Emergent BioSolutions Inc. (NYSE: EBS) today reported financial
results for the first quarter ended March 31, 2024.
"We delivered a strong quarter with growth
across all our key products,” said Joe Papa, President and CEO at
Emergent. “We also took significant actions to improve our debt
position, reduce operating expenses and strengthen our financial
flexibility. Emergent's transformation will not happen overnight.
The actions we are implementing today, combined with the assets
Emergent possesses, will enable us to move faster, reach farther
and be more nimble. The public health threats we collectively face
are changing, and so is Emergent.”
FINANCIAL HIGHLIGHTS (1)
Q1 2024 vs. Q1
2023
($ in millions, except per
share amounts) |
Q1 2024 |
Q1 2023 |
% Change |
Total Revenues |
$ |
300.4 |
|
$ |
164.3 |
|
83 |
% |
Net Income (Loss) |
$ |
9.0 |
|
$ |
(186.2 |
) |
105 |
% |
Net Income (Loss) per Diluted
Share |
$ |
0.17 |
|
$ |
(3.71 |
) |
105 |
% |
Adjusted Net Income (Loss)
(2) |
$ |
31.1 |
|
$ |
(163.5 |
) |
119 |
% |
Adjusted Net Income (Loss) per
Diluted Share (2) |
$ |
0.59 |
|
$ |
(3.26 |
) |
118 |
% |
Adjusted EBITDA (2) |
$ |
66.9 |
|
$ |
(101.5 |
) |
166 |
% |
Total Segment Gross Margin %
(2) |
|
51 |
% |
|
3 |
% |
|
Total Segment Adjusted Gross
Margin % (2) |
|
51 |
% |
|
5 |
% |
|
|
|
|
|
|
|
|
|
SELECT Q1 2024 AND OTHER RECENT BUSINESS
UPDATES
- Appointed industry leader Joseph C. Papa as new President, CEO
and Director
- Was awarded procurement contract valued up to $235.8 Million to
supply BioThrax® (Anthrax Vaccine Adsorbed) to the U.S. Department
of Defense
- Received "no action indicated" (NAI) status for Baltimore
Bayview Manufacturing Facility
- Continued progress on strengthening our fundamentals with key
focus on our Medical Countermeasure (“MCM”) and NARCAN®
products
- Amended our senior secured credit facility
FIRST QUARTER 2024 FINANCIAL
PERFORMANCE (1)
Revenues
The Company uses the following categories in
discussing product/service level revenues:
- NARCAN® — comprises contributions from NARCAN®
Nasal Spray
- Other Commercial Products - comprises
contributions from Vaxchora® and Vivotif®, which we sold to
Bavarian Nordic as part of our travel health business in May
2023
- Anthrax MCM — comprises potential
contributions from CYFENDUS®, previously known as AV7909,
BioThrax®, Anthrasil® and Raxibacumab
- Smallpox MCM — comprises potential
contributions from ACAM2000®, VIGIV and TEMBEXA®
- Other Products — comprises potential
contributions from BAT®, RSDL® and Trobigard®
- Bioservices — comprises service and lease
revenues from the Bioservices business
|
|
|
|
($ in millions) |
Q1 2024 |
Q1 2023 |
% Change |
Product sales, net
(3): |
|
|
|
NARCAN® |
$ |
118.5 |
$ |
100.4 |
18 |
% |
Other Commercial Products |
|
— |
|
5.8 |
(100 |
)% |
Anthrax MCM |
|
55.9 |
|
21.9 |
155 |
% |
Smallpox MCM |
|
50.2 |
|
7.2 |
* |
Other Products |
|
49.3 |
|
8.1 |
* |
Total Product sales, net |
$ |
273.9 |
$ |
143.4 |
91 |
% |
|
|
|
|
Bioservices: |
|
|
|
Services |
$ |
18.3 |
$ |
12.6 |
45 |
% |
Leases |
|
0.2 |
|
1.8 |
(89) % |
Total Bioservices revenues |
$ |
18.5 |
$ |
14.4 |
28 |
% |
|
|
|
|
Contracts and
grants |
$ |
8.0 |
$ |
6.5 |
23 |
% |
|
|
|
|
Total revenues |
$ |
300.4 |
$ |
164.3 |
83 |
% |
|
|
|
|
* % change is greater than +/-
200% |
|
|
|
Products Revenue, net
NARCAN®
For Q1 2024, revenues from NARCAN® (naloxone
HCl) Nasal Spray increased $18.1 million, or 18%, as compared
with Q1 2023. The increase was primarily driven by higher branded
NARCAN® sales to U.S. public interest channels and sales of OTC
NARCAN®, partially offset by lower Canadian retail sales of branded
NARCAN®.
Other Commercial Products
For Q1 2024, revenues from Other Commercial
Products decreased $5.8 million, or 100%, as compared with Q1
2023. The decrease was due to no sales of our Vaxchora® and
Vivotif® products during the current quarter, which we sold to
Bavarian Nordic as part of our travel health business in May
2023.
Anthrax MCM
For Q1 2024, revenues from Anthrax MCM increased
$34.0 million, or 155%, as compared with Q1 2023. The increase
reflects the impact of timing of sales related to CYFENDUS® and
BioThrax®. Anthrax vaccine product sales are primarily made under
annual purchase options exercised by the USG. Fluctuations in
revenues result from the timing of the exercise of annual purchase
options, the timing of USG purchases, the availability of
governmental funding and Company delivery of orders that
follow.
Smallpox MCM
For Q1 2024, revenues from Smallpox MCM
increased $43.0 million as compared with Q1 2023. The increase
was primarily due to higher VIGIV and ACAM2000® sales due to
timing. Fluctuations in revenues from Smallpox MCM result from the
timing of the exercise of annual purchase options in the existing
procurement contracts, the timing of USG purchases, the
availability of governmental funding and Company delivery of orders
that follow.
Other Products
For Q1 2024, revenues from other product sales
increased $41.2 million as compared with Q1 2023. The increase
was primarily due to higher BAT and RSDL® product sales due to
timing.
Bioservices Revenues
Services
For Q1 2024, revenues from Bioservices services
increased $5.7 million, or 45%, as compared with Q1 2023. The
increase was driven by an increase in production at the Company's
Camden facility, partially offset by decreases in production at the
Company’s Canton and Winnipeg facilities.
Leases
For Q1 2024, revenues from Bioservices leases
decreased $1.6 million, or 89%, as compared with Q1 2023. The
decrease was related to the completion of a lease for a Bioservices
customer at our Canton facility.
Contracts and Grants
For Q1 2024, revenues from contracts and grants
increased $1.5 million, or 23%, as compared with Q1 2023. The
increase was due to development work in connection with EbangaTM,
partially offset by the close out of other development
initiatives.
Operating Expenses
($ in millions) |
Q1 2024 |
Q1 2023 |
% Change |
Cost of Commercial product sales |
$ |
52.1 |
$ |
45.8 |
14 |
% |
Cost of MCM product sales |
|
62.2 |
|
55.4 |
12 |
% |
Cost of Bioservices |
|
30.3 |
|
51.7 |
(41 |
)% |
Research and development
(“R&D”) |
|
15.1 |
|
40.7 |
(63 |
)% |
Selling, general and
administrative (“SG&A”) |
|
84.7 |
|
101.3 |
(16 |
)% |
Amortization of intangible
assets |
|
16.2 |
|
17.0 |
(5 |
)% |
Total operating expenses |
$ |
260.6 |
$ |
311.9 |
(16 |
)% |
|
|
|
|
|
|
|
Cost of Commercial Product Sales
For Q1 2024, cost of Commercial product sales
increased $6.3 million, or 14%, as compared with Q1 2023. The
increase was primarily due to higher sales of OTC NARCAN®, which
launched during the third quarter of 2023, partially offset by
lower Canadian retail sales of branded NARCAN®.
Cost of MCM Product Sales
For Q1 2024, cost of MCM product sales increased
$6.8 million, or 12%, as compared with Q1 2023. The increase
was primarily due to higher sales of BAT®, VIGIV, BioThrax® and
CYFENDUS®, partially offset by a decrease in shutdown costs.
Cost of Bioservices
For Q1 2024, cost of Bioservices decreased
$21.4 million, or 41%, as compared with Q1 2023. The decrease
was primarily due to a reduction in overhead costs at the Company’s
Camden and Bayview facilities, coupled with no production
activities at the Company’s Canton facility. The decrease in costs
at the Camden facility was partially offset by increases in
production activity following the remediation of matters related to
the FDA's warning letter, which was closed out in October 2023.
Research and Development Expenses
For Q1 2024, R&D expenses decreased
$25.6 million, or 63%, as compared with Q1 2023. The decrease
was primarily due to the sale of our development program for CHIKV
VLP to Bavarian Nordic and reduction in related overhead costs, as
well as a reduction in overhead costs driven by the headcount
reductions as a result of restructuring. The decrease was partially
offset by an increase in expense related to development activities
for EbangaTM.
Selling, General and Administrative Expenses
For Q1 2024, SG&A expenses decreased
$16.6 million, or 16%, as compared with Q1 2023. The decrease
was primarily due to decreases in compensation and other employee
costs as a result of the restructuring initiatives that began
during the first quarter of 2023 and a reduction in professional
services fees related to general corporate initiatives in the prior
year, including organizational transformation consulting fees.
These decreases were partially offset by an increase in marketing
expenses related to the launch of OTC NARCAN® and higher legal
services fees.
ADDITIONAL FINANCIAL INFORMATION (1)
Capital Expenditures
($ in millions) |
Q1 2024 |
Q1 2023 |
% Change |
|
Capital expenditures |
$ |
10.8 |
|
$ |
15.1 |
|
(28 |
)% |
Capital expenditures as a % of
total revenues |
|
4 |
% |
|
9 |
% |
|
|
|
|
|
|
|
|
|
|
|
For Q1 2024, capital expenditures decreased
largely due to lower product development activities across the
Company’s facilities.
SEGMENT INFORMATION
In the fourth quarter of 2023, we realigned our
reportable operating segments to reflect recent changes in our
internal operating and reporting process. The Company now manages
the business with a focus on three reportable segments: (1) a
Commercial Products segment consisting of our NARCAN® and other
commercial products which were sold as part of our travel health
business in the second quarter of 2023; (2) a MCM Products segment
consisting of the Anthrax - MCM, Smallpox - MCM and Other products
and (3) a services segment (“Services”) consisting of our
Bioservices. The Company evaluates the performance of these
reportable segments based on revenue and segment adjusted gross
margin, which is a non-GAAP financial measure. Segment revenue
includes external customer sales, but does not include
inter-segment services. The Company does not allocate contracts and
grants, R&D, SG&A, amortization of intangible assets,
interest and other income (expense) or taxes to its evaluation of
the performance of these segments.
FIRST QUARTER 2024 SEGMENT
RESULTS
($ in
millions) |
Commercial Products |
Quarter Ended March 31, |
|
2024 |
|
|
2023 |
|
$ Change |
% Change |
Revenues |
$ |
118.5 |
|
$ |
106.2 |
|
$ |
12.3 |
12 |
% |
Cost of
sales |
|
52.1 |
|
|
45.8 |
|
|
6.3 |
14 |
% |
Gross margin
** |
$ |
66.4 |
|
$ |
60.4 |
|
$ |
6.0 |
10 |
% |
Gross margin %
** |
|
56 |
% |
|
57 |
% |
|
|
|
|
|
|
|
Segment adjusted gross
margin (2) |
$ |
66.4 |
|
$ |
60.4 |
|
$ |
6.0 |
10 |
% |
Segment adjusted gross
margin % (2) |
|
56 |
% |
|
57 |
% |
|
|
|
|
|
|
|
** Gross margin is calculated as revenues less cost of sales. Gross
margin % is calculated as gross margin divided by revenues. |
Commercial Products gross margin increased $6.0
million, or 10%, to $66.4 million in the quarter, as compared with
$60.4 million in the prior year quarter. Commercial Products gross
margin percentage decreased 1 percentage point to 56% for the
quarter ended March 31, 2024. The decrease was largely due to the
higher sales of OTC NARCAN® and lower branded NARCAN® sales.
Commercial Products segment adjusted gross margin is consistent
with gross margin.
($ in
millions) |
MCM Products |
Quarter Ended March 31, |
|
2024 |
|
|
2023 |
|
$ Change |
% Change |
Revenues |
$ |
155.4 |
|
$ |
37.2 |
|
$ |
118.2 |
|
* |
Cost of sales |
|
62.2 |
|
|
55.4 |
|
|
6.8 |
|
12 |
% |
Gross margin
** |
$ |
93.2 |
|
$ |
(18.2 |
) |
$ |
111.4 |
|
* |
Gross margin %
** |
|
60 |
% |
(49) % |
|
|
Add back: |
|
|
|
|
Changes in fair value of contingent consideration |
$ |
0.5 |
|
$ |
0.3 |
|
$ |
0.2 |
|
67 |
% |
Restructuring costs |
|
(0.1 |
) |
|
2.0 |
|
|
(2.1 |
) |
(105) % |
Segment adjusted gross
margin (2) |
$ |
93.6 |
|
$ |
(15.9 |
) |
$ |
109.5 |
|
* |
Segment adjusted gross
margin % (2) |
|
60 |
% |
(43) % |
|
|
|
|
|
|
|
* % change is greater than +/-
200% |
|
|
|
|
** Gross margin is calculated as revenues less cost of sales. Gross
margin % is calculated as gross margin divided by revenues. |
MCM Products gross margin increased $111.4
million to $93.2 million in the quarter, as compared with
$(18.2) million in the prior year quarter. MCM Products gross
margin percentage increased 109 percentage points to 60% for the
quarter ended March 31, 2024. The increase was primarily due to a
favorable sales mix which was weighted more heavily towards higher
margin products and a decrease in shutdown costs compared to the
prior quarter. MCM Product segment adjusted gross margin in the
current year period excludes the impact of non-cash items related
to the changes in the fair value of contingent consideration of
$0.5 million and the impact of restructuring costs of
$(0.1) million.
($ in
millions) |
Services |
Quarter Ended March 31, |
|
2024 |
|
|
2023 |
|
$ Change |
% Change |
Revenues |
$ |
18.5 |
|
$ |
14.4 |
|
$ |
4.1 |
|
28 |
% |
Cost of
services |
|
30.3 |
|
|
51.7 |
|
|
(21.4 |
) |
(41) % |
Gross margin
** |
$ |
(11.8 |
) |
$ |
(37.3 |
) |
$ |
25.5 |
|
68 |
% |
Gross margin %
** |
(64 |
)% |
(259 |
)% |
|
|
Add back: |
|
|
|
|
Restructuring costs |
$ |
(0.2 |
) |
$ |
— |
|
$ |
(0.2 |
) |
NM |
Segment adjusted gross
margin (2) |
$ |
(12.0 |
) |
$ |
(37.3 |
) |
$ |
25.3 |
|
68 |
% |
Segment adjusted gross
margin % (2) |
(65 |
)% |
(259 |
)% |
|
|
|
|
|
|
|
** Gross margin is calculated as revenues less cost of sales. Gross
margin % is calculated as gross margin divided by revenues. |
NM - Not Meaningful |
|
|
|
|
Services gross margin increased $25.5 million,
or 68%, to $(11.8) million in the quarter, as compared with $(37.3)
million in the prior year quarter. Services gross margin percentage
increased 195 percentage points to (64)% for the quarter ended
March 31, 2024. The increase was primarily due to a reduction in
overhead costs at the Company’s Camden and Bayview facilities,
coupled with an increase in production at our Camden facility due
to the remediation of matters related to the FDA's warning letter,
which was closed out in October 2023. Services segment adjusted
gross margin in the current year period excludes the impact of
restructuring costs of $(0.2) million.
2024 FINANCIAL FORECAST
The Company provides the following updated
financial forecast for full year 2024 and initial forecast for Q2
2024, in both instances reflecting management's expectations based
on the most current information available.
Full Year 2024
METRIC($ in
millions) |
Updated Range(as of
05/01/2024) |
Action |
Previous Range(as of
03/06/2024) |
Total
revenues |
$1,000 - $1,100 |
REVISED |
$900 - $1,100 |
Net loss |
$(148) - $(98) |
REVISED |
$(183) - $(133) |
Adjusted net loss
(2) |
$(65) - $(15) |
REVISED |
$(130) - $(80) |
Adjusted EBITDA
(2) |
$125 - $175 |
REVISED |
$50 - $100 |
Total segment adjusted
gross margin % (2) |
44% - 47% |
REVISED |
40% - 45% |
|
|
|
|
Segment Level Revenue
(4) |
|
|
|
Commercial Products |
$460 - $500 |
UNCHANGED |
$460 - $500 |
MCM Products |
$440 - $490 |
REVISED |
$340 - $490 |
Services |
$70 - $80 |
UNCHANGED |
$70 - $80 |
Key
Assumptions($ and shares in millions) |
Updated Range(as of
05/01/2024) |
Interest expense |
~$82 |
R&D |
~6% of Revenue |
Weighted avg. fully diluted
share count |
~52 |
Capex |
~$32 |
Depreciation &
amortization |
~$111 |
|
|
Q2 2024
METRIC($ in
millions) |
Q2 2024 Forecast |
Total
revenues |
$160 - $210 |
|
|
FOOTNOTES(1) All financial information included in
this release is unaudited.(2) See “Non-GAAP Financial Measures” and
the "Reconciliation of Non-GAAP Financial Measures" tables for the
definitions and reconciliations of these non-GAAP financial
measures to the most closely related GAAP financial measures.(3)
Product sales, net are reported net of variable consideration
including returns, rebates, wholesaler fees and prompt pay
discounts in accordance with U.S. generally accepted accounting
principles.(4) Other Commercial products, which includes Vivotif®
and Vaxchora®, which were sold to Bavarian Nordic as part of our
travel health business in May 2023, are not included in the 2024
forecast. |
|
CONFERENCE CALL, PRESENTATION SUPPLEMENT
AND WEBCAST INFORMATION
Company management will host a conference call
at 5:00 pm eastern time today, May 1, 2024, to discuss these
financial results. The conference call and presentation supplement
can be accessed from the Company's website or through the
following:
By phone Advance registration
is required. Visit
https://register.vevent.com/register/BI79219c258a3a4d65a99bbd1228238ad7
to register and receive an email with the dial-in number, passcode
and registrant ID.By webcast Visit
https://edge.media-server.com/mmc/p/rxbgqwyu/. A replay of the call
can be accessed from the Emergent website.
ABOUT EMERGENT BIOSOLUTIONS INC.
At Emergent, our mission is to protect and
enhance life. We develop, manufacture, and deliver protections
against public health threats through a pipeline of innovative
vaccines and therapeutics. For over 20 years, we have been at work
defending people from things we hope will never happen—so that we
are prepared just in case they ever do. We do what we do because we
see the opportunity to create a better, more secure world. One
where preparedness empowers protection from the threats we face.
And peace of mind prevails. In working together, we envision
protecting or enhancing 1 billion lives by 2030. For more
information, visit our website and follow us on LinkedIn, Twitter,
and Instagram.
NON-GAAP FINANCIAL MEASURES
In the accompanying analysis of financial
information, we sometimes use information derived from consolidated
and segment financial information that may not be presented in our
financial statements or prepared in accordance with generally
accepted accounting principles in the United States (“GAAP”).
Certain of these financial measures are considered not in
conformity with GAAP (“non-GAAP financial measures”) under the
United States Securities and Exchange Commission (“SEC”) rules.
Specifically, we have referred to the following non-GAAP financial
measures:
- Adjusted Net Income (Loss)
- Adjusted Net Income (Loss) per Diluted
Share
- Adjusted EBITDA
- Total Segment Revenues
- Total Segment Gross Margin
- Total Segment Gross Margin %
- Total Segment Adjusted Gross Margin
- Total Segment Adjusted Gross Margin %
- Segment Adjusted Gross Margin
- Segment Adjusted Gross Margin %
We define Adjusted Net Income (Loss) and
Adjusted Net Income (Loss) per Diluted Share, which are non-GAAP
financial measures, as net income (loss) and net income (loss) per
diluted share, respectively, excluding the impact of changes in
fair value of contingent consideration, acquisition and
divestiture-related costs, severance and restructuring costs, other
income (expense) items and non-cash amortization charges. We use
Adjusted Net Income (Loss) for the purpose of calculating Adjusted
Net Income (Loss) per Diluted Share. Management uses Adjusted Net
Income (Loss) per Diluted Share to assess total Company operating
performance on a consistent basis. We believe that these non-GAAP
financial measures, when considered together with our GAAP
financial results and GAAP financial measures, provide management
and investors with an additional understanding of our business
operating results, including underlying trends.
We define Adjusted EBITDA, which is a non-GAAP
financial measure, as consolidated net income (loss) before income
tax provision (benefit), interest expense, net, depreciation,
amortization of intangible assets, changes in fair value of
contingent consideration, severance and restructuring costs, other
income (expense) items and acquisition and divestiture-related
costs. We believe that this non-GAAP financial measure, when
considered together with our GAAP financial results and GAAP
financial measures, provides management and investors with a more
complete understanding of our operating results, including
underlying trends. In addition, EBITDA is a common alternative
measure of operating performance used by many of our competitors.
It is used by investors, financial analysts, rating agencies and
others to value and compare the financial performance of companies
in our industry, although it may be defined differently by
different companies. Therefore, we also believe that this non-GAAP
financial measure, considered along with corresponding GAAP
financial measures, provides management and investors with
additional information for comparison of our operating results with
the operating results of other companies.
We have included the definitions of Segment
Gross Margin and Segment Gross Margin %, which are GAAP financial
measures, below in order to more fully define the components of
certain non-GAAP financial measures presented in this press
release. We define Segment Gross Margin, as a segment's revenues,
less a segment's cost of sales or services. We define Segment Gross
Margin %, as Segment Gross Margin as a percentage of a segments
revenues. We define Segment Adjusted Gross Margin, which is a
non-GAAP financial measure as Segment Gross Margin excluding the
impact of restructuring costs and non-cash items related to changes
in the fair value of contingent consideration. We define Segment
Adjusted Gross Margin %, which is a non-GAAP financial measure, as
Segment Adjusted Gross Margin as a percentage of a segment's
revenues.
We define Total Segment Revenues, which is a
non-GAAP financial measure, as our Total Revenues, less contracts
and grants revenue, which is also equal to the sum of the revenues
of our reportable operating segments. We define Total Segment Gross
Margin, which is a non-GAAP financial measure, as Total Segment
Revenues less our aggregate cost of sales or services. We define
Total Segment Gross Margin %, which is a non-GAAP financial
measure, as Total Segment Gross Margin as a percentage of Total
Segment Revenues. We define Total Segment Adjusted Gross Margin,
which is a non-GAAP financial measure, as Total Segment Gross
Margin, excluding the impact of restructuring costs and changes in
the fair value of contingent consideration. We define Total Segment
Adjusted Gross Margin %, which is a non-GAAP financial measure, as
Total Segment Adjusted Gross Margin as a percentage of Total
Segment Revenues.
Non-GAAP financial measures are not defined in
the same manner by all companies and may not be comparable with
other similarly titled measures of other companies. The
determination of the amounts that are excluded from these non-GAAP
financial measures are a matter of management judgment and depend
upon, among other factors, the nature of the underlying expense or
income amounts. Non-GAAP financial measures should be considered in
addition to, but not as a substitute for or superior to, the
information contained in our Consolidated Statements of Operations
and Consolidated Statements of Cash Flows. Reconciliations of these
non-GAAP financial measures to the most directly comparable GAAP
financial measures are included in the financial tables
accompanying this press release.
SAFE HARBOR STATEMENT
This press release includes forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. All statements, other than statements of
historical fact, including statements regarding the future
performance of the Company or any of our businesses, our business
strategy, future operations, future financial position, future
revenues and earnings, our ability to achieve the objectives of our
restructuring initiatives, including our future results, projected
costs, prospects, plans and objectives of management, are
forward-looking statements. We generally identify forward-looking
statements by using words like “anticipate,” “believe,” “continue,”
“could,” “estimate,” “expect,” “forecast,” “future,” “goal,”
“intend,” “may,” “plan,” “position,” “possible,” “potential,”
“predict,” “project,” “should,” “target,” “will,” “would,” and
similar expressions or variations thereof, or the negative thereof,
but these terms are not the exclusive means of identifying such
statements. Forward-looking statements are based on our current
intentions, beliefs and expectations regarding future events based
on information that is currently available. We cannot guarantee
that any forward-looking statement will be accurate. Readers should
realize that if underlying assumptions prove inaccurate or if known
or unknown risks or uncertainties materialize, actual results could
differ materially from our expectations. Readers are, therefore,
cautioned not to place undue reliance on any forward-looking
statement contained herein. Any such forward-looking statement
speaks only as of the date of this press release, and, except as
required by law, we do not undertake any obligation to update any
forward-looking statement to reflect new information, events or
circumstances.
There are a number of important factors that
could cause our actual results to differ materially from those
indicated by such forward-looking statements, including, among
others, the availability of USG funding for contracts related to
procurement of our medical countermeasure ("MCM") products,
including CYFENDUS® (Anthrax Vaccine Adsorbed (AVA), Adjuvanted),
BioThrax® (Anthrax Vaccine Adsorbed), and ACAM2000®, (Smallpox
(Vaccinia) Vaccine, Live), among others, as well as contracts
related to development of medical countermeasures; the availability
of government funding for our other commercialized products,
including EbangaTM (ansuvimab-zykl), BAT® (Botulism Antitoxin
Heptavalent (A,B,C,D,E,F,G)-(Equine)) and RSDL® (Reactive Skin
Decontamination Lotion Kit); our ability to meet our commitments to
quality and compliance in all of our manufacturing operations; our
ability to negotiate additional USG procurement or follow-on
contracts for our MCM products that have expired or will be
expiring; the commercial availability and acceptance of
over-the-counter NARCAN® (naloxone HCl) Nasal Spray; the impact of
the generic marketplace on NARCAN® (naloxone HCI) Nasal Spray and
future NARCAN® sales; our ability to perform under our contracts
with the USG, including the timing of and specifications relating
to deliveries; our ability to provide Bioservices for the
development and/or manufacture of product and/or product candidates
of our customers at required levels and on required timelines; the
ability of our contractors and suppliers to maintain compliance
with current good manufacturing practices and other regulatory
obligations; our ability to negotiate further commitments related
to the collaboration and deployment of capacity toward future
commercial manufacturing under our existing Bioservices contracts;
our ability to collect reimbursement for raw materials and payment
of services fees from our Bioservices customers; the results of
pending stockholder litigation and government investigations and
their potential impact on our business; our ability to comply with
the operating and financial covenants required by our senior
secured credit facilities and the amended and restated credit
agreement relating to such facilities, as amended from time to
time, as well as our 3.875% Senior Unsecured Notes due 2028; our
ability to maintain adequate internal control over financial
reporting and to prepare accurate financial statements in a timely
manner; our ability to resolve the going concern qualification in
our consolidated financial statements and otherwise successfully
manage our liquidity in order to continue as a going concern; the
procurement of our product candidates by USG entities under
regulatory authorities that permit government procurement of
certain medical products prior to FDA marketing authorization, and
corresponding procurement by government entities outside of the
United States; our ability to realize the expected benefits of the
sale of our travel health business to Bavarian Nordic; the impact
of the organizational changes we announced in January 2023 and
August 2023; our ability to identify and acquire companies,
businesses, products or product candidates that satisfy our
selection criteria; the impact of cyber security incidents,
including the risks from the unauthorized access, interruption,
failure or compromise of our information systems or those of our
business partners, collaborators or other third parties; the
success of our commercialization, marketing and manufacturing
capabilities and strategy; and the accuracy of our estimates
regarding future revenues, expenses, capital requirements and needs
for additional financing. The foregoing sets forth many, but not
all, of the factors that could cause actual results to differ from
our expectations in any forward-looking statement. Readers should
consider this cautionary statement, as well as the risks identified
in our periodic reports filed with the Securities and Exchange
Commission, when evaluating our forward-looking statements.
Trademarks
Emergent®, BioThrax®, BaciThrax®, RSDL®, BAT®,
Trobigard®, Anthrasil®, CNJ-016®, ACAM2000®, NARCAN®, CYFENDUS®,
TEMBEXA® and any and all Emergent BioSolutions Inc. brands,
products, services and feature names, logos and slogans are
trademarks or registered trademarks of Emergent BioSolutions Inc.
or its subsidiaries in the United States or other countries. All
other brands, products, services and feature names or trademarks
are the property of their respective owners.
Investor
ContactRich LindahlExecutive Vice President, Chief
Financial Officerlindahlr@ebsi.com |
Media
ContactAssal HellmerVice President,
Communicationsmediarelations@ebsi.com |
Emergent BioSolutions Inc.
Consolidated Balance Sheets(unaudited, in
millions, except per share data)
|
March 31, |
|
December 31, |
|
2024 |
|
|
|
2023 |
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
78.5 |
|
|
$ |
111.7 |
|
Restricted cash |
|
0.5 |
|
|
|
— |
|
Accounts receivable, net |
|
233.5 |
|
|
|
191.0 |
|
Inventories, net |
|
333.4 |
|
|
|
328.9 |
|
Prepaid expenses and other current assets |
|
36.5 |
|
|
|
47.9 |
|
Total current assets |
|
682.4 |
|
|
|
679.5 |
|
|
|
|
|
Property, plant and equipment, net |
|
379.4 |
|
|
|
382.8 |
|
Intangible assets, net |
|
550.4 |
|
|
|
566.6 |
|
Other assets |
|
191.4 |
|
|
|
194.3 |
|
Total assets |
$ |
1,803.6 |
|
|
$ |
1,823.2 |
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
100.2 |
|
|
$ |
112.2 |
|
Accrued expenses |
|
14.3 |
|
|
|
18.6 |
|
Accrued compensation |
|
42.0 |
|
|
|
74.1 |
|
Debt, current portion |
|
459.2 |
|
|
|
413.7 |
|
Other current liabilities |
|
14.5 |
|
|
|
32.7 |
|
Total current liabilities |
|
630.2 |
|
|
|
651.3 |
|
|
|
|
|
Debt, net of current portion |
|
446.7 |
|
|
|
446.5 |
|
Deferred tax liability |
|
34.8 |
|
|
|
47.2 |
|
Other liabilities |
|
28.0 |
|
|
|
28.9 |
|
Total liabilities |
$ |
1,139.7 |
|
|
$ |
1,173.9 |
|
|
|
|
|
Stockholders’ equity: |
|
|
|
Preferred stock, $0.001 par value per share; 15.0 shares
authorized, no shares issued and outstanding |
|
— |
|
|
|
— |
|
Common stock, $0.001 par value per share; 200.0 shares authorized,
58.0 and 57.8 shares issued; 52.4 and 52.2 shares outstanding,
respectively. |
|
0.1 |
|
|
|
0.1 |
|
Treasury stock, at cost, 5.6 and 5.6 common shares,
respectively |
|
(227.7 |
) |
|
|
(227.7 |
) |
Additional paid-in capital |
|
909.8 |
|
|
|
904.4 |
|
Accumulated other comprehensive loss, net |
|
(5.5 |
) |
|
|
(5.7 |
) |
Accumulated deficit |
|
(12.8 |
) |
|
|
(21.8 |
) |
Total stockholders’ equity |
$ |
663.9 |
|
|
$ |
649.3 |
|
Total liabilities and stockholders’ equity |
$ |
1,803.6 |
|
|
$ |
1,823.2 |
|
Emergent BioSolutions Inc.
Consolidated Statements of
Operations(unaudited, in millions, except per
share data)
|
Three Months Ended March 31, |
|
2024 |
|
|
|
2023 |
|
Revenues: |
|
|
|
Commercial Product sales |
$ |
118.5 |
|
|
$ |
106.2 |
|
MCM Product sales |
|
155.4 |
|
|
|
37.2 |
|
Total Product sales, net |
|
273.9 |
|
|
|
143.4 |
|
Bioservices: |
|
|
|
Services |
|
18.3 |
|
|
|
12.6 |
|
Leases |
|
0.2 |
|
|
|
1.8 |
|
Total Bioservices revenues |
|
18.5 |
|
|
|
14.4 |
|
Contracts and grants |
|
8.0 |
|
|
|
6.5 |
|
Total revenues |
|
300.4 |
|
|
|
164.3 |
|
|
|
|
|
Operating
expenses: |
|
|
|
Cost of Commercial Product sales |
|
52.1 |
|
|
|
45.8 |
|
Cost of MCM Product sales |
|
62.2 |
|
|
|
55.4 |
|
Cost of Bioservices |
|
30.3 |
|
|
|
51.7 |
|
Research and development |
|
15.1 |
|
|
|
40.7 |
|
Selling, general and administrative |
|
84.7 |
|
|
|
101.3 |
|
Amortization of intangible assets |
|
16.2 |
|
|
|
17.0 |
|
Total operating expenses |
|
260.6 |
|
|
|
311.9 |
|
|
|
|
|
Income (loss) from
operations |
|
39.8 |
|
|
|
(147.6 |
) |
|
|
|
|
Other income
(expense): |
|
|
|
Interest expense |
|
(24.3 |
) |
|
|
(17.9 |
) |
Other, net |
|
(3.4 |
) |
|
|
4.9 |
|
Total other income (expense), net |
|
(27.7 |
) |
|
|
(13.0 |
) |
|
|
|
|
Income (loss) before
income taxes |
|
12.1 |
|
|
|
(160.6 |
) |
Income tax
provision |
|
3.1 |
|
|
|
25.6 |
|
Net income (loss) |
$ |
9.0 |
|
|
$ |
(186.2 |
) |
|
|
|
|
Net income (loss) per
common share |
|
|
|
Basic |
$ |
0.17 |
|
|
$ |
(3.71 |
) |
Diluted |
$ |
0.17 |
|
|
$ |
(3.71 |
) |
|
|
|
|
Shares used in
computing net income (loss) per common share |
|
|
|
Basic |
|
52.2 |
|
|
|
50.2 |
|
Diluted |
|
52.2 |
|
|
|
50.2 |
|
Emergent BioSolutions
Inc.Consolidated Statements of Cash
Flows(unaudited, in millions)
|
Three Months Ended March 31, |
|
2024 |
|
|
|
2023 |
|
Operating
Activities |
|
|
|
Net income (loss) |
$ |
9.0 |
|
|
$ |
(186.2 |
) |
Adjustments to reconcile net income (loss) to net cash used in
operating activities: |
|
|
|
Share-based compensation expense |
|
5.9 |
|
|
|
6.8 |
|
Depreciation and amortization |
|
27.9 |
|
|
|
34.6 |
|
Change in fair value of contingent obligations, net |
|
0.5 |
|
|
|
0.3 |
|
Amortization of deferred financing costs |
|
6.9 |
|
|
|
1.0 |
|
Deferred income taxes |
|
(12.2 |
) |
|
|
(4.7 |
) |
Other |
|
(3.1 |
) |
|
|
0.3 |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
(50.0 |
) |
|
|
2.6 |
|
Inventories |
|
(4.5 |
) |
|
|
(30.7 |
) |
Prepaid expenses and other assets |
|
(6.0 |
) |
|
|
(4.5 |
) |
Accounts payable |
|
(2.4 |
) |
|
|
31.0 |
|
Accrued expenses and other liabilities |
|
1.1 |
|
|
|
(14.7 |
) |
Long-term incentive plan accrual |
|
1.2 |
|
|
|
— |
|
Accrued compensation |
|
(33.3 |
) |
|
|
(24.3 |
) |
Income taxes receivable and payable, net |
|
16.1 |
|
|
|
12.9 |
|
Contract liabilities |
|
(19.7 |
) |
|
|
(8.4 |
) |
Net cash used in operating activities |
|
(62.6 |
) |
|
|
(184.0 |
) |
Investing
Activities |
|
|
|
Purchases of property, plant and equipment |
|
(10.8 |
) |
|
|
(15.1 |
) |
Net cash used in investing activities |
|
(10.8 |
) |
|
|
(15.1 |
) |
Financing
Activities |
|
|
|
Proceeds from revolving credit facility |
|
50.0 |
|
|
|
— |
|
Principal payments on revolving credit facility |
|
(5.0 |
) |
|
|
— |
|
Principal payments on term loan facility |
|
(3.9 |
) |
|
|
(8.4 |
) |
Taxes paid for share-based compensation activity |
|
(0.4 |
) |
|
|
(2.1 |
) |
Net cash provided by (used in) financing
activities: |
|
40.7 |
|
|
|
(10.5 |
) |
Effect of exchange rate changes on cash, cash equivalents and
restricted cash |
|
— |
|
|
|
(0.2 |
) |
Net change in cash, cash equivalents and restricted cash |
|
(32.7 |
) |
|
|
(209.8 |
) |
Add: Net change in cash, classified within current assets held for
sale |
|
— |
|
|
|
(2.6 |
) |
Cash, cash equivalents and
restricted cash, beginning of period |
|
111.7 |
|
|
|
642.6 |
|
Cash, cash equivalents and
restricted cash, end of period |
$ |
79.0 |
|
|
$ |
430.2 |
|
Supplemental cash flow
disclosures: |
|
|
|
Cash paid for interest |
$ |
21.5 |
|
|
$ |
21.6 |
|
Cash paid for income
taxes |
$ |
12.4 |
|
|
$ |
16.7 |
|
Non-cash investing and
financing activities: |
|
|
|
Purchases of property, plant and equipment unpaid at period
end |
$ |
3.3 |
|
|
$ |
7.8 |
|
Gain on extinguishment of debt |
$ |
0.3 |
|
|
$ |
— |
|
Reconciliation of cash
and cash equivalents and restricted cash: |
|
|
|
Cash and cash equivalents |
$ |
78.5 |
|
|
$ |
430.2 |
|
Restricted cash |
|
0.5 |
|
|
|
— |
|
Total |
$ |
79.0 |
|
|
$ |
430.2 |
|
Emergent BioSolutions,
Inc.Reconciliation of Non-GAAP Financial
MeasuresReconciliation of Net Income (Loss) and
Net Income (Loss) per Diluted Share to Adjusted Net Income
(Loss)and Adjusted Net Income (Loss) per Diluted
Share(1)
($ in millions,
except per share value) |
Three Months Ended March 31, |
|
|
2024 |
|
|
2023 |
|
Source |
Net income
(loss) |
$ |
9.0 |
|
$ |
(186.2 |
) |
|
Adjustments: |
|
|
|
Non-cash amortization charges |
$ |
23.2 |
|
$ |
18.0 |
|
Intangible Asset ("IA") Amortization, Other Income |
Changes in fair value of contingent consideration |
|
0.5 |
|
|
0.3 |
|
MCM Product COGS |
Severance and restructuring costs |
|
(0.5 |
) |
|
9.7 |
|
COGS, SG&A and R&D |
Acquisition and divestiture costs |
|
— |
|
|
1.1 |
|
SG&A |
Other income (expense), net items |
|
3.1 |
|
|
— |
|
Other Income (Expense) |
Tax effect |
|
(4.2 |
) |
|
(6.4 |
) |
|
Total adjustments: |
$ |
22.1 |
|
$ |
22.7 |
|
|
Adjusted net income
(loss) |
$ |
31.1 |
|
$ |
(163.5 |
) |
|
Net income (loss) per
diluted share |
$ |
0.17 |
|
$ |
(3.71 |
) |
|
Adjustments: |
|
|
|
Non-cash amortization charges |
$ |
0.44 |
|
$ |
0.36 |
|
IA Amortization, Other Income |
Changes in fair value of contingent consideration |
|
0.01 |
|
|
0.01 |
|
MCM Product COGS |
Severance and restructuring costs |
|
(0.01 |
) |
|
0.19 |
|
COGS, SG&A and R&D |
Acquisition and divestiture costs |
|
— |
|
|
0.02 |
|
SG&A |
Other income (expense), net items |
|
0.06 |
|
|
— |
|
Other Income (Expense) |
Tax effect |
|
(0.08 |
) |
|
(0.13 |
) |
|
Total adjustments: |
$ |
0.42 |
|
$ |
0.45 |
|
|
Adjusted net income
(loss) per diluted share |
$ |
0.59 |
|
$ |
(3.26 |
) |
|
Diluted shares used in computing Adjusted net income (loss) per
diluted share |
|
52.2 |
|
|
50.2 |
|
|
Emergent BioSolutions,
Inc.Reconciliation of Net Income (Loss) to
Adjusted EBITDA (1)
($ in
millions) |
Three Months Ended March 31, |
|
2024 |
|
|
2023 |
|
Net income (loss) |
$ |
9.0 |
|
$ |
(186.2 |
) |
Adjustments: |
|
|
Depreciation & amortization |
$ |
27.9 |
|
$ |
34.6 |
|
Income taxes |
|
3.1 |
|
|
25.6 |
|
Total interest expense, net |
|
23.8 |
|
|
13.4 |
|
Changes in fair value of contingent consideration |
|
0.5 |
|
|
0.3 |
|
Severance and restructuring costs |
|
(0.5 |
) |
|
9.7 |
|
Acquisition and divestiture costs |
|
— |
|
|
1.1 |
|
Other income (expense), net items |
|
3.1 |
|
|
— |
|
Total adjustments |
$ |
57.9 |
|
$ |
84.7 |
|
Adjusted
EBITDA |
$ |
66.9 |
|
$ |
(101.5 |
) |
Emergent BioSolutions,
Inc.Reconciliations of Total Revenues to Total
Segment Revenues and of Segment and Total Segment Gross Margin and
Gross Margin % to Segment and Total Segment
Adjusted Gross Margin and Adjusted Gross Margin % (1)
Three Months Ended
March 31, 2024(unaudited, in millions) |
Commercial Products |
MCM Products |
Services |
|
Total Segment |
Contracts & Grants |
Total Revenues |
Revenues |
$ |
118.5 |
|
$ |
155.4 |
|
$ |
18.5 |
|
|
$ |
292.4 |
|
$ |
8.0 |
$ |
300.4 |
|
|
|
|
|
|
|
|
Cost of sales or
services |
|
52.1 |
|
|
62.2 |
|
|
30.3 |
|
|
|
144.6 |
|
|
|
|
|
|
|
|
|
|
|
Gross
margin |
$ |
66.4 |
|
$ |
93.2 |
|
$ |
(11.8 |
) |
|
$ |
147.8 |
|
|
|
Gross margin
% |
|
56 |
% |
|
60 |
% |
(64) % |
|
|
51 |
% |
|
|
|
|
|
|
|
|
|
|
Add
back: |
|
|
|
|
|
|
|
Changes in fair value of contingent consideration |
$ |
— |
|
$ |
0.5 |
|
$ |
— |
|
|
$ |
0.5 |
|
|
|
Restructuring costs |
|
— |
|
|
(0.1 |
) |
|
(0.2 |
) |
|
|
(0.3 |
) |
|
|
|
|
|
|
|
|
|
|
Adjusted gross
margin |
$ |
66.4 |
|
$ |
93.6 |
|
$ |
(12.0 |
) |
|
$ |
148.0 |
|
|
|
Adjusted gross margin
% |
|
56 |
% |
|
60 |
% |
(65) % |
|
|
51 |
% |
|
|
Three Months Ended
March 31, 2023(unaudited, in millions) |
CommercialProducts |
MCM Products |
Services |
|
Total Segment |
Contracts &Grants |
Total Revenues |
Revenues |
$ |
106.2 |
|
$ |
37.2 |
|
$ |
14.4 |
|
|
$ |
157.8 |
|
$ |
6.5 |
$ |
164.3 |
|
|
|
|
|
|
|
|
Cost of sales or
services |
|
45.8 |
|
|
55.4 |
|
|
51.7 |
|
|
|
152.9 |
|
|
|
|
|
|
|
|
|
|
|
Gross
margin |
$ |
60.4 |
|
$ |
(18.2 |
) |
$ |
(37.3 |
) |
|
$ |
4.9 |
|
|
|
Gross margin
% |
|
57 |
% |
(49 |
)% |
(259 |
)% |
|
|
3 |
% |
|
|
|
|
|
|
|
|
|
|
Add
back: |
|
|
|
|
|
|
|
Changes in fair value of contingent consideration |
$ |
— |
|
$ |
0.3 |
|
$ |
— |
|
|
$ |
0.3 |
|
|
|
Restructuring costs |
|
— |
|
|
2.0 |
|
|
— |
|
|
|
2.0 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted gross
margin |
$ |
60.4 |
|
$ |
(15.9 |
) |
$ |
(37.3 |
) |
|
$ |
7.2 |
|
|
|
Adjusted gross margin
% |
|
57 |
% |
(43 |
)% |
(259 |
)% |
|
|
5 |
% |
|
|
Emergent BioSolutions,
Inc.Reconciliation of Net Loss Forecast to
Adjusted Net Loss Forecast
($ in millions) |
2024 Full Year Forecast |
Source |
Net loss |
$(148) - $(98) |
|
Adjustments: |
|
|
Non-cash amortization charges |
$65 |
IA Amortization Other Income |
Changes in fair value of contingent consideration |
2 |
MCM Product COGS |
Severance and restructuring costs |
21 |
COGS, SG&A and R&D |
All Other |
5 |
Acquisition/divestiture costs and non operating investment
loss |
Tax effect |
(10) |
|
Total adjustments: |
$83 |
|
Adjusted net
loss |
$(65) - $(15) |
|
Reconciliation of Net Loss Forecast to
Adjusted EBITDA Forecast
($ in millions) |
2024 Full Year Forecast |
Net loss |
$(148) -
$(98) |
Adjustments: |
|
Depreciation & amortization |
$111 |
Income taxes |
52 |
Total interest expense, net |
82 |
Changes in fair value of contingent consideration |
2 |
Severance and restructuring costs |
21 |
All other |
5 |
Total adjustments |
$273 |
Adjusted EBITDA |
$125 -
$175 |
Emergent BioSolutions,
Inc.Reconciliations of Forecasted Total Revenues
to Forecasted Total Segment Revenues and of Forecasted Segment and
Total Segment Gross Margin and Gross Margin % to Forecasted Segment
and Total Segment Adjusted Gross Margin and Adjusted Gross Margin %
(1)
(in
millions) |
2024 Full Year Forecast |
Total
revenues |
$1,000 - $1,100 |
Contracts & Grants |
(30) |
Total segment
revenues |
$970 - $1070 |
|
|
Cost of sales or
services |
$551 - $575 |
Total segment gross
margin |
$419 - $495 |
Total segment gross
margin % |
43% - 46% |
Add
back: |
|
Changes in fair value of contingent consideration |
$2 |
Severance and restructuring costs |
$5 |
Total segment adjusted
gross margin |
$426 - $502 |
Total segment adjusted
gross margin % |
44% - 47% |
Emergent Biosolutions (NYSE:EBS)
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