Emergent BioSolutions Inc. (NYSE:EBS) today announced its financial
forecast for 2021 and selected preliminary unaudited financial
results for 2020.
“In a year full of unprecedented challenges due to
the pandemic, the Emergent team’s unwavering commitment produced
incredible results,” said Robert G. Kramer, president and chief
executive officer. “Operationally, we rapidly responded to our
customers’ needs, and financially, we delivered record revenue and
earnings. We are proud to be a leader in the growing public health
threat market, enabled by our development and manufacturing
expertise, successful public-private partnerships, and broad
portfolio of products and CDMO services. We look forward to
continuing to execute on our strategy and building on the momentum
created in 2020 across all four of our business units.”
”Our 2020 financial performance clearly
demonstrates the resilience and durability of our diversified
portfolio of products and services,” said Richard S. Lindahl,
executive vice president and chief financial officer. “We enter
2021 with positive momentum and are poised to deliver robust
double-digit gains in total revenues and non-GAAP earnings for the
fifth consecutive year. One year into our five-year strategy, we
are increasingly confident in the growth prospects for the
business.”
PRELIMINARY 2020 FINANCIAL RESULTS
(Unaudited)
The Company is providing the following preliminary,
unaudited financial results for full year 2020.
(in millions) |
PRELIMINARY RESULTS(As of 1/10/2021) |
PRIOR 2020 GUIDANCE(As of 11/5/2020) |
Total Revenues |
$1,545 - $1,555 |
$1,520 - $1,580 |
Net Income |
$295 - $310 |
$255 - $285 |
Adjusted EBITDA (1) |
$625 - $645 |
$575 - $615 |
Adjusted Net Income (1) |
$415 - $430 |
$375 - $405 |
Revenue MetricsTotal revenues for
2020 are expected to be in the range of $1,545 and $1,555 million,
an increase at the midpoint of $444 million or 40% as compared to
2019. This growth primarily reflects increased sales of contract
development and manufacturing (CDMO) services to pharmaceutical and
biotechnology innovators and government/non-government organization
(NGO) customers, as well as higher product sales.
Profitability MetricsThe Company
anticipates Adjusted EBITDA of $625 to $645 million, which at the
midpoint represents an increase of $355 million or 127% as compared
to 2019. The Company anticipates Adjusted Net Income of $415 to
$430 million, which at the midpoint represents an increase of $270
million or 177% as compared to 2019. This growth primarily reflects
the forecasted increase in total revenues discussed above. (See
"Reconciliation of Non-GAAP Measures" for a definition of the terms
and reconciliation tables.)
Note:The preliminary 2020
financial results are unaudited, subject to revision, and
anticipated to be finalized by late February 2021. The Company's
final audited financial results could differ materially from these
selected preliminary results.
2021 FINANCIAL FORECAST
The Company is providing the following forecast of
selected financial metrics for full year 2021.
(in millions) |
FULL YEAR 2021(As of
1/10/2021) |
Total Revenues |
$1,950 - $2,050 |
Adjusted EBITDA (1) |
$750 - $810 |
Adjusted Net Income (1) |
$475 -- $525 |
|
|
Product/Service Level Revenue |
|
• Anthrax Vaccines |
$280 -- $310 |
• ACAM2000 |
$185 -- $205 |
• NARCAN® Nasal Spray |
$305 -- $325 |
• CDMO Services |
$925 -- $965 |
• Other Products and Contracts and Grants |
$220 -- $240 |
Total RevenuesThe 2021 forecast
for total revenues reflects continued growth in aggregate product
revenues and significant growth in services revenue from the CDMO
business.
Adjusted EBITDA and Adjusted Net Income
(1)The 2021 forecast reflects an anticipated mix of
product and services gross margin, continued investment in research
and development, and scale efficiencies in selling, general &
administration expenses.
2021 Product/Service Level Revenues –
Select Assumptions
- Anthrax vaccine revenues are expected
to be at a more normalized annual level and continue to primarily
reflect procurement of AV7909 (Anthrax Vaccine Adsorbed,
adjuvanted) under the Company’s existing contract with the
Biomedical Advanced Research and Development Authority
(BARDA).
- ACAM2000®, (Smallpox (Vaccinia)
Vaccine, Live) vaccine deliveries are expected to continue under
the terms of the Company’s existing contract with the U.S.
Department of Health and Human Services (HHS) at unit volume levels
consistent with 2020 deliveries.
- Narcan® (naloxone HCl) Nasal Spray
revenues assume no generic competition prior to the resolution of
the Company's appeal of the patent litigation regarding the 4mg
form of this intranasal spray product.
- CDMO Services assumes continued growth
in Development Services (DVS), Drug Substance (DS) manufacturing,
and Drug Product (DP) manufacturing and Packaging for both
clinical- and commercial-stage projects on behalf of a growing list
of pharmaceutical and biotechnology innovators and government/NGO
customers.
Other 2021 Assumptions
- Gross margin is expected to be
approximately 65% on a GAAP basis, influenced by the mix of product
and services revenues.
- A follow-on procurement contract with
HHS is expected for the delivery of raxibacumab, the Company’s Food
and Drug Administration-approved anthrax monoclonal antibody
therapeutic, to the Strategic National Stockpile (SNS).
- Pipeline progress is expected across
the vaccines, therapeutics, and devices portfolios, anticipating at
least one Phase 3 launch and one Biologics License Application
(BLA)/Emergency Use Authorization (EUA) filing.
- Capital expenditures, net of
reimbursement, are expected to be in a range of 8% to 9% of total
revenues, reflecting ongoing investments in capacity and capability
expansions related to the CDMO business and the Company's product
portfolio.
FOOTNOTES
(1) See “Reconciliation of
Non-GAAP Measures” for a definition of terms and applicable
reconciliation tables.
PRESENTATION WEBCASTThe Company
will provide an update on the current business and discuss
preliminary 2020 financial results, the forecast and corporate
goals for 2021, and long-term goals during its presentation at the
39th Annual J.P. Morgan Healthcare Conference on January 11, 2021
at 8:20 AM Eastern time.
A live webcast of the presentation can be accessed
through Emergent’s website. An on-demand replay of
the webcast can also be accessed in the investors section after the
presentation has concluded.
RECONCILIATION OF NON-GAAP MEASURES
(unaudited)This press release contains two financial
measures (Adjusted Net Income and Adjusted EBITDA (Earnings Before
Interest, Taxes, Depreciation and Amortization)) 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 income
adjusts for specified items that can be highly variable or
difficult to predict, or reflect the non-cash impact of charges.
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 EBITDA reflects net income excluding the
impact of depreciation, amortization, interest expense and income
taxes, excluding specified items that can be highly variable and
the non-cash impact of certain accounting adjustments. 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.
This press release references increases in
Revenues, Adjusted EBITDA, and Adjusted Net Income from the
Company’s full year 2019 performance to the mid-point of the
estimated full year 2020 performance. The Company believes these
metrics are an important part of assessing the improvement in
performance on a year over year basis. These increases are
expressed in dollars as well as percentages. A reconciliation of
the calculation of these increases is included below.
Reconciliation of Net Income to Adjusted
Net Income (Unaudited)
(in millions, except per share value) |
Twelve Months Ended December 31, |
2021(Forecast) |
2020(Estimated) |
2019 (Actual) |
Source |
Net income |
$420.0 - $470.0 |
$295.0 - $310.0 |
$54.5 |
|
Adjustments: |
+ Non-cash amortization charges |
64.0 |
64.0 |
61.7 |
Intangible Asset Amortization, Other Income |
+ Changes in fair value of contingent consideration |
3.0 |
32.0 |
24.8 |
COGS |
+ Impairment of IPR&D intangible asset |
— |
29.0 |
12.0 |
R&D |
+ Exit and disposal costs |
— |
17.0 |
— |
COGS, SG&A, Other Income |
+ Acquisition-related costs (transaction & integration) |
2.0 |
1.0 |
12.6 |
SG&A |
+ Impact of purchase accounting on inventory step-up |
— |
— |
6.1 |
COGS |
Tax effect |
(14.0) |
(23.0) |
(19.4) |
|
Total adjustments: |
$55.0 |
$120.0 |
$97.8 |
|
Adjusted net income |
$475.0 - $525.0 |
$415.0 - $430.0 |
$152.3 |
|
Reconciliation of Net Income to Adjusted
EBITDA (Unaudited)
(in millions) |
Twelve Months Ended December 31, |
2021(Forecast) |
2020(Estimated) |
2019 (Actual) |
Source |
Net income |
$420.0 - $470.0 |
$295.0 - $310.0 |
$54.5 |
|
Adjustments: |
+ Depreciation & amortization |
133.0 |
115.0 |
110.7 |
COGS, SG&A, R&D |
+ Income taxes |
161.0 - 171.0 |
106.0 - 111.0 |
22.9 |
Income Taxes |
+ Total interest expense, net |
31.0 |
30.0 |
36.1 |
Other Expense |
+ Changes in fair value of contingent consideration |
3.0 |
32.0 |
24.8 |
COGS |
+ Impairment of IPR&D intangible asset |
— |
29.0 |
12.0 |
R&D |
+ Exit and disposal costs |
— |
17.0 |
— |
COGS, SG&A, Other Income |
+ Acquisition-related costs (transaction & integration) |
2.0 |
1.0 |
12.6 |
SG&A |
+ Impact of purchase accounting on inventory step-up |
— |
— |
6.1 |
COGS |
Total adjustments |
$330.0 - $340.0 |
$330.0 - $335.0 |
$225.2 |
|
Adjusted EBITDA |
$750.0 - $810.0 |
$625.0 - $645.0 |
$279.7 |
|
Reconciliation of the 2020 Estimated
Midpoint of Revenues, Adjusted EBITDA and Adjusted Net Income and
the Dollar and Percentage Increases as compared to 2019 Actual
(Unaudited)
(in millions, except percentage increase at midpoint of range) |
|
Twelve Months Ended December 31, |
Revenues |
Adjusted EBITDA |
Adjusted Net Income |
2020 (Estimated) Range |
$1,545.0 - $1,555.0 |
$625.0 - $645.0 |
$415.0 - $430.0 |
2020 (Estimated) Midpoint of Range |
$1,550.0 |
$635.0 |
$422.5 |
2019 (Actual) |
$1,106.0 |
$279.7 |
$152.3 |
Increase at Midpoint of Range ($) |
$444.0 |
$355.3 |
$270.2 |
Percentage Increase at Midpoint of Range |
40% |
127% |
177% |
ABOUT EMERGENT
BIOSOLUTIONSEmergent 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 information, visit our website and follow us
on LinkedIn, Twitter, and
Instagram.
SAFE HARBOR STATEMENTThis 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; statements regarding
continuing to execute on our strategy; entering into 2021 building
on the momentum created in 2020 across all four of our business
units; strong financial and operating momentum in 2021; the
resilience and durability of our portfolio; being poised to deliver
robust double-digit gains in total revenues and non-GAAP earnings;
gross margin and our level of capital expenditures; continued
procurement of AV7909 and ACAM2000 vaccine deliveries; no generic
competition for Narcan® Nasal Spray prior to the resolution of the
Company’s appeal of the patent litigation regarding the 4mg form of
this intranasal spray product; entering into a follow-on
procurement contract with the U.S. Department of Health and Human
Services for the delivery of raxibacumab; overall growth prospects
for the business, including continued CDMO growth and further
pipeline progress in other business units, including at least one
Phase 3 launch, one Biologics License Application/Emergency Use
Authorization filing; 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 global pandemic that arose from COVID-19, 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 and certain product candidates and
the future exercise of options under contracts related to such
procurement; the negotiation of further commitments or contracts
related to the collaboration and deployment of capacity toward
future commercial manufacturing under our CDMO contracts; our
ability to perform under our contracts with the U.S. government and
our CDMO clients, including the timing of and specifications
relating to deliveries; the continued exercise of discretion by
BARDA to procure additional doses of AV7909 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 to successfully appeal the patent
litigation decision related to NARCAN® Nasal Spray 4mg/spray; our
ability and the ability of our collaborators to enforce patents
related to NARCAN® Nasal Spray against potential generic entrants;
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 obtain or maintain FDA
approval or authorization for emergency or broader patient use of
our COVID-19 treatment candidates and their actual safety and
effectiveness; timing of and results of clinical trials; our
ability to comply with the operating and financial covenants
required by our senior secured credit facilities and the indenture
governing our senior unsecured notes due 2028; our ability to
obtain and maintain regulatory approvals for our other product
candidates and the timing of any such approvals; 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 ContactRobert BurrowsVice President, Investor Relations(o)
240/631-3280; (m) 240/413-1917burrowsr@ebsi.com |
Media ContactMiko B. NeriSenior Director, Global Communications
& Public Affairs(o) 240/631-3392nerim@ebsi.com |
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