December 31,				Six Months Ended   December 31,
	2022		2021		2022		2021
Segment EBITDA reconciled to net earnings:
Biologics	$	181	$	199	$	294	$	366
Pharma and Consumer Health	135		147		243		246
Sub-Total	$	316	$	346	$	537	$	612
Reconciling items to net earnings
Unallocated costs (1)	(52)		(101)		(139)		(157)
Depreciation and amortization	(103)		(98)		(202)		(179)
Interest expense, net	(47)		(32)		(79)		(58)
Income tax expense	(33)		(18)		(36)		(28)
Net earnings	$	81	$	97	$	81	$	190

(1) Unallocated costs include restructuring and special items, stock-based compensation, gain on sale of subsidiary, impairment charges, certain other corporate directed costs, and other costs that are not allocated to the segments as follows:                                                        

(Dollars in millions)	Three Months Ended   December 31,				Six Months Ended   December 31,
	2022		2021		2022		2021
Impairment charges and gain/loss on sale of assets(a)	$	(1)	$	(16)	$	1	$	(19)
Stock-based compensation	(10)		(11)		(29)		(32)
Restructuring and other special items(b)	(33)		(23)		(42)		(31)
Gain on sale of subsidiary(c)	—		—		—		1
Other income (expense), net(d)	23		(14)		(2)		(23)
Unallocated corporate costs, net	(31)		(37)		(67)		(53)
Total unallocated costs	$	(52)	$	(101)	$	(139)	$	(157)

(a) Impairment charges and gain/loss on sale of assets during the three and six months ended December 31, 2021 include fixed asset impairment charges associated with a product in the Pharma and Consumer Health segment.

(b)    Restructuring and other special items during the three months ended December 31, 2022 include (i) restructuring charges associated with our plans to reduce costs, consolidate facilities, and optimize our infrastructure across the organization and (ii) transaction and integration costs associated with our Metrics acquisition. Restructuring and other special items for the six months ended December 31, 2022 also includes warehouse exit costs for a product the Company no longer manufactures in its Pharma and Consumer Health segment. For further details on restructuring charges, see Note 8, Restructuring Costs.

Restructuring and other special items during the three months ended December 31, 2021 include (a) transaction and integration costs primarily associated with the Bettera Wellness acquisition and (b) restructuring costs associated with the closure of the previously owned Bolton facility. Restructuring and other special items during the six months ended December 31, 2021 include (c) transaction and integration costs associated with the Delphi Genetics SA, Hepatic Cell Therapy Support SA, RheinCell Therapeutics GmbH, and Bettera Wellness acquisitions.

(c)    Gain on sale of subsidiary for the six months ended December 31, 2021 was due to the sale of the Company's facility in Woodstock, Illinois and the associated business.

(d)    Other income (expense), net during the three and six months ended December 31, 2022 and 2021 primarily includes foreign currency remeasurement losses/gains.

The following table includes total assets for each segment, as well as reconciling items necessary to total the amounts reported in the consolidated financial statements.

(Dollars in millions)	December 31, 2022		June 30, 2022
Assets:
Biologics	$	5,902	$	5,770
Pharma and Consumer Health	4,992		4,355
Corporate and eliminations	253		382
Total assets	$	11,147	$	10,507

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Supplemental Balance Sheet Information

6 Months Ended

Dec. 31, 2022

Balance Sheet Related Disclosures [Abstract]

Supplemental Balance Sheet Information

SUPPLEMENTAL BALANCE SHEET INFORMATION

Supplemental balance sheet information at December 31, 2022 and June 30, 2022 is detailed in the following tables.

Inventories

Work-in-process and inventories include raw materials, labor, and overhead. Total inventories consist of the following:

(Dollars in millions)	December 31, 2022		June 30, 2022
Raw materials and supplies	$	803	$	651
Work-in-process	144		109
Total inventories, gross	947		760
Inventory cost adjustment (1)	(129)		(58)
Total inventories	$	818	$	702

(1) Increase in inventory cost adjustment is primarily associated with the settlement of certain take-or-pay arrangements.

Prepaid expenses and other

Prepaid expenses and other consist of the following:

(Dollars in millions)	December 31, 2022		June 30, 2022
Prepaid expenses	$	67	$	61
Short-term contract assets	497		398
Spare parts supplies	23		22
Prepaid income tax	31		26
Non-U.S. value-added tax	37		48
Other current assets	59		70
Total prepaid expenses and other	$	714	$	625

Other accrued liabilities

Other accrued liabilities consist of the following:

(Dollars in millions)	December 31, 2022		June 30, 2022
Contract liabilities	$	175	$	185
Accrued employee-related expenses	143		198
Accrued expenses	123		140
Operating lease liabilities	12		14
Restructuring accrual	7		1
Accrued interest	33		32
Accrued income tax	34		50
Total other accrued liabilities	$	527	$	620

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Subsequent Events (Notes)	6 Months Ended
	Dec. 31, 2022
Subsequent Events [Abstract]
Subsequent Events [Text Block]	SUBSEQUENT EVENTS

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Basis of Presentation and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six months ended December 31, 2022 are not necessarily indicative of the results that may be expected for the year ending June 30, 2023. The consolidated balance sheet at June 30, 2022 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information on the Company's accounting policies and footnotes, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2022 filed with the Securities and Exchange Commission (the “SEC”).

Reportable Segments

Effective July 1, 2022, in connection with the appointment of a new President and Chief Executive Officer, the Company changed its operating structure and reorganized its executive leadership team accordingly. This new organizational structure includes a shift from the four operating and reportable segments the Company disclosed during fiscal 2022 to two segments: (i) Biologics and (ii) Pharma and Consumer Health. Set forth below is a summary description of the Company's two current operating and reportable segments.

Biologics—The Biologics segment provides the same services as the Biologics segment the Company reported in fiscal 2022, with some organizational adjustments and the addition of analytical development and testing services for large molecules that were previously disclosed as part of the Company's prior Oral and Specialty Delivery segment. The Biologics segment as reorganized provides development and manufacturing for biologic proteins; cell, gene, and other nucleic acid therapies; plasmid DNA; induced pluripotent stem cells (iPSCs); and vaccines. It also provides formulation, development, and manufacturing for parenteral dose forms, including vials, prefilled syringes, and cartridges; and, as noted above, analytical development and testing services for large molecules.

Pharma and Consumer Health—The Pharma and Consumer Health segment encompasses, except as noted above, the offerings of three of the Company's prior reportable segments—Softgel and Oral Technologies, Oral and Specialty Delivery, and Clinical Supply Services—and comprises the Company’s market-leading capabilities for complex oral solids, softgel formulations, Zydis® fast-dissolve technologies, and gummy, soft chew, and lozenge dosage forms; formulation, development, and manufacturing platforms for oral, nasal, inhaled, and topical dose forms; and clinical trial development and supply services.

Each segment reports through a separate management team and ultimately reports to the Company's President and Chief Executive Officer, who is designated as the Chief Operating Decision Maker for segment reporting purposes. The Company's operating segments are the same as its reportable segments. All prior-period comparative segment information has been restated to reflect the current reportable segments in accordance with Accounting Standards Codification (“ASC”) 280, Segment Reporting, promulgated by the Financial Accounting Standards Board (the “FASB”).

Reclassification, Policy

Reclassifications

Consequent to the reorganization noted above, certain prior-period amounts were reclassified to conform to the current period presentation.

Foreign Currency Translation

Foreign Currency TranslationThe financial statements of the Company’s operations are generally measured using the local currency as the functional currency. Adjustments to translate the assets and liabilities of operations outside the United States (“U.S.”) into U.S. dollars are accumulated as a component of other comprehensive income utilizing period-end exchange rates. Since July 1, 2018, the Company has accounted for its Argentine operations as highly inflationary.

Depreciation, Depletion, and Amortization

Depreciation

Depreciation expense was $69 million and $64 million for the three months ended December 31, 2022 and 2021, respectively. Depreciation expense was $135 million and $122 million for the six months ended December 31, 2022 and 2021, respectively. Depreciation expense includes amortization of assets related to finance leases. The Company charges repairs and maintenance costs to expense as incurred.

Amortization

Amortization expense related to other intangible assets was $34 million and $34 million for the three months ended December 31, 2022 and 2021, respectively. Amortization expense related to other intangible assets was $67 million and $57 million for the six months ended December 31, 2022 and 2021, respectively.

Research and Development Costs

Research and Development Costs

The Company expenses research and development costs as incurred. Research and development costs amounted to $4 million and $6 million for the three months ended December 31, 2022 and 2021, respectively. Research and development costs amounted to $9 million and $12 million for the six months ended December 31, 2022 and 2021, respectively.

Marketable Securities

Marketable SecuritiesThe Company classifies its marketable securities as available-for-sale, because it may sell certain of its marketable securities prior to the stated maturity for various reasons, including management of liquidity, credit risk, duration, relative return, and asset allocation. The Company determines the fair value of each marketable security in its portfolio at each period end and recognizes gains and losses in the portfolio in other comprehensive income. As of December 31, 2022, the amortized cost basis of marketable securities approximates fair value and all outstanding marketable securities mature within one year.

Recent Financial Accounting Standards

Recent Financial Accounting Standards

New Accounting Standards Not Adopted as of December 31, 2022

In March 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance to ease the potential burden in accounting for the discontinuation of a reference rate such as LIBOR, formerly known as the London Interbank Offered Rate, because of reference rate reform. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which delayed the effective date from December 31, 2022 to December 31, 2024. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements.

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Revenue from Contract with Customer (Policies)

6 Months Ended

Dec. 31, 2022

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer [Policy Text Block]

REVENUE RECOGNITION

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. The Company generally earns its revenue by supplying goods or providing services under contracts with its customers in two primary revenue streams: (i) manufacturing and commercial product supply, and (ii) development and clinical supply services. The Company measures the revenue from customers based on the consideration specified in its contracts, excluding any sales incentive or amount collected on behalf of a third party that the Company expects to be entitled in exchange for transferring the promised goods to and/or performing services for the customer (the “Transaction Price”). To the extent the Transaction Price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the Transaction Price utilizing either the expected value method or the most likely amount method depending on which method is expected to better predict the amount of consideration to which the Company will be entitled. The value of variable consideration is included in the Transaction Price if, and to the extent, it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. These estimates are re-assessed each reporting period, as required, and any adjustments required are recorded on a cumulative catch-up basis, which affects revenue and net income in the period of adjustment.

The Company’s customer contracts generally include provisions entitling the Company to a termination penalty when the customer invokes its contractual right to terminate prior to the contract’s nominal end date. The termination penalties in the customer contracts vary but are generally considered substantive for accounting purposes and create enforceable rights and obligations throughout the stated duration of the contract. The Company accounts for a contract cancellation as a contract modification in the period in which the customer invokes the termination provision. The determination of the contract termination penalty is based on the terms stated in the relevant customer agreement. As of the modification date, the Company updates its estimate of the transaction price using the expected value method, subject to constraints, and to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. These estimates are re-assessed each reporting period, as required, and any adjustments required are recorded on a cumulative catch-up basis, which would affect revenue and net income in the period of adjustment.

Manufacturing & Commercial Product Supply Revenue

Manufacturing and commercial product supply revenue consists of revenue earned by manufacturing products supplied to customers under long-term commercial supply arrangements. In these arrangements, the customer typically owns and supplies the active pharmaceutical ingredient, or API, that is used in the manufacturing process. The contract generally includes the terms of the manufacturing services and related product quality assurance procedures to comply with regulatory requirements. Due to the regulated nature of the Company’s business, these contract terms are highly interdependent and, therefore, are considered to be a single combined performance obligation. The transaction price is generally stated in the agreement as a fixed price per unit, with no contractual provision for a refund or price concession. Control is transferred to the customer over time, creating a corresponding right to recognize the related revenue, because there is no alternative use to the Company for the asset created and the Company has an enforceable right to payment for performance completed as of that date. Progress is measured based on the units of product that have successfully completed the contractually required product quality assurance process, as the conclusion of that process generally defines the time when the applicable contract and the related regulatory requirements permit the customer to exercise control over the product’s disposition. The customer is typically responsible for arranging the shipping and handling of product following completion of the quality assurance process. Payment is typically due 30 to 45 days after the goods are delivered as requested by the customer, based on the payment terms set forth in the applicable customer agreement.

Development Services and Clinical Supply Revenue

Development services and clinical supply contracts generally take the form of short-term, fee-for-service arrangements. Performance obligations vary, but frequently include biologic cell-line development, performing formulation, analytical stability, or other services related to product development, and providing manufacturing services for products that are under development or otherwise not intended for commercial sale. They can also include a combination of the following services: the manufacturing, packaging, storage, distribution, destruction, inventory management of customer clinical trial material and the sourcing of comparator drug products on behalf of customers to be used in clinical trials to compare performance with the drug under clinical investigation. The transaction prices for these arrangements are fixed and include amounts stated in the contracts for each promised service, and each service is generally considered to be a separate performance obligation. In most instances, the Company recognizes revenue over time because there is no alternative use to the Company for the asset created and the Company has an enforceable right to payment for performance completed as of that date.

The Company measures progress toward the completion of its performance obligations satisfied over time based on the nature of the services to be performed. For certain types of arrangements, revenue is recognized over time and measured using an output method based on the completion of tasks and activities that are performed to satisfy a performance obligation. For certain types of arrangements, revenue is recognized over time and measured using an input method based on effort expended. Each of these methods provides an appropriate depiction of the Company’s progress toward fulfilling its performance obligations for its respective arrangement. In certain development services arrangements that require a portion of the contract consideration to be received in advance at the commencement of the contract, such advance payment is initially recorded as a contract liability. In certain clinical supply arrangements, revenue is recognized at the point in time when control transfers, which occurs upon either the delivery of the related output of the service to the customer or the completion of quality testing with respect to the product, and the Company has an enforceable right to payment based on the terms of the arrangement.

The Company allocates consideration to each performance obligation using the “relative standalone selling price” as defined under ASC 606. Generally, the Company utilizes observable standalone selling prices in its allocations of consideration. If observable standalone selling prices are not available, the Company estimates the applicable standalone selling price using a cost-plus-margin approach or an adjusted market assessment approach, in each case, representing the amount that the Company believes the market is willing to pay for the applicable service. Payment is typically due 30 to 45 days following the completion of services provided to the customer, based on the payment terms set forth in the applicable customer agreement.

The Company records revenue for comparator sourcing arrangements on a net basis because it is acting as an agent that does not control the product or service before it is transferred to the customer. Payment for comparator sourcing activity is typically received in advance at the commencement of the contract and is initially recorded as a contract liability.

The Company generally expenses sales commissions as incurred because either the amortization period is one year or less, or the balance with an amortization period greater than one year is not material.

The following tables reflect net revenue for the three and six months ended December 31, 2022 and 2021, by type of activity and reportable segment (in millions):

Three Months Ended December 31, 2022	Biologics		Pharma and Consumer Health		Total
Manufacturing & commercial product supply	$	75	$	340	$	415
Development services & clinical supply	505		230		735
Total	$	580	$	570	$	1,150
Inter-segment revenue elimination					(1)
Combined net revenue					$	1,149

Three Months Ended December 31, 2021	Biologics		Pharma and Consumer Health		Total
Manufacturing & commercial product supply	$	169	$	359	$	528
Development services & clinical supply	472		218		690
Total	$	641	$	577	$	1,218
Inter-segment revenue elimination					(1)
Combined net revenue					$	1,217

Six Months Ended December 31, 2022	Biologics		Pharma and Consumer Health		Total
Manufacturing & commercial product supply	$	169	$	632	$	801
Development services & clinical supply	934		437		1,371
Total	$	1,103	$	1,069	$	2,172
Inter-segment revenue elimination					(1)
Combined net revenue					$	2,171

Six Months Ended December 31, 2021	Biologics		Pharma and Consumer Health		Total
Manufacturing & commercial product supply	$	303	$	635	$	938
Development services & clinical supply	886		419		1,305
Total	$	1,189	$	1,054	$	2,243
Inter-segment revenue elimination					(1)
Combined net revenue					$	2,242

The following table allocates revenue by the location where the goods were made or the service performed:

	Three Months Ended   December 31,				Six Months Ended   December 31,
(Dollars in millions)	2022		2021		2022		2021
United States	$	734	$	793	$	1,432	$	1,423
Europe	356		370		630		722
Other	88		83		169		155
Elimination of revenue attributable to multiple locations	(29)		(29)		(60)		(58)
Total	$	1,149	$	1,217	$	2,171	$	2,242

Contract Liabilities

Contract liabilities relate to cash consideration that the Company receives in advance of satisfying the related performance obligations. The contract liabilities balances (current and non-current) as of December 31, 2022 and June 30, 2022 are as follows:

(Dollars in millions)
Balance at June 30, 2022	$	194
Balance at December 31, 2022	$	186
Revenue recognized in the period from amounts included in contracts liability at the beginning of the period:	$	(113)

Contract liabilities that will be recognized within 12 months of December 31, 2022 are accounted for in Other accrued liabilities and those that will be recognized longer than 12 months after December 31, 2022 are accounted for within Other liabilities.

Contract Assets

Contract assets primarily relate to the Company's conditional right to receive consideration for services that have been performed for customers as of December 31, 2022 relating to the Company's development services but had not yet been invoiced as of December 31, 2022. Contract assets are transferred to trade receivables, net when the Company’s right to receive the consideration becomes unconditional. Contract assets totaled $513 million and $441 million as of December 31, 2022 and June 30, 2022, respectively. Contract assets expected to transfer to trade receivables within 12 months are accounted for within Prepaid expenses and other. Contract assets expected to transfer to trade receivables longer than 12 months are accounted for within Other long-term assets.

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Revenue Recognition (Tables) - USD ($)
$ in Millions

3 Months Ended

6 Months Ended

Dec. 31, 2022

Dec. 31, 2021

Dec. 31, 2022

Dec. 31, 2021

Disaggregation of Revenue [Line Items]

Net revenue

$ 1,149.0

$ 1,217.0

$ 2,171.0

$ 2,242.0

Elimination of revenue attributable to multiple locations

(29.0)

(29.0)

$ (60.0)

(58.0)

Revenue Recognition and Deferred Revenue [Abstract]

Contractual Liabilities

The contract liabilities balances (current and non-current) as of December 31, 2022 and June 30, 2022 are as follows:

(Dollars in millions)
Balance at June 30, 2022	$	194
Balance at December 31, 2022	$	186
Revenue recognized in the period from amounts included in contracts liability at the beginning of the period:	$	(113)

Geographical [Member]

Disaggregation of Revenue [Line Items]

Disaggregation of Revenue

The following table allocates revenue by the location where the goods were made or the service performed:

	Three Months Ended   December 31,				Six Months Ended   December 31,
(Dollars in millions)	2022		2021		2022		2021
United States	$	734	$	793	$	1,432	$	1,423
Europe	356		370		630		722
Other	88		83		169		155
Elimination of revenue attributable to multiple locations	(29)		(29)		(60)		(58)
Total	$	1,149	$	1,217	$	2,171	$	2,242

United States

Disaggregation of Revenue [Line Items]

Net revenue

734.0

793.0

$ 1,432.0

1,423.0

Europe

Disaggregation of Revenue [Line Items]

Net revenue

356.0

370.0

630.0

722.0

International Other

Disaggregation of Revenue [Line Items]

Net revenue

$ 88.0

$ 83.0

$ 169.0

$ 155.0

Product and Service[Member]

Disaggregation of Revenue [Line Items]

Disaggregation of Revenue

The following tables reflect net revenue for the three and six months ended December 31, 2022 and 2021, by type of activity and reportable segment (in millions):

Three Months Ended December 31, 2022	Biologics		Pharma and Consumer Health		Total
Manufacturing & commercial product supply	$	75	$	340	$	415
Development services & clinical supply	505		230		735
Total	$	580	$	570	$	1,150
Inter-segment revenue elimination					(1)
Combined net revenue					$	1,149

Three Months Ended December 31, 2021	Biologics		Pharma and Consumer Health		Total
Manufacturing & commercial product supply	$	169	$	359	$	528
Development services & clinical supply	472		218		690
Total	$	641	$	577	$	1,218
Inter-segment revenue elimination					(1)
Combined net revenue					$	1,217

Six Months Ended December 31, 2022	Biologics		Pharma and Consumer Health		Total
Manufacturing & commercial product supply	$	169	$	632	$	801
Development services & clinical supply	934		437		1,371
Total	$	1,103	$	1,069	$	2,172
Inter-segment revenue elimination					(1)
Combined net revenue					$	2,171

Six Months Ended December 31, 2021	Biologics		Pharma and Consumer Health		Total
Manufacturing & commercial product supply	$	303	$	635	$	938
Development services & clinical supply	886		419		1,305
Total	$	1,189	$	1,054	$	2,243
Inter-segment revenue elimination					(1)
Combined net revenue					$	2,242

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Goodwill (Tables)

6 Months Ended

Dec. 31, 2022

Goodwill Disclosure [Abstract]

Goodwill - Rollforward

The following table summarizes the changes between June 30, 2022 and December 31, 2022 in the carrying amount of goodwill in total and by segment:

(Dollars in millions)	Biologics		Pharma and Consumer Health		Total
Balance at June 30, 2022 (1)	$	1,535	$	1,471	$	3,006
Additions(2)	—		215		215
Reallocation	16		(16)		—
Foreign currency translation adjustments	1		(7)		(6)
Balance at December 31, 2022	$	1,552	$	1,663	$	3,215

(1) As of result of the organizational realignments which were effective July 1, 2022, (described in Note 1, Basis of Presentation and Summary of Significant Accounting Policies), beginning balances have been reclassified to conform with the current period presentation.

(2) The addition to goodwill is a result of the Metrics acquisition. For further details, see Note 3, Business Combinations.

As part of the business reorganization discussed in Note 1, Basis of Presentation and Summary of Significant Accounting Policies, the goodwill from the previous Biologics, Softgel and Oral Technologies, Oral and Specialty Delivery, and Clinical Supply Services segments was reallocated between the current Biologics and Pharma and Consumer Health segments.

As a result of this realignment, the Company performed an interim quantitative goodwill impairment test for all of its reporting units as of July 1, 2022, which did not result in any goodwill impairment charges.

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Long-Term Obligations and Other Short-Term Borrowings (Tables)

3 Months Ended

6 Months Ended

Dec. 31, 2022

Dec. 31, 2022

Debt Disclosure [Abstract]

Long-Term Obligations, Presented Net of Issue Discounts and Fees Paid to Lenders, and Other Short-Term Borrowings

Long-term obligations and short-term borrowings consisted of the following at December 31, 2022 and June 30, 2022:

(Dollars in millions)	Maturity	December 31, 2022		June 30, 2022
Senior secured credit facilities
Term loan facility B-3 (6.375% as of December 31)	February 2028	$	1,426	$	1,433
Revolving credit facility (1) (6.032% as of December 31)	November 2027	600		—
5.000% senior notes due 2027	July 2027	500		500
2.375% euro senior notes due 2028(2)	March 2028	879		874
3.125% senior notes due 2029	February 2029	550		550
3.500% senior notes due 2030	April 2030	650		650
Financing lease obligations	2022 to 2038	289		234
Other obligations	2022 to 2028	2		2
Unamortized discount and debt issuance costs		(43)		(41)
Total debt		$	4,853	$	4,202
Less: current portion of long-term obligations and other short-term      borrowings (1)		632		31
Long-term obligations, less current portion		$	4,221	$	4,171

(1) During the six months ended December 31, 2022, the Company drew down $625 million on its revolving credit facility to fund the acquisition of Metrics and supplement operating cash flows, of which $25 million was repaid during three months ended December 31, 2022. The Company has elected to classify the borrowing on its revolving credit facility as current as it intends to repay a portion of the borrowing using cash flow from operations and/or refinance the borrowing through a senior notes offering within the next twelve months.

(2) The change in euro-denominated debt was due to fluctuations in foreign currency exchange rates.

Fair Value Disclosures [Abstract]

Schedule Of Carrying And Fair Value Of Financial Instruments Table

The carrying amounts and the estimated fair values of the Company’s principal categories of debt as of December 31, and June 30, 2022 are as follows:

		December 31, 2022				June 30, 2022
(Dollars in millions)	Fair Value Measurement	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
5.000% senior notes due 2027	Level 2	$	500	$	483	$	500	$	483
2.375% Euro senior notes due 2028	Level 2	879		755		874		744
3.125% senior notes due 2029	Level 2	550		469		550		476
3.500% senior notes due 2030	Level 2	650		551		650		561
Senior secured credit facilities & other	Level 2	2,317		2,111		1,669		1,575
Subtotal		$	4,896	$	4,369	$	4,243	$	3,839
Unamortized discount and debt issuance costs		(43)		—		(41)		—
Total debt		$	4,853	$	4,369	$	4,202	$	3,839

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Earnings Per Share (Tables)

6 Months Ended

Dec. 31, 2022

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The reconciliations between basic and diluted earnings per share attributable to Catalent common shareholders for the three and six months ended December 31, 2022 and 2021, respectively, are as follows:

	Three Months Ended   December 31,				Six Months Ended   December 31,
(In millions except per share data)	2022		2021		2022		2021
Net earnings	$	81	$	97	$	81	$	190
Less: Net earnings attributable to preferred shareholders	—		(4)		—		(13)
Net earnings attributable to common shareholders	$	81	$	93	$	81	$	177
Weighted average shares outstanding - basic	181		175		180		173
Weighted average dilutive securities issuable - stock plans	—		2		1		2
Weighted average shares outstanding - diluted	181		177		181		175
Earnings per share:
Basic	$	0.45	$	0.53	$	0.45	$	1.02
Diluted	$	0.44	$	0.52	$	0.45	$	1.01

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

antidilutive effect on the weighted average shares outstanding for the three and six months ended December 31, 2022 and 2021 were not material.

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Other Income and Expense (Tables)

6 Months Ended

Dec. 31, 2022

Other Income and Expenses [Abstract]

Schedule of Other Nonoperating Income (Expense)

The components of other expense, net for the three and six months ended December 31, 2022 and 2021 are as follows:

	Three Months Ended   December 31,				Six Months Ended  December 31,
(Dollars in millions)	2022		2021		2022		2021
Debt financing costs (1)	$	—	$	—	$	—	$	4
Foreign currency (gains) losses (2)	(25)		15		(1)		24
Other (3)	2		(1)		3		(5)
Total other (income) expense, net	$	(23)	$	14	$	2	$	23

(1)    Debt financing costs for the six months ended December 31, 2021 includes $4 million of financing charges related to $450 million of U.S. dollar-denominated term loans borrowed in that period under the Company’s senior secured credit facilities.

(2)    Foreign currency remeasurement gains/losses include both cash and non-cash transactions.

(3)    Other, for the six months ended December 31, 2021, includes a gain of $2 million related to the fair value of the derivative liability associated with the formerly outstanding Series A Preferred Stock.

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Derivative Instruments and Hedging Activities Net Investment Hedge Activity (Tables)

6 Months Ended

Dec. 31, 2022

Derivative Instruments and Hedging Activities Disclosures [Line Items]

Schedule of Net Investment Hedge in Accumulated Other Comprehensive Income (Loss) and Statement of Financial Performance

The following table summarizes net investment hedge activity during the three and six months ended December 31, 2022 and 2021.

	Three Months Ended   December 31,				Six Months Ended   December 31,
(Dollars in millions)	2022		2021		2022		2021
Unrealized foreign exchange gain (loss) within other comprehensive income	$	(85)	$	40	$	(4)	$	62
Unrealized foreign exchange gain (loss) within statement of operations	$	—	$	(8)	$	—	$	(11)

Schedule of Interest Rate Derivatives

A summary of the estimated fair value of the 2021 Rate Swap reported in the consolidated balance sheets is stated in the table below:

	December 31, 2022			June 30, 2022
(Dollars in millions)	Balance Sheet Classification	Estimated Fair Value		Balance Sheet Classification	Estimated Fair Value
Interest-rate swap	Other long-term assets	$	54	Other long-term assets	$	36

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Fair Value Measures and Disclosures (Tables)

6 Months Ended

Dec. 31, 2022

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following table sets forth the Company’s financial assets and liabilities that were measured at fair value on a recurring basis and the fair value measurement for such assets and liabilities at December 31, and June 30, 2022:

(Dollars in millions)	Basis of Fair Value Measurement
December 31, 2022	Total		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	28	$	28	$	—	$	—
Interest-rate swap	54		—		54		—
Trading securities	1		1		—		—
June 30, 2022
Assets:
Marketable securities	$	89	$	89	$	—	$	—
Interest-rate swap	36		—		36		—
Trading securities	2		2		—		—

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Employee Retirement Benefit Plans (Tables)

6 Months Ended

Dec. 31, 2022

Retirement Benefits [Abstract]

Components of Company's Net Periodic Benefit Costs

Components of the Company’s net periodic benefit costs are as follows:

	Three Months Ended   December 31,				Six Months Ended   December 31,
(Dollars in millions)	2022		2021		2022		2021
Components of net periodic benefit cost:
Selling, general, and administrative expenses:
Service cost	$	1	$	1	$	2	$	2
Other expense, net:
Interest cost	2		1		4		2
Expected return on plan assets	(2)		(3)		(4)		(5)
Amortization (1)	—		1		—		2
Net amount recognized	$	1	$	—	$	2	$	1

(1) Amount represents the amortization of unrecognized actuarial losses.

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Equity and Accumulated Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Dec. 31, 2022

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Comprehensive Income (Loss)

Accumulated Other Comprehensive Loss

The components of the changes in the cumulative translation adjustment, derivatives and hedges, minimum pension liability, and marketable securities for the three and six months ended December 31, 2022 and 2021 are presented below.

	Three Months Ended   December 31,				Six Months Ended   December 31,
(Dollars in millions)	2022		2021		2022		2021
Foreign currency translation adjustments:
Net investment hedge	$	(85)	$	40	$	(4)	$	62
Long-term intercompany loans	31		(4)		(10)		(7)
Translation adjustments	155		(45)		(5)		(73)
Total foreign currency translation adjustment, pretax	101		(9)		(19)		(18)
Tax (benefit) expense	(17)		9		(2)		14
Total foreign currency translation adjustment, net of tax	$	118	$	(18)	$	(17)	$	(32)
Net change in derivatives and hedges:
Net gain recognized during the period	$	—	$	4	$	18	$	5
Total derivatives and hedges, pretax	—		4		18		5
Tax expense	—		1		4		1
Net change in derivatives and hedges, net of tax	$	—	$	3	$	14	$	4
Net change in minimum pension liability:
Net gain recognized during the period	$	—	$	—	$	—	$	1
Total pension liability, pretax	—		—		—		1
Tax benefit	—		—		—		—
Net change in minimum pension liability, net of tax	$	—	$	—	$	—	$	1
Net change in marketable securities:
Net gain (loss) recognized during the period	$	1	$	(1)	$	1	$	(1)
Amounts reclassified from accumulated other     comprehensive loss	1		—		2		—
Net change in marketable securities, pretax	2		(1)		3		(1)
Tax expense	1		$	—	1		$	—
Net change in marketable securities, net of tax	$	1	$	(1)	$	2	$	(1)

Schedule of Accumulated Other Comprehensive Income (Loss)

For the three months ended December 31, 2022 and 2021, the changes in accumulated other comprehensive loss, net of tax by component are as follows:    

(Dollars in millions)	Foreign Exchange Translation Adjustments		Pension and Liability Adjustments		Derivatives and Hedges		Marketable Securities		Other		Total
Balance at September 30, 2022	$	(513)	$	(38)	$	41	$	(3)	$	(1)	$	(514)
Other comprehensive income before     reclassifications	118		—		—		—		—		118
Amounts reclassified from accumulated other     comprehensive loss	—		—		—		1		—		1
Net current period other comprehensive     income	118		—		—		1		—		119
Balance at December 31, 2022	$	(395)	$	(38)	$	41	$	(2)	$	(1)	$	(395)

(Dollars in millions)	Foreign Exchange Translation Adjustments		Pension and Liability Adjustments		Derivatives and Hedges		Marketable Securities		Other		Total
Balance at September 30, 2021	$	(282)	$	(46)	$	1	$	(1)	$	(1)	$	(329)
Other comprehensive (loss) income before     reclassifications	(18)		—		3		(1)		—		(16)
Amounts reclassified from accumulated other     comprehensive loss	—		—		—		—		—		—
Net current period other comprehensive (loss)     income	(18)		—		3		(1)		—		(16)
Balance at December 31, 2021	$	(300)	$	(46)	$	4	$	(2)	$	(1)	$	(345)

For the six months ended December 31, 2022 and 2021, the changes in accumulated other comprehensive loss, net of tax by component are as follows:

(Dollars in millions)	Foreign Exchange Translation Adjustments		Pension and Liability Adjustments		Derivatives and Hedges		Marketable Securities		Other		Total
Balance at June 30, 2022	$	(378)	$	(38)	$	27	$	(4)	$	(1)	$	(394)
Other comprehensive (loss) income before     reclassifications	(17)		—		14		—		—		(3)
Amounts reclassified from accumulated other     comprehensive loss	—		—		—		2		—		2
Net current period other comprehensive (loss)     income	(17)		—		14		2		—		(1)
Balance at December 31, 2022	$	(395)	$	(38)	$	41	$	(2)	$	(1)	$	(395)

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Segment Information (Tables)

6 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Reconciliation of Earnings/(Loss) from Continuing Operations to EBITDA

(Dollars in millions)	Three Months Ended   December 31,				Six Months Ended   December 31,
	2022		2021		2022		2021
Segment EBITDA reconciled to net earnings:
Biologics	$	181	$	199	$	294	$	366
Pharma and Consumer Health	135		147		243		246
Sub-Total	$	316	$	346	$	537	$	612
Reconciling items to net earnings
Unallocated costs (1)	(52)		(101)		(139)		(157)
Depreciation and amortization	(103)		(98)		(202)		(179)
Interest expense, net	(47)		(32)		(79)		(58)
Income tax expense	(33)		(18)		(36)		(28)
Net earnings	$	81	$	97	$	81	$	190

(1) Unallocated costs include restructuring and special items, stock-based compensation, gain on sale of subsidiary, impairment charges, certain other corporate directed costs, and other costs that are not allocated to the segments as follows:                                                        

(Dollars in millions)	Three Months Ended   December 31,				Six Months Ended   December 31,
	2022		2021		2022		2021
Impairment charges and gain/loss on sale of assets(a)	$	(1)	$	(16)	$	1	$	(19)
Stock-based compensation	(10)		(11)		(29)		(32)
Restructuring and other special items(b)	(33)		(23)		(42)		(31)
Gain on sale of subsidiary(c)	—		—		—		1
Other income (expense), net(d)	23		(14)		(2)		(23)
Unallocated corporate costs, net	(31)		(37)		(67)		(53)
Total unallocated costs	$	(52)	$	(101)	$	(139)	$	(157)

(a) Impairment charges and gain/loss on sale of assets during the three and six months ended December 31, 2021 include fixed asset impairment charges associated with a product in the Pharma and Consumer Health segment.

(b)    Restructuring and other special items during the three months ended December 31, 2022 include (i) restructuring charges associated with our plans to reduce costs, consolidate facilities, and optimize our infrastructure across the organization and (ii) transaction and integration costs associated with our Metrics acquisition. Restructuring and other special items for the six months ended December 31, 2022 also includes warehouse exit costs for a product the Company no longer manufactures in its Pharma and Consumer Health segment. For further details on restructuring charges, see Note 8, Restructuring Costs.

Restructuring and other special items during the three months ended December 31, 2021 include (a) transaction and integration costs primarily associated with the Bettera Wellness acquisition and (b) restructuring costs associated with the closure of the previously owned Bolton facility. Restructuring and other special items during the six months ended December 31, 2021 include (c) transaction and integration costs associated with the Delphi Genetics SA, Hepatic Cell Therapy Support SA, RheinCell Therapeutics GmbH, and Bettera Wellness acquisitions.

(c)    Gain on sale of subsidiary for the six months ended December 31, 2021 was due to the sale of the Company's facility in Woodstock, Illinois and the associated business.

(d)    Other income (expense), net during the three and six months ended December 31, 2022 and 2021 primarily includes foreign currency remeasurement losses/gains.

Total Assets for Each Segment and Reconciling in Consolidated Financial Statements

The following table includes total assets for each segment, as well as reconciling items necessary to total the amounts reported in the consolidated financial statements.

(Dollars in millions)	December 31, 2022		June 30, 2022
Assets:
Biologics	$	5,902	$	5,770
Pharma and Consumer Health	4,992		4,355
Corporate and eliminations	253		382
Total assets	$	11,147	$	10,507

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Supplemental Balance Sheet Information (Tables)

6 Months Ended

Dec. 31, 2022

Balance Sheet Related Disclosures [Abstract]

Inventory

Inventories

Work-in-process and inventories include raw materials, labor, and overhead. Total inventories consist of the following:

(Dollars in millions)	December 31, 2022		June 30, 2022
Raw materials and supplies	$	803	$	651
Work-in-process	144		109
Total inventories, gross	947		760
Inventory cost adjustment (1)	(129)		(58)
Total inventories	$	818	$	702

Prepaid and Other Assets

Prepaid expenses and other

Prepaid expenses and other consist of the following:

(Dollars in millions)	December 31, 2022		June 30, 2022
Prepaid expenses	$	67	$	61
Short-term contract assets	497		398
Spare parts supplies	23		22
Prepaid income tax	31		26
Non-U.S. value-added tax	37		48
Other current assets	59		70
Total prepaid expenses and other	$	714	$	625

Other Accrued Liabilities

Other accrued liabilitiesOther accrued liabilities consist of the following:

(Dollars in millions)	December 31, 2022		June 30, 2022
Contract liabilities	$	175	$	185
Accrued employee-related expenses	143		198
Accrued expenses	123		140
Operating lease liabilities	12		14
Restructuring accrual	7		1
Accrued interest	33		32
Accrued income tax	34		50
Total other accrued liabilities	$	527	$	620

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Basis of Presentation and Summary of Significant Accounting Policies Research and Development Expense (Details) - USD ($)
$ in Millions

3 Months Ended

6 Months Ended

Dec. 31, 2022

Dec. 31, 2021

Dec. 31, 2022

Dec. 31, 2021

Research and Development Expense [Abstract]

Research and Development Costs

Research and Development Costs

The Company expenses research and development costs as incurred. Research and development costs amounted to $4 million and $6 million for the three months ended December 31, 2022 and 2021, respectively. Research and development costs amounted to $9 million and $12 million for the six months ended December 31, 2022 and 2021, respectively.

Research and Development Expense

$ 4

$ 6

$ 9

$ 12

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Basis of Presentation and Summary of Significant Accounting Polices Depreciation (Details) - USD ($)
$ in Millions

3 Months Ended

6 Months Ended

Dec. 31, 2022

Dec. 31, 2021

Dec. 31, 2022

Dec. 31, 2021

Depreciation, Depletion and Amortization [Abstract]

Depreciation, Depletion, and Amortization

Depreciation

Depreciation expense was $69 million and $64 million for the three months ended December 31, 2022 and 2021, respectively. Depreciation expense was $135 million and $122 million for the six months ended December 31, 2022 and 2021, respectively. Depreciation expense includes amortization of assets related to finance leases. The Company charges repairs and maintenance costs to expense as incurred.

Amortization

Amortization expense related to other intangible assets was $34 million and $34 million for the three months ended December 31, 2022 and 2021, respectively. Amortization expense related to other intangible assets was $67 million and $57 million for the six months ended December 31, 2022 and 2021, respectively.

Depreciation Cost

$ 69

$ 64

$ 135

$ 122

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Revenue Recognition Disaggregation of Revenue by type of activity and reporting segment (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Disaggregation of Revenue [Line Items]
Inter-segment revenue elimination	$ (1.0)	$ (1.0)	$ (1.0)	$ (1.0)
Net revenue	1,149.0	1,217.0	2,171.0	2,242.0
Biologics
Disaggregation of Revenue [Line Items]
Net revenue	580.0	641.0	1,103.0	1,189.0
Biologics | Manufacturing & Commercial Product Supply
Disaggregation of Revenue [Line Items]
Net revenue	75.0	169.0	169.0	303.0
Biologics | Development Services
Disaggregation of Revenue [Line Items]
Net revenue	505.0	472.0	934.0	886.0
PharmaConsumerHealth
Disaggregation of Revenue [Line Items]
Net revenue	570.0	577.0	1,069.0	1,054.0
PharmaConsumerHealth | Manufacturing & Commercial Product Supply
Disaggregation of Revenue [Line Items]
Net revenue	340.0	359.0	632.0	635.0
PharmaConsumerHealth | Development Services
Disaggregation of Revenue [Line Items]
Net revenue	230.0	218.0	437.0	419.0
Total Catalent before inter-segment revenue elimination
Disaggregation of Revenue [Line Items]
Net revenue	1,150.0	1,218.0	2,172.0	2,243.0
Total Catalent before inter-segment revenue elimination | Manufacturing & Commercial Product Supply
Disaggregation of Revenue [Line Items]
Net revenue	415.0	528.0	801.0	938.0
Total Catalent before inter-segment revenue elimination | Development Services
Disaggregation of Revenue [Line Items]
Net revenue	$ 735.0	$ 690.0	$ 1,371.0	$ 1,305.0

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Revenue Recognition Disaggregation of Revenue by Geography (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Disaggregation of Revenue [Line Items]
Elimination of revenue attributable to multiple locations	$ (29.0)	$ (29.0)	$ (60.0)	$ (58.0)
Net revenue	1,149.0	1,217.0	2,171.0	2,242.0
United States
Disaggregation of Revenue [Line Items]
Net revenue	734.0	793.0	1,432.0	1,423.0
Europe
Disaggregation of Revenue [Line Items]
Net revenue	356.0	370.0	630.0	722.0
International Other
Disaggregation of Revenue [Line Items]
Net revenue	$ 88.0	$ 83.0	$ 169.0	$ 155.0

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Revenue Recognition Contractual Liabilities (Details) - USD ($) $ in Millions	6 Months Ended
	Dec. 31, 2022	Jun. 30, 2022
Revenue Recognition and Deferred Revenue [Abstract]
Contract with Customer, Liability	$ 186	$ 194
Contract with Customer, Liability, Revenue Recognized	$ (113)

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Revenue Recognition Contractual Assets (Detail) - USD ($) $ in Millions	Dec. 31, 2022	Jun. 30, 2022
Text Block [Abstract]
Contract with Customer, Asset, Purchase	$ 513	$ 441

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Business Combinations Acquisition Purchase Agreement (Details) - USD ($) $ in Millions	6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Business Acquisition [Line Items]
Payments to Acquire Businesses, Net of Cash Acquired	$ 474	$ 1,020

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Business Combinations Net Assets Acquired (Details) - USD ($) $ in Millions		6 Months Ended
	Oct. 01, 2022	Dec. 31, 2022	Dec. 31, 2021
Net Assets Acquired from Business Combinations
Payments to Acquire Businesses, Net of Cash Acquired		$ 474.0	$ 1,020.0
Goodwill, Acquired During Period		215.0
Payments to Acquire Businesses, Net of Cash Acquired		$ 474.0	$ 1,020.0
Metrics
Net Assets Acquired from Business Combinations
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	$ 192.0
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles	53.0
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill	2.0
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables	15.0
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net	474.0
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory	6.0
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities	9.0
Business Combination, Consideration Transferred	474.0
Goodwill, Acquired During Period	215.0
Metrics | Customer Relationships [Member]
Net Assets Acquired from Business Combinations
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles	$ 53.0

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Business Combinations, Divestitures (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Business Acquisition, Contingent Consideration [Line Items]
Payments for (Proceeds from) Businesses and Interest in Affiliates	[1]	$ 0.0	$ 0.0	$ 0.0	$ 1.0
Goodwill, Acquired During Period				$ 215.0

[1] Gain on sale of subsidiary for the six months ended December 31, 2021

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Goodwill - Rollforward (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Goodwill [Roll Forward]
Beginning balance			$ 3,006.0
Goodwill, Acquired During Period			215.0
Goodwill, Transfers			0.0
Foreign currency translation adjustments			(6.0)
Ending balance	$ 3,215.0		3,215.0
Net revenue	1,149.0	$ 1,217.0	2,171.0	$ 2,242.0
Biologics
Goodwill [Roll Forward]
Beginning balance			1,535.0
Goodwill, Acquired During Period			0.0
Goodwill, Transfers			16.0
Foreign currency translation adjustments			1.0
Ending balance	1,552.0		1,552.0
Net revenue	580.0	641.0	1,103.0	1,189.0
Biologics | Manufacturing & Commercial Product Supply
Goodwill [Roll Forward]
Net revenue	75.0	169.0	169.0	303.0
Biologics | Development Services
Goodwill [Roll Forward]
Net revenue	505.0	472.0	934.0	886.0
PharmaConsumerHealth
Goodwill [Roll Forward]
Beginning balance			1,471.0
Goodwill, Acquired During Period			215.0
Goodwill, Transfers			(16.0)
Foreign currency translation adjustments			(7.0)
Ending balance	1,663.0		1,663.0
Net revenue	570.0	577.0	1,069.0	1,054.0
PharmaConsumerHealth | Manufacturing & Commercial Product Supply
Goodwill [Roll Forward]
Net revenue	340.0	359.0	632.0	635.0
PharmaConsumerHealth | Development Services
Goodwill [Roll Forward]
Net revenue	230.0	218.0	437.0	419.0
Total Catalent before inter-segment revenue elimination
Goodwill [Roll Forward]
Net revenue	1,150.0	1,218.0	2,172.0	2,243.0
Total Catalent before inter-segment revenue elimination | Manufacturing & Commercial Product Supply
Goodwill [Roll Forward]
Net revenue	415.0	528.0	801.0	938.0
Total Catalent before inter-segment revenue elimination | Development Services
Goodwill [Roll Forward]
Net revenue	$ 735.0	$ 690.0	$ 1,371.0	$ 1,305.0

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Other Intangibles, Net (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Intangible Assets Disclosure [Abstract]
Amortization expense	$ 34	$ 34	$ 67	$ 57

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Long-Term Obligations and Other Short-Term Borrowings - Long-Term Obligations, Presented Net of Issue Discounts and Fees Paid to Lenders, and Other Short-Term Borrowings (Detail) - USD ($) $ in Millions		3 Months Ended
		Dec. 31, 2022	Jun. 30, 2022
Schedule Of Debt [Line Items]
Total long-term debt		$ 4,853.0	$ 4,202.0
Debt, Current		632.0	31.0
Long-term obligations, less current portion		4,221.0	4,171.0
Line of Credit, Current		625.0
Debt Instrument, Unused Borrowing Capacity, Amount		496.0
Letters of Credit Outstanding, Amount		4.0
Repayments of Lines of Credit		25.0
Term loan facility B-3 U.S. dollar-denominated
Schedule Of Debt [Line Items]
Total long-term debt		1,426.0	1,433.0
Revolving Credit Facility - Two
Schedule Of Debt [Line Items]
Total long-term debt		600.0	0.0
Capital lease obligations
Schedule Of Debt [Line Items]
Total long-term debt		289.0	234.0
Other obligations
Schedule Of Debt [Line Items]
Total long-term debt		2.0	2.0
Estimate of Fair Value Measurement [Member]
Schedule Of Debt [Line Items]
Total long-term debt		4,369.0	3,839.0
Debt Instrument, Fair Value Disclosure		4,369.0	3,839.0
Estimate of Fair Value Measurement [Member] | Debt Issuance Costs
Schedule Of Debt [Line Items]
Total long-term debt		0.0	0.0
Carrying Value [Member]
Schedule Of Debt [Line Items]
Total long-term debt		4,853.0	4,202.0
Debt Instrument, Fair Value Disclosure		4,896.0	4,243.0
Carrying Value [Member] | Debt Issuance Costs
Schedule Of Debt [Line Items]
Total long-term debt		43.0	41.0
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | U.S Dollar-denominated 5.00% Senior Notes [Member]
Schedule Of Debt [Line Items]
Debt Instrument, Fair Value Disclosure		483.0	483.0
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | 2.375% Senior Euro Denominated Notes [Member]
Schedule Of Debt [Line Items]
Debt Instrument, Fair Value Disclosure		755.0	744.0
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | 3.125% Senior US Denominated Notes
Schedule Of Debt [Line Items]
Debt Instrument, Fair Value Disclosure		469.0	476.0
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | 3.500% Senior US Denominated Notes
Schedule Of Debt [Line Items]
Debt Instrument, Fair Value Disclosure		551.0	561.0
Fair Value, Inputs, Level 2 [Member] | Carrying Value [Member] | U.S Dollar-denominated 5.00% Senior Notes [Member]
Schedule Of Debt [Line Items]
Debt Instrument, Fair Value Disclosure		500.0	500.0
Fair Value, Inputs, Level 2 [Member] | Carrying Value [Member] | 2.375% Senior Euro Denominated Notes [Member]
Schedule Of Debt [Line Items]
Debt Instrument, Fair Value Disclosure	[1]	879.0	874.0
Fair Value, Inputs, Level 2 [Member] | Carrying Value [Member] | 3.125% Senior US Denominated Notes
Schedule Of Debt [Line Items]
Debt Instrument, Fair Value Disclosure		550.0	550.0
Fair Value, Inputs, Level 2 [Member] | Carrying Value [Member] | 3.500% Senior US Denominated Notes
Schedule Of Debt [Line Items]
Debt Instrument, Fair Value Disclosure		$ 650.0	$ 650.0

[1] The change in euro-denominated debt was due to fluctuations in foreign currency exchange rates.

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Long-Term Obligations and Other Short-Term Borrowings Long-Term Obligations and Other Short-Term Borrowings (Details) - USD ($) $ in Millions	Dec. 31, 2022	Jun. 30, 2022
Debt Instrument [Line Items]
Total long-term debt	$ 4,853	$ 4,202
Term loan facility B-3 U.S. dollar-denominated
Debt Instrument [Line Items]
Total long-term debt	$ 1,426	$ 1,433

XML

Long-Term Obligations and Other Short-Term Borrowings Fair Value Measurements of Financial Instruments - Carrying Amounts and Estimated Fair Value of Financial Instruments (Details) - USD ($) $ in Millions		Dec. 31, 2022	Jun. 30, 2022
Estimate of Fair Value Measurement [Member]
Fair Value Measurements Of Financial Instruments [Line Items]
Debt Instrument, Fair Value Disclosure		$ 4,369	$ 3,839
Carrying Value [Member]
Fair Value Measurements Of Financial Instruments [Line Items]
Debt Instrument, Fair Value Disclosure		4,896	4,243
U.S Dollar-denominated 5.00% Senior Notes [Member] | Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member]
Fair Value Measurements Of Financial Instruments [Line Items]
Debt Instrument, Fair Value Disclosure		483	483
U.S Dollar-denominated 5.00% Senior Notes [Member] | Fair Value, Inputs, Level 2 [Member] | Carrying Value [Member]
Fair Value Measurements Of Financial Instruments [Line Items]
Debt Instrument, Fair Value Disclosure		500	500
2.375% Senior Euro Denominated Notes [Member] | Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member]
Fair Value Measurements Of Financial Instruments [Line Items]
Debt Instrument, Fair Value Disclosure		755	744
2.375% Senior Euro Denominated Notes [Member] | Fair Value, Inputs, Level 2 [Member] | Carrying Value [Member]
Fair Value Measurements Of Financial Instruments [Line Items]
Debt Instrument, Fair Value Disclosure	[1]	879	874
3.125% Senior US Denominated Notes | Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member]
Fair Value Measurements Of Financial Instruments [Line Items]
Debt Instrument, Fair Value Disclosure		469	476
3.125% Senior US Denominated Notes | Fair Value, Inputs, Level 2 [Member] | Carrying Value [Member]
Fair Value Measurements Of Financial Instruments [Line Items]
Debt Instrument, Fair Value Disclosure		550	550
Senior Secured Credit Facilities & Other [Member] | Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member]
Fair Value Measurements Of Financial Instruments [Line Items]
Debt Instrument, Fair Value Disclosure		2,111	1,575
Senior Secured Credit Facilities & Other [Member] | Fair Value, Inputs, Level 2 [Member] | Carrying Value [Member]
Fair Value Measurements Of Financial Instruments [Line Items]
Debt Instrument, Fair Value Disclosure		$ 2,317	$ 1,669

[1] The change in euro-denominated debt was due to fluctuations in foreign currency exchange rates.

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Earnings Per Share Earnings Per Share - Additional Details (Details) - USD ($) $ / shares in Units, $ in Millions	Nov. 18, 2021	Nov. 23, 2020	Dec. 31, 2022	Jun. 30, 2022
Earnings Per Share [Abstract]
Conversion of Stock, Shares Converted	384,777	265,223
Dividends, Preferred Stock, Stock	$ 2	$ 2
Common Stock, Par or Stated Value Per Share			$ 0.01	$ 0.01

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Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Earnings Per Share [Abstract]
Net earnings/(loss)	$ 81.0	$ 97.0	$ 81.0	$ 190.0
Participating Securities, Distributed and Undistributed Earnings (Loss), Basic	0.0	4.0	0.0	13.0
Net Income (Loss) Available to Common Stockholders, Basic	$ 81.0	$ 93.0	$ 81.0	$ 177.0
Weighted Average Number of Shares Outstanding, Basic	181	175	180	173
Dilutive securities issuable-stock plans	0	2	1	2
Total weighted average diluted shares outstanding	181	177	181	175
Earnings Per Share, Basic	$ 0.45	$ 0.53	$ 0.45	$ 1.02
Earnings Per Share, Diluted	$ 0.44	$ 0.52	$ 0.45	$ 1.01

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Other Income and Expense (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Other Income and Expenses [Abstract]
Debt refinancing costs	[1]	—	—	—	4
Foreign Currency (gains) and losses	[2]	$ (25.0)	$ 15.0	$ (1.0)	$ 24.0
Other	[3]	2.0	(1.0)	3.0	(5.0)
Other (income)/expense, net	[4]	(23.0)	$ 14.0	2.0	23.0
Gain (Loss) on Extinguishment of Debt				4.0
Term Loan Facility Incremental Dollar Term B-3		$ 450.0
Derivative, Gain (Loss) on Derivative, Net				$ 0.0	$ 2.0

[1] Debt financing costs for the six months ended December 31, 2021 includes $4 million of financing charges related to $450 million of U.S. dollar-denominated term loans borrowed in that period under the Company’s senior secured credit facilities.

[2] Foreign currency remeasurement gains/losses include both cash and non-cash transactions.

[3] Other, for the six months ended December 31, 2021, includes a gain of $2 million related to the fair value of the derivative liability associated with the formerly outstanding Series A Preferred Stock.

[4] Other income (expense), net during the three and six months ended December 31, 2022 and 2021 primarily includes foreign currency remeasurement losses/gains.

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Restructuring and Other Costs (Details) $ in Millions	3 Months Ended		6 Months Ended
	Dec. 31, 2022 USD ($) employees	Dec. 31, 2021 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
Restructuring and Related Activities [Abstract]
Severance Costs	$ 12.0	$ 1.0	$ 14.0	$ 2.0
Business Exit Costs	11.0		13.0
Restructuring and other	23.0	1.0	27.0	2.0
Restructuring and Related Cost [Abstract]
Restructuring and other	23.0	1.0	27.0	2.0
Biologics
Restructuring and Related Activities [Abstract]
Restructuring and other	18.0		18.0
Restructuring and Related Cost [Abstract]
Restructuring and other	18.0		18.0
PharmaConsumerHealth
Restructuring and Related Activities [Abstract]
Restructuring and other	1.0	1.0	4.0	2.0
Restructuring and Related Cost [Abstract]
Restructuring and other	1.0	$ 1.0	4.0	$ 2.0
Corporate and Eliminations [Member]
Restructuring and Related Activities [Abstract]
Restructuring and other	4.0		5.0
Restructuring and Related Cost [Abstract]
Restructuring and other	4.0		5.0
Minimum [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Expected Cost	$ 14.0		14.0
Restructuring and Related Cost [Abstract]
Restructuring and Related Cost, Number of Positions Eliminated | employees	670
Maximum [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Expected Cost	$ 20.0		$ 20.0
Restructuring and Related Cost [Abstract]
Restructuring and Related Cost, Number of Positions Eliminated | employees	730

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Restructuring and Other Costs Individual Site (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Restructuring Cost and Reserve [Line Items]
Restructuring and other	$ 23.0	$ 1.0	$ 27.0	$ 2.0
Minimum [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Expected Cost	14.0		14.0
Maximum [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Expected Cost	$ 20.0		$ 20.0

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Derivative Instruments and Hedging Activities - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021	Jun. 30, 2022
Derivative [Line Items]
Total long-term debt	$ 4,853.0		$ 4,853.0		$ 4,202.0
Unrealized foreign exchange gain/(loss) within other comprehensive income	(85.0)	$ 40.0	(4.0)	$ 62.0
Unrealized foreign exchange gain/(loss) within statement of operations	0.0	$ (8.0)	0.0	(11.0)
Net accumulated gain related to investment hedges			123.0
Derivative, Gain (Loss) on Derivative, Net			0.0	$ 2.0
Cash Paid to Settle, Interest Rate Swap Agreement	2.0		2.0
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), after Reclassification, before Tax	18.0
Interest Rate Cash Flow Hedge Liability at Fair Value					36.0
Carrying Value [Member]
Derivative [Line Items]
Total long-term debt	4,853.0		4,853.0		4,202.0
Debt Instrument, Fair Value Disclosure	4,896.0		4,896.0		4,243.0
Euro Denominated Debt Outstanding [Member]
Derivative [Line Items]
Total long-term debt	879.0		879.0
U.S. Denominated Term Loan [Member]
Derivative [Line Items]
Total Debt, U.S Denominated Term Loan	$ 500.0		$ 500.0
Debt Instrument, Interest Rate, Effective Percentage	0.9985%		0.9985%
3.500% Senior US Denominated Notes | Fair Value, Inputs, Level 2 [Member] | Carrying Value [Member]
Derivative [Line Items]
Debt Instrument, Fair Value Disclosure	$ 650.0		$ 650.0		$ 650.0

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Fair value measurement recurring basis (Detail) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021	Jun. 30, 2022
Fair Value Disclosures [Abstract]
Marketable Securities		$ 28.0		$ 28.0		$ 89.0
Trading Securities at Fair Value		1.0		1.0		2.0
Interest Rate Cash Flow Hedge Asset at Fair Value		54.0		54.0		36.0
Interest Rate Cash Flow Hedge Liability at Fair Value						36.0
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Marketable Securities		28.0		28.0		89.0
Trading Securities at Fair Value		1.0		1.0		2.0
Interest Rate Cash Flow Hedge Asset at Fair Value		54.0		54.0		36.0
Interest Rate Cash Flow Hedge Liability at Fair Value						36.0
Payments for (Proceeds from) Businesses and Interest in Affiliates	[1]	0.0	$ 0.0	0.0	$ 1.0
Derivative, Gain (Loss) on Derivative, Net				0.0	$ 2.0
Fair Value, Inputs, Level 1 [Member]
Fair Value Disclosures [Abstract]
Marketable Securities		28.0		28.0		89.0
Trading Securities at Fair Value		1.0		1.0		2.0
Interest Rate Cash Flow Hedge Asset at Fair Value		0.0		0.0		0.0
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Marketable Securities		28.0		28.0		89.0
Trading Securities at Fair Value		1.0		1.0		2.0
Interest Rate Cash Flow Hedge Asset at Fair Value		0.0		0.0		0.0
Fair Value, Inputs, Level 2 [Member]
Fair Value Disclosures [Abstract]
Marketable Securities		0.0		0.0		0.0
Trading Securities at Fair Value		0.0		0.0		0.0
Interest Rate Cash Flow Hedge Asset at Fair Value		54.0		54.0		36.0
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Marketable Securities		0.0		0.0		0.0
Trading Securities at Fair Value		0.0		0.0		0.0
Interest Rate Cash Flow Hedge Asset at Fair Value		54.0		54.0		36.0
Fair Value, Inputs, Level 3 [Member]
Fair Value Disclosures [Abstract]
Marketable Securities		0.0		0.0		0.0
Trading Securities at Fair Value		0.0		0.0		0.0
Interest Rate Cash Flow Hedge Asset at Fair Value		0.0		0.0		0.0
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Marketable Securities		0.0		0.0		0.0
Trading Securities at Fair Value		0.0		0.0		0.0
Interest Rate Cash Flow Hedge Asset at Fair Value		$ 0.0		$ 0.0		$ 0.0

[1] Gain on sale of subsidiary for the six months ended December 31, 2021

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Income Taxes - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021	Jun. 30, 2022
Income Tax Disclosure [Abstract]
Unrecognized Tax Benefits, Including Income Tax Penalties and Interest Accrued	$ 4.0		$ 4.0		$ 5.0
Income tax expense(benefit)	33.0	$ 18.0	36.0	$ 28.0
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest	$ 114.0	$ 115.0	$ 117.0	$ 218.0

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Employee Retirement Benefit Plans - Components of Company's Net Periodic Benefit Costs (Detail) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Components of net periodic benefit cost:
Service cost		$ 1.0	$ 1.0	$ 2.0	$ 2.0
Interest cost		2.0	1.0	4.0	2.0
Expected return on plan assets		(2.0)	(3.0)	(4.0)	(5.0)
Amortization	[1]	0.0	1.0	0.0	2.0
Net amount recognized		1.0	0.0	2.0	1.0
Estimated discounted value of future employer contributions		38.0		38.0
Estimated annual cash contribution		$ 2.0	$ 2.0	$ 2.0	$ 2.0

[1] Amount represents the amortization of unrecognized actuarial losses.

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Equity and Accumulated Other Comprehensive Income (Loss) - Equity (Details) - USD ($) $ / shares in Units, $ in Millions			3 Months Ended	6 Months Ended
	Nov. 18, 2021	Nov. 23, 2020	Dec. 31, 2021	Dec. 31, 2021	Dec. 31, 2022	Jun. 30, 2022
Equity [Abstract]
Common Stock, Shares Authorized					1,000,000,000	1,000,000,000
Preferred Stock, Shares Authorized					100,000,000	100,000,000
Conversion of Stock, Shares Converted	384,777	265,223
Dividends, Preferred Stock, Stock	$ 2	$ 2
Preferred Stock, Shares Outstanding					0	0
Stock Issued During Period, Value, Conversion of Convertible Securities			$ (362)	$ (362)
Auction Market Preferred Securities, Stock Series [Line Items]
Preferred Stock, Shares Authorized					100,000,000	100,000,000
Preferred Stock, Par or Stated Value Per Share					$ 0.01	$ 0.01
Preferred Stock, Shares Issued					0	0

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Equity and Accumulated Other Comprehensive Income (Loss) - Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Foreign currency translation adjustments:
Net investment hedge	$ (85.0)	$ 40.0	$ (4.0)	$ 62.0
Long-term intercompany loans	31.0	(4.0)	(10.0)	(7.0)
Translation adjustments	155.0	(45.0)	(5.0)	(73.0)
Total foreign currency translation adjustment, pretax	101.0	(9.0)	(19.0)	(18.0)
Tax expense/(benefit)	(17.0)	9.0	(2.0)	14.0
Total foreign currency translation adjustment, net of tax	118.0	(18.0)	(17.0)	(32.0)
Net change in derivatives and hedges
Net loss recognized during the period	0.0	4.0	18.0	5.0
Total derivatives and hedges, pretax	0.0	4.0	18.0	5.0
Tax expense/(benefit)	0.0	1.0	4.0	1.0
Net change in derivatives and hedges, net of tax	0.0	3.0	14.0	4.0
Net change in minimum pension liability
Net gain/(loss) recognized during the period	0.0	0.0	0.0	1.0
Total pension liability, pretax	0.0	0.0	0.0	1.0
Tax expense/(benefit)	0.0	0.0	0.0	0.0
Pension and other post-retirement adjustments	0.0	0.0	0.0	1.0
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax, Portion Attributable to Parent [Abstract]
Available-for-sale Securities, Gross Realized Losses	1.0	(1.0)	1.0	(1.0)
Total available for sale investment, pretax	2.0	(1.0)	3.0	(1.0)
Tax expense/(benefit)		1.0	1.0	0.0
Available for sale investments	1.0	(1.0)	2.0	(1.0)
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other comprehensive income/(loss) before reclassifications	$ 118.0	$ (16.0)	$ (3.0)	$ (29.0)

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Equity and Accumulated Other Comprehensive Income (Loss) - Rollforward (Details) - USD ($) $ in Millions	3 Months Ended			6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2022	Dec. 31, 2021
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance	$ (514.0)	$ (329.0)		$ (394.0)	$ (317.0)
Other comprehensive income/(loss) before reclassifications	118.0	(16.0)		(3.0)	(29.0)
Amounts reclassified from accumulated other comprehensive income/(loss)	1.0			2.0	1.0
Total foreign currency translation adjustment, net of tax	118.0	(18.0)		(17.0)	(32.0)
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax	0.0	0.0		0.0	1.0
Net change in derivatives and hedges, net of tax	0.0	3.0		14.0	4.0
Other Comprehensive Income, Other, Net of Tax	119.0	(16.0)		(1.0)	(28.0)
Available for sale investments	1.0	(1.0)		2.0	(1.0)
Other comprehensive income/(loss), net of tax	119.0	(16.0)		(1.0)	(28.0)
Ending Balance	(395.0)	(345.0)		(395.0)	(345.0)
Accumulated Translation Adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance	(513.0)	(282.0)		(378.0)	(268.0)
Other comprehensive income/(loss) before reclassifications	118.0	(18.0)		(17.0)	(32.0)
Amounts reclassified from accumulated other comprehensive income/(loss)	0.0
Total foreign currency translation adjustment, net of tax		(18.0)		(17.0)	(32.0)
Ending Balance	(395.0)	(300.0)		(395.0)	(300.0)
Accumulated Defined Benefit Plans Adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance	(38.0)	(46.0)		(38.0)	(47.0)
Other comprehensive income/(loss) before reclassifications	0.0
Amounts reclassified from accumulated other comprehensive income/(loss)	0.0				1.0
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax	0.0			0.0	1.0
Ending Balance	(38.0)	(46.0)		(38.0)	(46.0)
AOCI, Derivative Qualifying as Hedge, Parent [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance	41.0	1.0		27.0
Other comprehensive income/(loss) before reclassifications	0.0	3.0		14.0	4.0
Amounts reclassified from accumulated other comprehensive income/(loss)	0.0
Ending Balance	41.0	4.0		41.0	4.0
ACOI, Accumulated Gain (Loss), Marketable Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance	(3.0)	(1.0)		(4.0)	(1.0)
Other comprehensive income/(loss) before reclassifications	0.0	(1.0)	$ 0.0		(1.0)
Amounts reclassified from accumulated other comprehensive income/(loss)	1.0			2.0
Net change in derivatives and hedges, net of tax	0.0	3.0		14.0	4.0
Available for sale investments		(1.0)		2.0	(1.0)
Ending Balance	(2.0)	(2.0)		(2.0)	(2.0)
Available-for-sale Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance	(1.0)	(1.0)		(1.0)	(1.0)
Other comprehensive income/(loss) before reclassifications	0.0
Amounts reclassified from accumulated other comprehensive income/(loss)	0.0
Other Comprehensive Income, Other, Net of Tax	0.0
Ending Balance	$ (1.0)	$ (1.0)		$ (1.0)	$ (1.0)

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Segment Information - Net Revenue and Segment Ebitda (Detail) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Segment Reporting, Revenue & EBITDA Reconciling Item [Line Items]
Net revenue		$ 1,149.0	$ 1,217.0	$ 2,171.0	$ 2,242.0
Inter-segment revenue elimination		(1.0)	(1.0)	(1.0)	(1.0)
Segment Reporting Information Unallocated Expense	[1]	(52.0)	(101.0)	(139.0)	(157.0)
Biologics
Segment Reporting, Revenue & EBITDA Reconciling Item [Line Items]
Net revenue		580.0	641.0	1,103.0	1,189.0
Segment EBITDA		181.0	199.0	294.0	366.0
PharmaConsumerHealth
Segment Reporting, Revenue & EBITDA Reconciling Item [Line Items]
Net revenue		570.0	577.0	1,069.0	1,054.0
Segment EBITDA		135.0	147.0	243.0	246.0
Total Catalent sub-total of Segment Reporting [Member]
Segment Reporting, Revenue & EBITDA Reconciling Item [Line Items]
Segment EBITDA		$ 316.0	$ 346.0	$ 537.0	$ 612.0

[1] Unallocated costs include restructuring and special items, stock-based compensation, gain on sale of subsidiary, impairment charges, certain other corporate directed costs, and other costs that are not allocated to the segments as follows:                                                        

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Segment Information, EBITDA, Reconciling Items (Detail) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Unallocated costs [Abstract]
Impairment Charges And Gain Loss On Sale Of Assets		$ 1.0	$ 16.0	$ (1.0)	$ 19.0
Stock-based compensation		10.0	11.0	29.0	32.0
Restructuring And Other Special Items	[1]	33.0	23.0	42.0	31.0
Payments for (Proceeds from) Businesses and Interest in Affiliates	[2]	0.0	0.0	0.0	1.0
Other (income)/expense, net	[3]	23.0	(14.0)	(2.0)	(23.0)
Non Allocated Corporate Costs Net		31.0	37.0	67.0	53.0
Segment Reporting Information Unallocated Expense	[4]	$ 52.0	$ 101.0	$ 139.0	$ 157.0

[1] Restructuring and other special items during the three months ended December 31, 2022 include (i) restructuring charges associated with our plans to reduce costs, consolidate facilities, and optimize our infrastructure across the organization and (ii) transaction and integration costs associated with our Metrics acquisition. Restructuring and other special items for the six months ended December 31, 2022 also includes warehouse exit costs for a product the Company no longer manufactures in its Pharma and Consumer Health segment. For further details on restructuring charges, see Note 8, Restructuring Costs. Restructuring and other special items during the three months ended December 31, 2021 include (a) transaction and integration costs primarily associated with the Bettera Wellness acquisition and (b) restructuring costs associated with the closure of the previously owned Bolton facility. Restructuring and other special items during the six months ended December 31, 2021 include (c) transaction and integration costs associated with the Delphi Genetics SA, Hepatic Cell Therapy Support SA, RheinCell Therapeutics GmbH, and Bettera Wellness acquisitions.

[2] Gain on sale of subsidiary for the six months ended December 31, 2021

[3] Other income (expense), net during the three and six months ended December 31, 2022 and 2021 primarily includes foreign currency remeasurement losses/gains.

[4] Unallocated costs include restructuring and special items, stock-based compensation, gain on sale of subsidiary, impairment charges, certain other corporate directed costs, and other costs that are not allocated to the segments as follows:                                                        

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Segment Information - Reconciliation of Earnings / (Loss) from Continuing Operations to Ebitda (Detail) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Segment Reporting [Abstract]
Segment Reporting Information Unallocated Expense	[1]	$ 52.0	$ 101.0	$ 139.0	$ 157.0
Depreciation and amortization		103.0	98.0	202.0	179.0
Interest expense, net		47.0	32.0	79.0	58.0
Income tax expense(benefit)		33.0	18.0	36.0	28.0
Earnings/(loss) from continuing operations		$ 81.0	$ 97.0	$ 81.0	$ 190.0

[1] Unallocated costs include restructuring and special items, stock-based compensation, gain on sale of subsidiary, impairment charges, certain other corporate directed costs, and other costs that are not allocated to the segments as follows:                                                        

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Segment Information - Total Assets for Each Segment and Reconciling in Consolidated Financial Statements (Detail) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021	Jun. 30, 2022
Segment Reporting, Asset Reconciling Item [Line Items]
Total assets		$ 11,147.0		$ 11,147.0		$ 10,507.0
Payments for (Proceeds from) Businesses and Interest in Affiliates	[1]	0.0	$ 0.0	0.0	$ 1.0
Biologics
Segment Reporting, Asset Reconciling Item [Line Items]
Total assets		5,902.0		5,902.0		5,770.0
PharmaConsumerHealth
Segment Reporting, Asset Reconciling Item [Line Items]
Total assets		4,992.0		4,992.0		4,355.0
Corporate and Eliminations [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Total assets		$ 253.0		$ 253.0		$ 382.0

[1] Gain on sale of subsidiary for the six months ended December 31, 2021

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Supplemental Balance Sheet Information - Inventory (Detail) - USD ($) $ in Millions	Dec. 31, 2022	Jun. 30, 2022
Inventory, Net [Abstract]
Raw materials and supplies	$ 803	$ 651
Work-in-process	144	109
Total inventories, gross	947	760
Inventory cost adjustment	(129)	(58)
Inventories	$ 818	$ 702

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Supplemental Balance Sheet Information - Prepaid and Other Assets (Detail) - USD ($) $ in Millions	Dec. 31, 2022	Jun. 30, 2022
Prepaid Expense and Other Assets, Current [Abstract]
Prepaid expenses	$ 67	$ 61
Contract with Customer, Asset, Net, Current	497	398
Spare parts supplies	23	22
Prepaid income tax	31	26
Non-U.S. value added tax	37	48
Other current assets	59	70
Prepaid expenses and other	$ 714	$ 625

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Supplemental Balance Sheet Information - Other Accrued Liabilities (Detail) - USD ($) $ in Millions	Dec. 31, 2022	Jun. 30, 2022
Balance Sheet Related Disclosures [Abstract]
Accrued employee-related expenses	$ 143	$ 198
Accrued Operating Lease, Liabilities	12	14
Restructuring accrual	7	1
Accrued interest	33	32
Contract liability	175	185
Accrued income tax	34	50
Other accrued liabilities and expenses	123	140
Other accrued liabilities	$ 527	$ 620

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Subsequent Events (Details) - USD ($) $ in Millions		3 Months Ended			6 Months Ended
	Oct. 01, 2022	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2022	Dec. 31, 2021	Sep. 30, 2022	Jun. 30, 2022	Sep. 30, 2021	Jun. 30, 2021
Subsequent Event
Unrecognized Tax Benefits, Including Income Tax Penalties and Interest Accrued		$ 4.0			$ 4.0			$ 5.0
Assets		11,147.0			11,147.0			10,507.0
Line of Credit, Current		625.0			625.0
Other comprehensive income/(loss) before reclassifications		118.0	$ (16.0)		(3.0)	$ (29.0)
Foreign currency translation adjustments		118.0	(18.0)		(17.0)	(32.0)
Net change in derivatives and hedges, net of tax		0.0	3.0		14.0	4.0
Available for sale investments		1.0	(1.0)		2.0	(1.0)
Other Comprehensive Income, Other, Net of Tax		119.0	(16.0)		(1.0)	(28.0)
Accumulated other comprehensive income/(loss)		(395.0)	(345.0)		(395.0)	(345.0)	$ (514.0)	(394.0)	$ (329.0)	$ (317.0)
Amounts reclassified from accumulated other comprehensive income/(loss)		1.0			2.0	1.0
Pension and other post-retirement adjustments		0.0	0.0		0.0	1.0
Tax expense/(benefit)			1.0		1.0	0.0
Accumulated Translation Adjustment [Member]
Subsequent Event
Other comprehensive income/(loss) before reclassifications		118.0	(18.0)		(17.0)	(32.0)
Foreign currency translation adjustments			(18.0)		(17.0)	(32.0)
Accumulated other comprehensive income/(loss)		(395.0)	(300.0)		(395.0)	(300.0)	(513.0)	(378.0)	(282.0)	(268.0)
Amounts reclassified from accumulated other comprehensive income/(loss)		0.0
AOCI, Derivative Qualifying as Hedge, Parent [Member]
Subsequent Event
Other comprehensive income/(loss) before reclassifications		0.0	3.0		14.0	4.0
Accumulated other comprehensive income/(loss)		41.0	4.0		41.0	4.0	41.0	27.0	1.0
Amounts reclassified from accumulated other comprehensive income/(loss)		0.0
ACOI, Accumulated Gain (Loss), Marketable Securities [Member]
Subsequent Event
Other comprehensive income/(loss) before reclassifications		0.0	(1.0)	$ 0.0		(1.0)
Net change in derivatives and hedges, net of tax		0.0	3.0		14.0	4.0
Available for sale investments			(1.0)		2.0	(1.0)
Accumulated other comprehensive income/(loss)		(2.0)	(2.0)		(2.0)	(2.0)	(3.0)	(4.0)	(1.0)	(1.0)
Amounts reclassified from accumulated other comprehensive income/(loss)		1.0			2.0
Accumulated Defined Benefit Plans Adjustment [Member]
Subsequent Event
Other comprehensive income/(loss) before reclassifications		0.0
Accumulated other comprehensive income/(loss)		(38.0)	(46.0)		(38.0)	(46.0)	(38.0)	(38.0)	(46.0)	(47.0)
Amounts reclassified from accumulated other comprehensive income/(loss)		0.0				1.0
Pension and other post-retirement adjustments		0.0			0.0	1.0
Available-for-sale Securities [Member]
Subsequent Event
Other comprehensive income/(loss) before reclassifications		0.0
Other Comprehensive Income, Other, Net of Tax		0.0
Accumulated other comprehensive income/(loss)		(1.0)	(1.0)		(1.0)	(1.0)	$ (1.0)	(1.0)	$ (1.0)	$ (1.0)
Amounts reclassified from accumulated other comprehensive income/(loss)		0.0
PharmaConsumerHealth
Subsequent Event
Segment EBITDA		135.0	$ 147.0		243.0	$ 246.0
Assets		$ 4,992.0			$ 4,992.0			$ 4,355.0
Metrics
Subsequent Event
Business Combination, Consideration Transferred	$ 474.0

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Label	Element	Value
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents	us-gaap_CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents	$ 449,000,000
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents	us-gaap_CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents	$ 896,000,000