Emergent BioSolutions Inc. (NYSE: EBS) reported financial results
for the three months ended March 31, 2020.
"Emergent is uniquely positioned to respond to the unprecedented
challenges of the COVID-19 pandemic," said Robert G. Kramer Sr.,
president and chief executive officer of Emergent BioSolutions. “We
are deploying our decades of experience in vaccines and
therapeutics development and manufacturing, our well-established
platform technologies, and our significant development and
manufacturing capabilities. Our goal is to create multiple
innovative solutions to deliver on our commitments to our customers
and patients, while continuing to safeguard our employees.”
FINANCIAL HIGHLIGHTS (unaudited)
(in millions) |
Q1 2020 |
Q1 2019 |
$ Change |
% Change |
Total Revenues |
$192.5 |
$190.6 |
$1.9 |
1.0% |
Net Loss |
$(12.5) |
$(26.0) |
$13.5 |
51.9% |
Adjusted Net Income (Loss)
(1) |
$0.3 |
$(5.2) |
$5.5 |
105.8% |
Adjusted EBITDA (1) |
$15.3 |
$8.4 |
$6.9 |
82.1% |
EMERGENT'S RESPONSE TO COVID-19
- Signed a contract development and manufacturing (CDMO)
agreement, valued at $135 million, to be U.S. manufacturing partner
of Johnson & Johnson's lead vaccine candidate for COVID-19.
Negotiations continue on a long-term commercial supply agreement
for large-scale drug substance manufacturing, anticipated to begin
in 2021.
- Initiated development of two investigational plasma-derived
therapies. COVID-Human Immune Globulin (COVID- HIG), a human
plasma-derived product candidate, for which the Company
subsequently received $14.5 million in Health and Human Services
(HHS) funding, is being developed as a potential treatment for
COVID-19 in severe hospitalized and high-risk patients and will be
included in at least one of the studies of the National Institute
of Allergy and Infectious Diseases (NIAID), part of the National
Institutes of Health, evaluating potential treatments for COVID-19.
COVID-Equine Immune Globulin (COVID-EIG) is also being developed as
an equine plasma-derived therapy candidate for potential treatment
of severe disease in humans.
- Signed a CDMO agreement with Novavax, Inc. to provide
development services, drug substance and drug product manufacturing
for its experimental vaccine candidate for COVID-19,
NVX-CoV2373.
- Signed a CDMO agreement with Vaxart, Inc. to provide
development services and drug substance manufacturing to produce
its experimental oral vaccine candidate for COVID-19.
Q1 2020 AND OTHER RECENT BUSINESS
ACCOMPLISHMENTS
- Received agreement from the European Medicines Agency (EMA) and
the U.S. Food and Drug Administration (FDA) on the company’s
proposed development plan to use Serum Neutralizing Antibodies
(SNA) as surrogate endpoint to predict likely clinical benefit of
CHIKV VLP, the company’s chikungunya virus virus-like particle
(VLP) vaccine candidate, in a Phase 3 safety and immunogenicity
study anticipated in late 2020.
- Received positive opinion and subsequent approval from EMA of
Vaxchora® Cholera Vaccine (recombinant, Live, Oral), making it the
only single-dose oral cholera vaccine approved across all European
Union member states, the UK, and the European Economic Area
countries, indicated for active immunization against disease caused
by Vibrio cholerae serogroup 01 in adults and children from 6 years
of age. Commercial launch is being planned for late
2020.
- Signed a CDMO agreement with Novavax, Inc. to provide drug
substance manufacturing of NanoFluTM, its seasonal influenza
vaccine candidate.
- Announced the appointment of Dr. Karen Smith as chief medical
officer with responsibility for leading and further establishing
Emergent’s global integrated capability in clinical development,
medical affairs, and regulatory affairs.
- Submitted a data package to the FDA in support of extending the
shelf life of NARCAN®(naloxone HCl) Nasal Spray from 24 to 36
months, with an expected review by FDA to take approximately six
months.
2020 FINANCIAL PERFORMANCE (unaudited)
(I) Quarter Ended March 31, 2020
(Q1)
Revenues
Total Revenues
For Q1 2020, total revenues were $192.5 million, a slight
increase over 2019. Total revenues reflect a decline in product
sales revenues partially offset by an increase in CDMO and
contracts and grants revenues.
Product Sales
For Q1 2020, product sales were $148.2 million,
a decrease of $4.8 million or 3% as compared to 2019. The change
primarily reflects increases in sales of Anthrax Vaccines and
NARCAN Nasal Spray offset by a decrease in ACAM2000, as previously
anticipated.
(in
millions) |
Three Months Ended March 31, |
2020 |
2019 |
% Change |
Product Sales |
|
|
|
NARCAN Nasal Spray |
$72.2 |
$65.5 |
10% |
ACAM2000 |
$— |
$45.6 |
(100)% |
Anthrax vaccines |
$51.9 |
$11.7 |
NM |
Other |
$24.1 |
$30.2 |
(20)% |
Total Product Sales |
$148.2 |
$153.0 |
(3)% |
Contract Development and Manufacturing
For Q1 2020, revenue from the Company’s contract development and
manufacturing operations was $21.7 million, an increase of $5.8
million or 36% as compared to 2019. The increase primarily reflects
increased demand across development services, drug substance and
drug product offerings.
Contracts and Grants
For Q1 2020, revenue from the Company’s development-based
contracts and grants was $22.6 million, an increase of$0.9 million
as compared to 2019. The increase primarily reflects revenues
associated with a grant received related to our PC2A (diazepam)
auto-injector drug-device product candidate.
Operating Expenses
Cost of Product Sales and Contract Development and
Manufacturing
For Q1 2020, cost of product sales and contract manufacturing
was $76.9 million, a decrease of $14.9 million or 16% as compared
to 2019. The decrease primarily reflects a decrease in sales of
ACAM2000 and raxibacumab.
Research and Development (Gross and Net)
For Q1 2020, gross R&D expenses were $42.7 million, a
decrease of $3.4 million or 7% as compared to 2019. The decrease
primarily reflects a decline of costs associated with the Company's
FLU-IGIV product candidate. During 2019, the Company was incurring
costs associated with phase 2 clinical trials for FLU-IGIV.
For Q1 2020, net R&D expense, which reflects investments
made in development programs that are not currently funded in whole
or in part by third-party partners and is calculated as gross
research and development expenses minus contracts and grants
revenue, was 20.1 million, a decrease of $4.3 million or 18% as
compared to 2019. The decrease is also attributable to a decline of
costs associated with the Company's FLU-IGIV product candidate. The
Q1 2020 and Q1 2019 net R&D expense was 12% of adjusted revenue
(total revenue less contracts & grants).
(in
millions) |
Three Months Ended March 31, |
2020 |
2019 |
% Change |
Research and Development Expenses |
$42.7 |
$46.1 |
(7)% |
Adjustments: |
Less Contracts and Grants Revenue |
$22.6 |
$21.7 |
4% |
Net Research and Development
Expenses |
$20.1 |
$24.4 |
(18)% |
Adjusted Revenue(Total Revenue
less Contracts and Grants Revenue) |
$169.9 |
$168.9 |
1% |
Net R&D as % of Adjusted
Revenue (Net R&D Margin) |
12% |
14% |
NA |
Selling, General and Administrative
For Q1 2020, selling, general and administrative
expenses were $69.7 million, an increase of $4.3 million or 7% as
compared to 2019. The increase primarily reflects additional
expenses related to staffing to support the Company's growth.
Amortization of Intangible Assets
For Q1 2020, amortization of intangible assets was $14.8 million
was consistent with amortization of intangible assets of $14.5
million in Q1 2019.
Income Taxes
For Q1 2020, the income tax benefit in the amount of $8.8
million was consistent with the benefit during the Q1 2019 as a
percentage of net loss during the periods.
Net Loss & Adjusted Net Income (Loss)
For Q1 2020, the Company recorded net loss of $12.5 million, or
$0.24 per diluted share, versus net loss of $26.0 million, or $0.51
per diluted share, in 2019.
For Q1 2020, the Company recorded adjusted net income of $0.3
million, or $.01 per diluted share, versus adjusted net loss of
$5.2 million, or $.10 per diluted share, in 2019. (1)
Adjusted EBITDA
For Q1 2020, the Company recorded adjusted EBITDA of $15.3
million versus $8.4 million in 2019. (1)
2020 FINANCIAL FORECAST
For full year 2020, the Company reaffirms its expectation of the
following forecasted financial metrics previously provided on
February 20, 2020.
(in millions) |
FULL YEAR 2020(As of 4/30/2020) |
Total Revenues |
$1,175 -- $1,275 |
Adjusted Net Income (1) |
$160 -- $210 |
Adjusted EBITDA (1) |
$300 -- $360 |
The Company’s financial forecast for 2020 includes the
anticipated impact of the following items:
- A full year of product sales, including the following ranges
for key components of the product portfolio:- NARCAN Nasal
Spray: $285 million - $315 million;- Anthrax Vaccines: $270
million - $300 million; - ACAM2000: $180 million - $200
million;
- Contract development and manufacturing revenue of $125 million
- $145 million;
- Deliveries of raxibacumab to the Strategic National Stockpile
(SNS) under the anticipated follow-on procurement contract with
HHS;
- Domestic and international sales of the other medical
countermeasures that comprise Other Product sales;
- Continued improvement of gross margin (a combination of product
sales and CDMO services) in a range of 200 - 400 basis points
annually, driven by improved product mix;
- Continued investment in internally funded development projects
most notably the anticipated Phase 3 studies for the CHIKV VLP and
FLU-IGIV product candidates as well as the Phase 1/2 study for
COVID-EIG, among other R&D projects.
Emergent has assessed the risks to its business associated with
the COVID-19 pandemic and has adopted measures to mitigate those
risks as they are understood today, and accordingly is providing
this outlook for 2020. Despite the lack of expected material
disruption to the company’s business, the management team continues
to assess the business and operational implications associated with
the pandemic and market conditions on its employees, patients and
customers.
The outlook for 2020 does not include estimates for potential
new corporate development or other M&A transactions.
Q2 2020 REVENUE FORECAST
For Q2 2020, the Company forecast for total revenues is $270
million - $300 million.
FOOTNOTES
(1) See "Reconciliation of Net Loss to Adjusted Net Loss and
Adjusted EBITDA" for a definition of terms and the reconciliation
tables.
CONFERENCE CALL, PRESENTATION
SUPPLEMENT, AND WEBCAST INFORMATION
Company management will host a conference call
at 5:00 pm (Eastern Time) today, April 30, 2020, to discuss these
financial results. The conference call and presentation supplement
can be accessed from the Company's website or through the
following:
Live Teleconference Information:Dial in: [US] (855) 766-6521;
[International] (262) 912-6157Conference ID: 3784302
Live Webcast Information:Visit
https://edge.media-server.com/mmc/p/juw3z8b3 for the live
webcast feed.
A replay of the call can be accessed at
www.emergentbiosolutions.com under “Investors.”
ABOUT EMERGENT BIOSOLUTIONS INC.
Emergent BioSolutions is a global life sciences company whose
mission is to protect and enhance life. Through our specialty
products and contract development and manufacturing services, we
are dedicated to providing solutions that address public health
threats. Through social responsibility, we aim to build healthier
and safer communities. We aspire to deliver peace of mind to our
patients and customers so they can focus on what’s most important
in their lives. In working together, we envision protecting or
enhancing 1 billion lives by 2030. For more informationvisit
www.emergentbiosolutions.com. Find us on LinkedIn and follow us on
Twitter @emergentbiosolu and Instagram @life_at_emergent.
SAFE HARBOR STATEMENT
This press release includes forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Any statements, other than statements of
historical fact, including, without limitation, our financial
guidance and related projections and statements regarding our
ability to meet such projections in the anticipated timeframe, if
at all; the ability to advance potential solutions to combat the
novel strain of coronavirus (SARS-CoV-2) causing COVID-19 disease;
statements regarding total contract value; continued product sales
of key components of the product portfolio at specified levels;
deliveries of raxibacumab to the SNS under the anticipated
follow-on procurement contract with the ASPR; domestic and
international sales of the other medical countermeasures at
specified levels; contract development and manufacturing revenues
at specified levels; extending the shelf life of NARCAN® Nasal
Spray; the results of clinical trials; continued improvement of
gross margin (a combination of product sales and CDMO services); as
well as continued investment in internally funded development
projects and any other statements containing the words “will,”
“believes,” “expects,” “anticipates,” “intends,” “plans,”
“targets,” “forecasts,” “estimates” and similar expressions in
conjunction with, among other things, discussions of the Company's
outlook, financial performance or financial condition, financial
and operation goals, strategic goals, growth strategy, product
sales, government development or procurement contracts or awards,
government appropriations, manufacturing capabilities, and the
timing of certain regulatory approvals or expenditures are
forward-looking statements. These forward-looking statements are
based on our current intentions, beliefs and expectations regarding
future events. We cannot guarantee that any forward-looking
statement will be accurate. Investors should realize that if
underlying assumptions prove inaccurate or unknown risks or
uncertainties materialize, actual results could differ materially
from our expectations. Investors are, therefore, cautioned not to
place undue reliance on any forward- looking statement. Any
forward-looking statements speak only as of the date of this press
release, and, except as required by law, we do not undertake 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 the impact
of global economic conditions and public health crises and
epidemics, such as the impact from the global pandemic that arose
from the novel strain of coronavirus (SARS-CoV-2) causing COVID-19
disease that recently originated and quickly spread globally, on
the markets, our operations, and employees as well as those of our
customers and suppliers; availability of U.S. government funding
for procurement for our products; our ability to perform under our
contracts with the U.S. government, including the timing of and
specifications relating to deliveries; the continued exercise of
discretion by BARDA to procure additional doses of AV7909 (anthrax
vaccine adsorbed (AVA), adjuvanted) prior to approval by the FDA;
our ability to secure licensure of AV7909 from the FDA within the
anticipated timeframe, if at all; our ability to secure follow-on
procurement contracts for our solutions to public health threats
that are under procurement contracts that have expired or will be
expiring; our ability and the ability of our collaborators to
enforce patents related to NARCAN Nasal Spray against potential
generic entrants; our ability to identify and acquire companies,
businesses, products or product candidates that satisfy our
selection criteria; our ability and the ability of our contractors
and suppliers to maintain compliance with Current Good
Manufacturing Practices and other regulatory obligations; our
ability to comply with the operating and financial covenants
required by our senior secured credit facilities; our ability to
obtain and maintain regulatory approvals for our product candidates
and the timing of any such approvals; the safety and effectiveness
of the current COVID-19 product candidates we are working on; the
procurement of products by U.S. government entities under
regulatory exemptions prior to approval by the FDA and
corresponding procurement by government entities outside of the
United States under regulatory exemptions prior to approval by the
corresponding regulatory authorities in the applicable country; the
success of our commercialization, marketing and manufacturing
capabilities and strategy; and the accuracy of our estimates
regarding future revenues, expenses, and 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. Investors
should consider this cautionary statement as well as the risk
factors identified in our periodic reports filed with the
Securities and Exchange Commission when evaluating our
forward-looking statements.
Investor Contact Robert BurrowsVice President, Investor
Relations(o) 240/631-3280; (m) 240/413-1917burrowsr@ebsi.com
Media Contact Miko B. NeriSenior Director, Corporate
Communications (o) 240/631-3392NeriM@ebsi.com
Emergent BioSolutions Inc.Consolidated Balance
Sheets (unaudited, in millions, except per share data)
|
March 31, 2020 |
|
December 31, 2019 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
$ |
181.5 |
|
167.8 |
Restricted cash |
|
0.2 |
|
0.2 |
Accounts receivable, net |
|
162.5 |
|
270.7 |
Inventories |
|
248.1 |
|
222.5 |
Income tax receivable, net |
|
10.2 |
|
4.6 |
Prepaid expenses and other current assets |
|
24.1 |
|
20.4 |
Total current assets |
|
626.6 |
|
686.2 |
Property, plant and equipment, net |
|
549.2 |
|
542.3 |
Intangible assets, net |
|
708.1 |
|
712.9 |
In-process research and development |
|
29.0 |
|
29.0 |
Goodwill |
|
266.4 |
|
266.6 |
Deferred tax assets, net |
|
17.6 |
|
13.4 |
Other assets |
|
81.8 |
|
76.9 |
Total assets |
$ |
2,278.7 |
|
$ |
2,327.3 |
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable |
$ |
84.2 |
|
|
94.8 |
Accrued expenses |
|
41.5 |
|
|
39.5 |
Accrued compensation |
|
47.5 |
|
|
62.4 |
Debt, current portion |
|
26.3 |
|
|
12.9 |
Other current liabilities |
|
7.6 |
|
|
6.7 |
Total current liabilities |
|
207.1 |
|
|
216.3 |
Contingent consideration, net of current portion |
|
26.1 |
|
|
26.0 |
Debt, net of current portion |
|
762.9 |
|
|
798.4 |
Deferred tax liability |
|
63.9 |
|
|
63.9 |
Contract liabilities, net of current portion |
|
85.0 |
|
|
85.6 |
Other liabilities |
|
58.9 |
|
|
48.6 |
Total liabilities |
|
1,203.9 |
|
|
1,238.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
Preferred stock, $0.001 par value; 15.0 shares authorized, no
shares issued or outstanding |
|
— |
|
|
— |
|
|
|
|
|
|
Common stock, $0.001 par value; 200.0 shares authorized, 53.5 and
53.0 shares issued; 52.3 and 51.7 shares
outstanding, respectively |
|
0.1 |
|
|
0.1 |
Treasury stock, at cost, 1.2 common shares |
|
(39.6) |
|
|
(39.6) |
Additional paid-in capital |
|
726.2 |
|
|
716.1 |
Accumulated other comprehensive loss, net |
|
(21.2) |
|
|
(9.9) |
Retained earnings |
|
409.3 |
|
|
421.8 |
Total stockholders' equity |
|
1,074.8 |
|
|
1,088.5 |
Total liabilities and stockholders' equity |
$ |
2,278.7 |
|
|
2,327.3 |
Emergent BioSolutions Inc.Consolidated Statements
of Operations (unaudited, in millions, except per share data)
|
Three Months Ended
March 31, |
|
2020 |
|
2019 |
Revenues: |
|
|
|
|
Product sales, net |
$ |
148.2 |
|
|
153.0 |
|
Contract development and manufacturing services |
|
21.7 |
|
|
15.9 |
|
Contracts and grants |
|
22.6 |
|
|
21.7 |
|
Total revenues |
|
192.5 |
|
|
190.6 |
|
Operating expenses: |
|
|
|
|
Cost of product sales and contract development and manufacturing
services |
|
76.9 |
|
|
91.8 |
|
Research and development |
|
42.7 |
|
|
46.1 |
|
Selling, general and administrative |
|
69.7 |
|
|
65.4 |
|
Amortization of intangible assets |
|
14.8 |
|
|
14.5 |
|
Total operating expenses |
|
204.1 |
|
|
217.8 |
|
Loss from operations |
|
(11.6) |
|
|
(27.2) |
|
Other (expense) income: |
|
|
|
|
Interest expense |
|
(8.6) |
|
|
(9.6) |
|
Other expense, net |
|
(1.1) |
|
|
(1.0) |
|
Total other expense, net |
|
(9.7) |
|
|
(10.6) |
|
Loss before provision for income
taxes |
|
(21.3) |
|
|
(37.8) |
|
Income tax benefit |
|
8.8 |
|
|
11.8 |
|
Net loss |
$ |
(12.5) |
|
$ |
(26.0) |
|
|
|
|
|
|
|
|
Net loss per common share |
|
|
|
|
|
|
Basic |
$ |
(0.24) |
|
$ |
(0.51) |
|
Diluted |
$ |
(0.24) |
|
$ |
(0.51) |
|
|
|
|
|
|
|
|
Shares used in computing
loss per share |
|
|
|
|
Basic |
52.0 |
|
51.2 |
|
Diluted |
52.0 |
|
51.2 |
|
Emergent BioSolutions Inc.Condensed Consolidated
Statements of Cash Flows (unaudited, in millions)
|
Three Months Ended March 31, |
|
|
2020 |
|
|
2019 |
|
Cash flows provided by operating
activities: |
|
|
|
|
|
|
Net loss |
$ |
(12.5 |
) |
$ |
(26.0 |
) |
Adjustments to reconcile net loss to net cash provided by operating
activities: |
|
|
|
|
|
|
Share-based compensation expense |
|
6.6 |
|
|
6.8 |
|
Depreciation and amortization |
|
28.2 |
|
|
26.6 |
|
Amortization of deferred financing costs |
|
0.7 |
|
|
0.7 |
|
Deferred income taxes |
|
(4.2 |
) |
|
(11.4 |
) |
Change in fair value of contingent consideration, net |
|
0.6 |
|
|
1.7 |
|
Other |
|
— |
|
|
(0.1 |
) |
Changes in operating assets and liabilities: |
|
|
Accounts receivable |
|
108.2 |
|
|
141.6 |
|
Inventories |
|
(25.6 |
) |
|
(5.2 |
) |
Prepaid expenses and other assets |
|
(15.3 |
) |
|
(16.6 |
) |
Accounts payable |
|
(15.6 |
) |
|
4.2 |
|
Accrued expenses |
|
1.1 |
|
|
1.7 |
|
Accrued compensation |
|
(14.9 |
) |
|
(21.3 |
) |
Contract liabilities |
|
0.5 |
|
|
2.1 |
|
Net cash provided by operating activities: |
|
57.8 |
|
|
104.8 |
|
Cash flows used in investing
activities: |
|
|
Purchases of property, plant and equipment and other |
|
(24.2 |
) |
|
(21.4 |
) |
Net cash used in investing activities: |
|
(24.2 |
) |
|
(21.4 |
) |
Cash flows used in financing
activities: Proceeds from revolving credit facility |
|
— |
|
|
30.0 |
|
Principal payments on revolving credit facility |
|
(20.0 |
) |
|
(80.0 |
) |
Principal payments on term loan facility |
|
(2.8 |
) |
|
(2.8 |
) |
Proceeds from issuance of common stock upon exercise of stock
options |
|
9.1 |
|
|
0.9 |
|
Taxes paid on behalf of employees for equity activity |
|
(5.6 |
) |
|
(6.0 |
) |
Contingent consideration payments |
|
(0.7 |
) |
|
(0.5 |
) |
Net cash used in financing activities: |
|
(20.0 |
) |
|
(58.4 |
) |
Effect of exchange rate changes on cash, cash equivalents and
restricted cash |
|
0.1 |
|
|
— |
|
Net increase in cash, cash equivalents and restricted cash |
|
13.7 |
|
|
25.0 |
|
Cash, cash equivalents and restricted cash at beginning of
period |
|
168.0 |
|
|
112.4 |
|
Cash, cash equivalents and restricted cash at end of period |
$ |
181.7 |
|
$ |
137.4 |
|
RECONCILIATION OF NET LOSS TO ADJUSTED NET LOSS AND ADJUSTED
EBITDA (unaudited)
This press release contains two financial measures
(Adjusted Net Loss and Adjusted EBITDA (Earnings Before
Depreciation and Amortization, Interest and Taxes)) that
are considered “non-GAAP” financial measures under applicable
Securities and Exchange Commission rules and regulations. These
non-GAAP financial measures should be considered supplemental to
and not a substitute for financial information prepared in
accordance with generally accepted accounting principles. The
Company’s definition of these non-GAAP measures may differ from
similarly titled measures used by others. Adjusted Net Loss adjusts
for specified items that can be highly variable or difficult to
predict, or reflect the non-cash impact of charges resulting from
purchase accounting. All adjustments are tax effected utilizing the
federal statutory tax rate for the US, except for changes in the
fair value of contingent consideration as the vast majority is
non-deductible for tax purposes. Adjusted Net Loss margin is
defined as Adjusted Net Loss divided by total revenues. Adjusted
EBITDA reflects net income excluding the impact of depreciation,
amortization, interest expense and provision for income taxes,
excluding specified items that can be highly variable and the non-
cash impact of certain purchase accounting adjustments. Adjusted
EBITDA margin is defined as Adjusted EBITDA divided by total
revenues. The Company views these non-GAAP financial measures as a
means to facilitate management’s financial and operational
decision-making, including evaluation of the Company’s historical
operating results and comparison to competitors’ operating results.
These non-GAAP financial measures reflect an additional way of
viewing aspects of the Company’s operations that, when viewed with
GAAP results and the reconciliations to the corresponding GAAP
financial measure may provide a more complete understanding of
factors and trends affecting the Company’s business.
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. Because non-GAAP financial measures
exclude the effect of items that will increase or decrease the
Company’s reported results of operations, management strongly
encourages investors to review the Company’s consolidated financial
statements and publicly filed reports in their entirety.
Reconciliation of Net Loss to Adjusted Net Loss (Unaudited)
(in millions, except per share value) |
Three Months Ended March 31, 2020 |
|
2020 |
|
2019 |
|
Source |
Net loss |
|
($12.5) |
|
($26.0) |
|
|
Adjustments: |
+ Acquisition-related costs (transaction & integration) |
|
— |
|
4.0 |
|
SG&A |
+ Non-cash amortization charges |
|
15.5 |
|
15.3 |
|
SG&A,
Other Income |
+ Changes in fair value of contingent consideration |
|
0.6 |
|
1.6 |
|
SG&A |
+ Impact of purchase accounting on inventory step-up |
|
— |
|
5.0 |
|
COGS |
Tax effect |
|
(3.3) |
|
(5.1) |
|
|
Total adjustments: |
|
12.8 |
|
20.8 |
|
|
Adjusted net income (loss) |
$0.3 |
|
($5.2) |
|
|
Adjusted net income (loss) per
diluted share |
$0.01 |
|
($0.10) |
|
|
(in millions) |
Full Year Forecast |
2020F |
Source |
Net income |
$105 - $155 |
|
Adjustments: |
+ Acquisition-related costs (transaction & integration) |
4 |
SG&A |
+ Non-cash amortization charges |
64 |
Intangible AssetAmortization, Other |
+ Change in fair value of contingent consideration |
1 |
COGS |
Tax effect |
(14) |
|
Total adjustments: |
55 |
|
Adjusted net income |
$160 - $210 |
|
Reconciliation of Net Loss to Adjusted EBITDA (Unaudited)
(in
millions, except per share value) |
Three Months Ended March 31, |
2020 |
2019 |
Net loss |
($12.5) |
($26.0) |
Adjustments: |
+ Depreciation & amortization |
28.2 |
26.6 |
+ Provision for income taxes |
(8.8) |
(11.8) |
+ Total interest expense, net* |
7.8 |
9.0 |
+ Changes in fair value of contingent consideration |
0.6 |
1.6 |
+ Acquisition-related costs (transaction & integration) |
— |
4.0 |
+ Impact of purchase accounting on inventory step-up |
— |
5.0 |
Total additional adjustments |
27.8 |
34.4 |
Adjusted EBITDA |
$15.3 |
$8.4 |
|
* Includes interest
income of $0.8 million in 2020 and $0.6 million in 2019 |
(in millions) |
Full YearForecast |
2020F |
Net income |
$105 - $155 |
Adjustments: |
+ Depreciation & amortization |
111 to 121 |
+ Provision for income taxes |
31 |
+ Total interest expense |
48 |
+ Acquisition-related costs (transaction & integration) |
4 |
+ Change in fair value of contingent consideration |
1 |
Total additional adjustments |
195 to 205 |
Adjusted EBITDA |
$300 - $360 |
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