Emergent BioSolutions Inc. (NYSE: EBS) today reported financial
results for the quarter and year ended December 31, 2020. The
Company also reaffirmed its full year 2021 forecast.
“Emergent’s financial and operational performance in 2020
reflects the impact we are making in addressing the growing public
health threat landscape and meeting our mission to protect and
enhance the lives of patients,” said Robert G. Kramer, president
and CEO of Emergent BioSolutions. “We look forward to continuing to
execute on our strategy with vaccines, therapeutics, devices, and
contract development and manufacturing services. Our strong core
business, robust development pipeline, and innovator and
public-private partnership opportunities position us to remain
leaders in the market and create long-term shareholder value.”
FINANCIAL HIGHLIGHTS (1)
(in millions, except per share data) |
Q4 2020 |
Q4 2019 |
% Change |
Total Revenues |
$ |
583.0 |
$ |
360.4 |
62 |
% |
Net Income |
$ |
185.4 |
$ |
46.9 |
* |
Net Income Per Diluted Share |
$ |
3.44 |
$ |
0.90 |
* |
Adjusted Net Income (2) |
$ |
198.8 |
$ |
82.7 |
* |
Adjusted Net Income Per Diluted Share (2) |
$ |
3.67 |
$ |
1.57 |
* |
Adjusted EBITDA (2) |
$ |
290.9 |
$ |
134.3 |
* |
|
|
|
|
|
|
(in millions, except per share data) |
Full Year 2020 |
Full Year 2019 |
% Change |
Total Revenues |
$ |
1,555.4 |
$ |
1,106.0 |
41 |
% |
Net Income |
$ |
305.1 |
$ |
54.5 |
* |
Net Income Per Diluted Share |
$ |
5.67 |
$ |
1.04 |
* |
Adjusted Net Income (2) |
$ |
423.9 |
$ |
152.3 |
* |
Adjusted Net Income Per Diluted Share (2) |
$ |
7.88 |
$ |
2.91 |
* |
Adjusted EBITDA (2) |
$ |
630.4 |
$ |
279.7 |
* |
* % change greater
than 100% |
|
SELECT Q4 2020 AND RECENT BUSINESS
ACCOMPLISHMENTS
- Completed three-year, $50 million expansion at the Company's
Baltimore Camden drug product facility, including a new
state-of-the-art fill/finish line that became operational in
January 2021, intended to significantly increase contract
development and manufacturing (CDMO) capacity and capability.
- Signed a CDMO services agreement with Providence Therapeutics
to provide drug product manufacturing services for their mRNA
PTX-COVID19-B vaccine candidate at the Company's Winnipeg, Manitoba
facility.
- Signed a CDMO services agreement for drug product manufacturing
of Humanigen's COVID-19 therapeutic candidate, lenzilumab™, at the
Company's Baltimore Camden facility.
- Initiated a Phase 3 clinical trial with the National Institutes
of Health to evaluate hyperimmune globulins, including the
Company's COVID-19 human hyperimmune globulin (COVID-HIG) product
candidate, as a potential treatment in adult patients hospitalized
with COVID-19.
- Initiated a clinical program to evaluate COVID-HIG to support
its use for potential post-exposure prophylaxis in individuals at
high risk of exposure to SARS-CoV-2 such as front-line health care
workers and military personnel.
2020 FINANCIAL PERFORMANCE (1)
(I) Quarter Ended December 31,
2020
Revenues
Total Revenues
For Q4 2020, total revenues were $583.0 million, an increase of
62% over the same period in Q4 2019, primarily driven by increased
contract development and manufacturing (CDMO) services
revenues.
Product Sales
For Q4 2020, total product sales were $340.9 million, an
increase of $30.1 million or 10% as compared to Q4 2019. Other
product sales decreased due to a decline in sales of raxibacumab,
VIGIV [Vaccinia Immune Globulin Intravenous (Human)] and the
Company's travel health vaccines, partially offset by increased
sales of BAT®[Botulism Antitoxin Heptavalent (A, B, C, D, E, F, G)
- (Equine)].
|
Three Months Ended December 31, |
(in millions) |
2020 |
2019 |
% Change |
Product Sales: |
|
|
|
|
|
|
ACAM2000® |
$ |
129.3 |
$ |
78.5 |
65 |
% |
Anthrax Vaccines |
$ |
115.7 |
$ |
92.9 |
25 |
% |
NARCAN® Nasal Spray |
$ |
77.4 |
$ |
66.9 |
16 |
% |
Other |
$ |
18.5 |
$ |
72.5 |
(74 |
)% |
Total Product Sales |
$ |
340.9 |
$ |
310.8 |
10 |
% |
|
|
|
|
|
|
|
Contract Development and Manufacturing (CDMO)
Services
For Q4 2020, revenue from CDMO services was $199.1 million, an
increase of $173.6 million as compared to Q4 2019. The increase is
largely due to the contribution for services performed to address
the COVID-19 pandemic provided to pharmaceutical and biotechnology
innovators and government/non-government organization (NGO)
customers across Development Services, Drug Substance
manufacturing, and Drug Product manufacturing and Packaging.
Contracts and Grants
For Q4 2020, revenue from development-based contracts and grants
was $43.0 million, an increase of $18.9 million or 78% as compared
to Q4 2019. The increase primarily reflects the contribution from
development awards related to the Company's COVID-HIG product
candidate, partially offset by a decrease in contribution
associated with development activities from the Company's AV7909
(Anthrax Vaccine Adsorbed, adjuvanted) product candidate,
reflecting the advanced stage of development for the program.
Operating Expenses
Cost of Product Sales and Contract Development and
Manufacturing (CDMO) Services
For Q4 2020, cost of product sales and CDMO services was $168.3
million, an increase of $35.5 million or 27% as compared to Q4
2019. Cost of product sales and CDMO services includes the impact
of contingent consideration charges, which declined $12 million in
Q4 2020 compared to Q4 2019. Excluding the impacts of the
contingent consideration charges between periods, the cost of
product sales and CDMO services increased $47.5 million. This
increase is primarily due to an increase in CDMO services and
product sale activities in Q4 2020 as compared to Q4 2019.
Research and Development (Gross and Net)
(2)
For Q4 2020, gross R&D expenses were $59.5
million, a decrease of $3.3 million or 5% as compared to Q4 2019.
The decrease primarily reflects the impact of the impairment of the
IPR&D intangible asset in Q4 2019 that did not recur in Q4
2020, offset by increased costs associated with the Company's
COVID-19 product candidates.
For Q4 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, was $16.5 million, a decrease
of $10.2 million or 38% as compared to Q4 2019. The decrease is
attributable to a reduction in R&D activities at the Company's
Bayview facility in 2020 compared to 2019 as the facility was
principally used for CDMO services in 2020. The Q4 2020 and Q4 2019
net R&D expense was 3% and 8% of adjusted revenue,
respectively.
Selling, General and
Administrative
For Q4 2020, selling, general and administrative expenses were
$82.1 million, an increase of $9.9 million or 14% as compared to Q4
2019. The increase primarily reflects an increase in staffing costs
to support the Company's growth.
Additional Financial
Information
Gross Margin (2)
For Q4 2020, gross margin was $371.7 million or 69% of adjusted
revenue, an increase of $168.2 million or 8% as compared to Q4
2019. For Q4 2020, adjusted gross margin was $370.6 million or 69%
of adjusted revenue, an increase of $154.7 million or 4% as
compared to Q4 2019. The improvement reflects the impact of product
mix as well as improved contribution from CDMO services.
CDMO Backlog and Opportunity Funnel
CDMO backlog, defined as estimated future services revenues for
2021 and beyond under signed contracts, was $1.34 billion at
December 31, 2020, reflecting the impact of additional services on
existing contracts and newly awarded contracts of $53.3 million
during the quarter offset by revenue recognized to date on
contracted amounts.
The CDMO opportunity funnel, defined as the initial contract
value to potentially be realized in 2021 and beyond based on issued
proposals as well as the value of extensions associated with
existing contracts, was approximately $689 million as of December
31, 2020. This amount reflects the increased traction resulting
from ongoing sales and business development and marketing efforts
domestically and internationally to existing and new pharmaceutical
and biotechnology innovators as well as government/NGO customers,
and excludes the potential value of extensions of contracts with
Johnson & Johnson and AstraZeneca.
(II) Full Year 2020
Revenues
Total Revenues
For the full year 2020, total revenues were $1,555.4 million, an
increase of 41% over 2019. Total revenues largely reflect an
increase in contract development and manufacturing services
revenues as well as product sales.
Product Sales
For the full year 2020, product sales were $989.8 million, an
increase of $86.3 million or 10% as compared to 2019. Other product
sales decreased due to a decline in sales of raxibacumab and travel
health vaccines.
|
Year Ended December 31, |
(in millions) |
2020 |
2019 |
% Change |
Product Sales: |
Anthrax Vaccines |
$ |
373.8 |
$ |
172.8 |
* |
NARCAN® Nasal Spray |
$ |
311.2 |
$ |
280.4 |
11 |
% |
ACAM2000® |
$ |
200.3 |
$ |
242.6 |
(17 |
)% |
Other |
$ |
104.5 |
$ |
207.7 |
(50 |
)% |
Total Product Sales |
$ |
989.8 |
$ |
903.5 |
10 |
% |
|
|
|
|
|
|
|
Contract Development and Manufacturing (CDMO)
Services
For the full year 2020, revenue from CDMO services was $450.5
million, an increase of $370.5 million as compared to 2019. The
increase is largely due to the contribution for services performed
to address the COVID-19 pandemic provided to pharmaceutical and
biotechnology innovators and government/NGO customers across
Development Services, Drug Substance manufacturing, and Drug
Product manufacturing and Packaging.
Contracts and Grants
For the full year 2020, revenue from development-based contracts
and grants was $115.1 million, a decrease of $7.4 million or 6% as
compared to 2019. The decrease primarily reflects the
completion of development activities associated
with the AV7909 product candidate in 2019, offset by recent new
development awards related to the Company's COVID-19 product
candidates and other product candidates.
Operating Expenses
Cost of Product Sales and Contract Development and
Manufacturing Services
For the full year 2020, cost of product sales and CDMO services
was $524.0 million, an increase of $90.5 million or 21% as compared
to 2019. The increase is due primarily to an increase in volume of
product sales and CDMO services, charges related to the Company's
contingent consideration liabilities, and a write-down of inventory
for the Company's travel health vaccines.
Research and Development (Gross and Net)
(2)
For the full year 2020, gross R&D expenses were $234.5
million, an increase of $8.3 million or 4% compared to 2019. The
increase primarily reflects the impact of impairment of the
Company's IPR&D intangible asset of $29.0 million in 2020 as
compared to $12.0 million in 2019. Excluding these items, gross
R&D expense decreased $8.7 million compared to 2019. The
decrease primarily reflects lower costs associated with the
Company's AV7909 product candidate, reflecting the advanced-stage
of its development, offset by increased costs associated with the
Company's COVID-19 product candidates.
For the full year 2020, net R&D expense was $90.4 million, a
decrease of $1.3 million or 1% as compared to 2019. The decrease
primarily reflects a decline in spending associated with the
Company's FLU-IGIV and CHIKV VLP product candidates and the change
in the nature of operations from primarily R&D to commercial
CDMO manufacturing at the Company's Bayview facility, offset by an
increase in costs associated with the Company's COVID-19 and other
product candidates. The 2020 and 2019 net R&D expense as a
percentage of adjusted revenues was 6% and 9%, respectively.
Selling, General and Administrative
For the full year 2020, selling, general and administrative
expenses were $303.3 million, an increase of $29.8 million or 11%
as compared to 2019. The increase primarily reflects an increase in
staffing costs to support the Company's growth as well as an
increase in share-based compensation due to a special broad-based,
immediately vested equity award to employees.
Additional Financial Information
Gross Margin (2)
For the full year 2020, gross margin was $916.3 million or 64%
of adjusted revenue, an increase of $366.3 million or 8% as
compared to 2019. For the full year 2020, adjusted gross margin was
$960.6 million or 67% of adjusted revenue, an increase of $385.8
million or 8% as compared to 2019. The improvement reflects the
impact of product mix as well as improved contribution from CDMO
services.
Operating Cash Flow
For the full year 2020, operating cash flow was $536.0 million,
an increase of $348.0 million as compared to 2019. The increase
reflects the cash generating strength of the Company’s current
diversified mix of product sales and CDMO services.
Capital Expenditures
For the full year 2020, capital expenditures were $141.0
million, an increase of $54.1 million or 62% as compared to 2019.
Expressed as a percentage of total revenues, capital expenditures
for the full year 2020 was 9%, versus 8% in 2019. The 2020 figure
reflects investments in key areas of the Company’s operations,
including technology, and capacity and capability expansions in
service of the CDMO business. In 2020, the company was reimbursed
for $41.8 million of capital expenditures pursuant to third-party
funding arrangements, resulting in capital expenditures net of
reimbursement of $99.2 million.
2021 FINANCIAL FORECAST
For full year 2021, the Company reaffirms its forecast of the
following financial metrics, originally announced on January 10,
2021:
(in millions) |
2021 Forecast (As of 2/18/2021) |
Total Revenues |
$1,950 - $2,050 |
•
NARCAN® Nasal Spray |
$305 - $325 |
•
Anthrax Vaccines |
$280 - $310 |
•
ACAM2000® |
$185 - $205 |
•
CDMO |
$925 - $965 |
Adjusted EBITDA (2) |
$750 - $810 |
Adjusted Net Income (2) |
$475 - $525 |
Gross Margin (2) |
65% |
|
|
The Company's financial forecast for 2021 includes the following
additional considerations:
- Anthrax vaccine revenues are expected 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 an appellate
decision related to its pending patent litigation in the second
half of 2021 followed by the entry of at least one competitor.
- CDMO Services assume continued performance of contracted
services for 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.
- 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 in support of the
Company's CDMO services business and product portfolio.
Q1 2021 REVENUE FORECAST
For Q1 2021, the Company expects total revenues of $330 million
to $370 million.
FOOTNOTES
(1) All financial information incorporated within this
release is unaudited(2) See "Reconciliation of Net Income to
Adjusted Net Income and Adjusted EBITDA, Gross Margin and Adjusted
Gross Margin and Net Research and Development Expenses" for a
definition of terms and reconciliation tables.
CONFERENCE CALL AND WEBCAST INFORMATION
Company management will host a conference call at 5:00 pm
(Eastern Time) today, February 18, 2021, to discuss these financial
results. The conference call 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: 3948196Live Webcast
Information:Visit https://edge.media-server.com/mmc/p/hmesjhe3 for
the webcast. |
|
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 information, visit
www.emergentbiosolutions.com. Find us on LinkedIn and follow us on
Twitter @emergentbiosolu and Instagram @life_at_emergent.
RECONCILIATION OF NON-GAAP MEASURES
This press release contains financial measures (Adjusted Net
Income, Adjusted EBITDA (Earnings Before Depreciation and
Amortization, Interest and Taxes, Gross Margin, Adjusted Gross
Margin and Net Research and Development expenses)) 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 net income margin is defined as adjusted net
income divided by total revenues. Adjusted EBITDA reflects net
income excluding the impact of depreciation, amortization, interest
expense and income tax provision (benefit), excluding specified
items that can be highly variable and the non-cash impact of
certain accounting adjustments. Adjusted EBITDA margin is defined
as Adjusted EBITDA divided by total revenues. Gross margin reflects
adjusted revenues minus cost of product sales and contract
development and manufacturing services (COGS). Adjusted revenues is
calculated as total revenues minus contracts and grants revenues.
Gross margin percentage is calculated as gross margin divided by
adjusted revenues. Adjusted gross margin adjusts COGS for specified
items that can be highly variable or difficult to predict, or to
reflect the non-cash impacts of charges (Adjusted COGS). Adjusted
gross margin is calculated as adjusted revenues minus adjusted
COGS. Adjusted gross margin percentage is calculated as adjusted
gross margin divided by adjusted revenues. Net research and
development expenses reflects research and development expenses
adjusted to reflect expenses which are funded (contracts and grants
revenue) and non-cash impairment of IPR&D charges. Net research
and development margin is calculated as net research and
development divided by adjusted revenue. 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.
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; statements regarding continuing to execute on
our strategy across all four of our business units; remaining
leaders in the market and creating long-term shareholder value; the
effectiveness of COVID-HIG at treating adult patients
hospitalized with COVID-19 and its effectiveness as potential
post-exposure prophylaxis in individuals at high risk of
exposure to COVID-19, such as front-line health care workers and
military personnel; normalized annual anthrax vaccine revenue
levels and continued procurement under the Company’s existing
contract with BARDA; continued ACAM2000 vaccine deliveries
consistent with 2020 deliveries; the results of the appellate
decision related to pending patent litigation followed by the entry
of at least one competitor for NARCAN® Nasal Spray 4mg/spray;
continued performance of CDMO services for both clinical- and
commercial-stage projects on behalf of a growing list of
pharmaceutical and biotechnology innovators and government/NGO
customers; pipeline progress and at least one BLA or EUA
submission in 2021; the percentage of capital expenditures as a
percentage of total revenues (net of reimbursement), ongoing
investments in capacity and capability expansions in
support of the Company's CDMO services
business and product portfolio; our CDMO backlog and
opportunity funnel 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 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 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 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 ContactRobert BurrowsVice President, Investor Relations(o)
240/631-3280; (m) 240/413-1917burrowsr@ebsi.com |
|
Media ContactNina DeLorenzoSVP, Global Communications & Public
Affairs mediarelations@ebsi.com |
|
|
|
Emergent BioSolutions Inc.Consolidated Balance
Sheets(unaudited in millions, except per share data)
|
December 31, |
|
2020 |
2019 |
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
621.3 |
|
$ |
167.8 |
|
Restricted cash |
|
0.2 |
|
|
0.2 |
|
Accounts receivable, net |
|
230.9 |
|
|
270.7 |
|
Inventories |
|
307.0 |
|
|
222.5 |
|
Prepaid expenses and other
current assets |
|
36.5 |
|
|
25.0 |
|
Total current assets |
|
1,195.9 |
|
|
686.2 |
|
|
|
|
|
|
|
|
Property, plant and equipment,
net |
|
644.1 |
|
|
542.3 |
|
Intangible assets, net |
|
663.1 |
|
|
712.9 |
|
In-process research and
development |
|
— |
|
|
29.0 |
|
Goodwill |
|
266.7 |
|
|
266.6 |
|
Other assets |
|
113.4 |
|
|
90.3 |
|
Total assets |
$ |
2,883.2 |
|
$ |
2,327.3 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
136.1 |
|
|
94.8 |
|
Accrued expenses |
46.9 |
|
|
39.5 |
|
Accrued compensation |
84.6 |
|
|
62.4 |
|
Debt, current portion |
33.8 |
|
|
12.9 |
|
Other current liabilities |
83.1 |
|
|
6.7 |
|
Total current liabilities |
384.5 |
|
|
216.3 |
|
|
|
|
|
|
|
|
Contingent consideration, net
of current portion |
|
34.2 |
|
|
26.0 |
|
Debt, net of current
portion |
|
841.0 |
|
|
798.4 |
|
Deferred tax liability |
|
53.2 |
|
|
63.9 |
|
Contract liabilities, net of
current portion |
|
55.5 |
|
|
85.6 |
|
Other liabilities |
|
67.8 |
|
|
48.6 |
|
Total liabilities |
$ |
1,436.2 |
|
$ |
1,238.8 |
|
Stockholders’ equity: |
|
|
|
|
|
|
Preferred stock, $0.001 par
value; 15.0 shares authorized, no shares issued
and outstanding |
|
— |
|
|
— |
|
|
|
|
|
|
|
|
Common stock, $0.001 par value;
200.0 shares authorized, 54.3 and 53.0 shares issued; 53.1 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 |
|
784.9 |
|
|
716.1 |
|
Accumulated other comprehensive
loss, net |
|
(25.3 |
) |
|
(9.9 |
) |
Retained earnings |
|
726.9 |
|
|
421.8 |
|
Total stockholders’ equity |
|
1,447.0 |
|
|
1,088.5 |
|
Total liabilities and
stockholders’ equity |
$ |
2,883.2 |
|
$ |
2,327.3 |
|
|
|
|
|
|
|
|
Emergent BioSolutions Inc.Consolidated Statements
of Operations(unaudited in millions, except per share data)
|
Three Months Ended December 31, |
|
2020 |
2019 |
Revenues: |
|
|
|
|
|
|
Product sales, net |
$ |
340.9 |
|
$ |
310.8 |
|
Contract development and
manufacturing services |
|
199.1 |
|
|
25.5 |
|
Contracts and grants |
|
43.0 |
|
|
24.1 |
|
Total revenues |
|
583.0 |
|
|
360.4 |
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
Cost of product sales and
contract development and manufacturing services |
|
168.3 |
|
|
132.8 |
|
Research and development |
|
59.5 |
|
|
62.8 |
|
Selling, general and
administrative |
|
82.1 |
|
|
72.2 |
|
Amortization of intangible
assets |
|
15.0 |
|
|
14.8 |
|
Total operating expenses |
|
324.9 |
|
|
282.6 |
|
|
|
|
|
|
|
|
Income from operations |
|
258.1 |
|
|
77.8 |
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
Interest expense |
|
(8.7 |
) |
|
(9.1 |
) |
Other, net |
|
3.4 |
|
|
2.8 |
|
Total other income (expense),
net |
|
(5.3 |
) |
|
(6.3 |
) |
|
|
|
|
|
|
|
Income before income taxes |
|
252.8 |
|
|
71.5 |
|
Income taxes |
|
67.4 |
|
|
24.6 |
|
Net income |
$ |
185.4 |
|
$ |
46.9 |
|
|
|
|
|
|
|
|
Net Income per common share |
|
|
|
|
|
|
Basic |
$ |
3.51 |
|
$ |
0.91 |
|
Diluted |
$ |
3.44 |
|
$ |
0.90 |
|
|
|
|
|
|
Shares used in computing income
per share |
|
|
|
|
Basic |
53.1 |
|
51.7 |
|
Diluted |
54.2 |
|
52.6 |
|
|
|
|
|
|
Emergent BioSolutions Inc.Consolidated Statements
of Operations(unaudited in millions, except per share data)
|
Year Ended December 31, |
|
2020 |
2019 |
Revenues: |
|
|
|
|
|
|
Product
sales, net |
$ |
989.8 |
|
$ |
903.5 |
|
Contract
development and manufacturing services |
|
450.5 |
|
|
80.0 |
|
Contracts and grants |
|
115.1 |
|
|
122.5 |
|
Total
revenues |
|
1,555.4 |
|
|
1,106.0 |
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
Cost of
product sales and contract development and manufacturing
services |
|
524.0 |
|
|
433.5 |
|
Research
and development |
|
234.5 |
|
|
226.2 |
|
Selling,
general and administrative |
|
303.3 |
|
|
273.5 |
|
Amortization of intangible assets |
|
59.8 |
|
|
58.7 |
|
Total
operating expenses |
|
1,121.6 |
|
|
991.9 |
|
|
|
|
|
|
|
|
Income
from operations |
|
433.8 |
|
|
114.1 |
|
|
|
|
|
|
|
|
Other
income (expense): |
|
|
|
|
|
|
Interest
expense |
|
(31.3 |
) |
|
(38.4 |
) |
Other,
net |
|
4.7 |
|
|
1.7 |
|
Total
other income (expense), net |
|
(26.6 |
) |
|
(36.7 |
) |
|
|
|
|
|
|
|
Income
before income taxes |
|
407.2 |
|
|
77.4 |
|
Income
taxes |
|
102.1 |
|
|
22.9 |
|
Net
income |
$ |
305.1 |
|
$ |
54.5 |
|
|
|
|
|
|
|
|
Net
Income per common share |
|
|
|
|
|
|
Basic |
$ |
5.79 |
|
$ |
1.06 |
|
Diluted |
$ |
5.67 |
|
$ |
1.04 |
|
|
|
|
|
|
Shares
used in computing income per share |
|
|
|
|
Basic |
52.7 |
|
51.5 |
|
Diluted |
53.8 |
|
52.4 |
|
|
|
|
|
|
Emergent BioSolutions Inc.Consolidated Statements
of Cash Flows(unaudited in millions)
|
Year Ended December 31, |
|
2020 |
2019 |
Cash flows from operating activities: |
|
|
|
|
|
|
Net income |
$ |
305.1 |
|
$ |
54.5 |
|
Adjustments to reconcile to net cash provided by operating
activities: |
|
|
|
|
|
|
Stock-based compensation expense |
|
51.0 |
|
|
26.7 |
|
Depreciation and amortization |
|
114.5 |
|
|
110.7 |
|
Impairment of intangible asset |
|
29.0 |
|
|
12.0 |
|
Change in fair value of contingent obligations, net |
|
31.7 |
|
|
24.8 |
|
Amortization of deferred financing costs |
|
3.5 |
|
|
3.0 |
|
Deferred income taxes |
|
(2.4 |
) |
|
(1.1 |
) |
Other |
|
(5.2 |
) |
|
(0.2 |
) |
Changes in operating assets and liabilities, net of business
acquisitions: |
|
|
|
|
|
|
Accounts receivable |
|
49.0 |
|
|
(8.2 |
) |
Inventories |
|
(83.2 |
) |
|
(16.7 |
) |
Prepaid expenses and other assets |
|
(29.2 |
) |
|
(39.1 |
) |
Accounts payable |
|
19.8 |
|
|
16.5 |
|
Accrued expenses and other liabilities |
|
19.4 |
|
|
(15.1 |
) |
Accrued compensation |
|
21.8 |
|
|
4.2 |
|
Contract liabilities |
|
11.2 |
|
|
16.0 |
|
Net cash provided by operating activities |
|
536.0 |
|
|
188.0 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
Purchases of property, plant and equipment and other |
|
(141.0 |
) |
|
(86.9 |
) |
Milestone payment from asset acquisition |
|
(10.0 |
) |
|
(10.0 |
) |
Net cash used in investing activities |
|
(151.0 |
) |
|
(96.9 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
Proceeds from revolving credit facility |
|
— |
|
|
130.0 |
|
Principal payments on revolving credit facility |
|
(373.0 |
) |
|
(105.0 |
) |
Proceeds from term loan facility |
|
— |
|
|
— |
|
Principal payments on term loan facility |
|
(14.1 |
) |
|
(11.3 |
) |
Proceeds from senior unsecured notes |
|
450.0 |
|
|
— |
|
Debt issuance costs |
|
(8.4 |
) |
|
— |
|
Proceeds from share-based compensation activity |
|
31.6 |
|
|
8.2 |
|
Taxes paid for share-based compensation activity |
|
(13.8 |
) |
|
(7.4 |
) |
Contingent consideration payments |
|
(2.8 |
) |
|
(50.4 |
) |
Net cash (used in) provided by financing activities |
|
69.5 |
|
|
(35.9 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
(1.0 |
) |
|
0.4 |
|
Net change in cash and cash equivalents and restricted cash |
|
453.5 |
|
|
55.6 |
|
Cash and cash equivalents and restricted cash at beginning of
year |
|
168.0 |
|
|
112.4 |
|
Cash and cash equivalents and restricted cash at end of year |
$ |
621.5 |
|
$ |
168.0 |
|
|
|
|
|
|
|
|
Reconciliation of Net Income to Adjusted Net
Income
|
Three Months Ended December 31, |
(in millions, except per share value) |
|
2020 |
|
|
2019 |
|
Source |
Net Income |
$ |
185.4 |
|
$ |
46.9 |
|
|
Adjustments: |
|
|
|
|
|
|
|
+ Non-cash amortization charges |
|
16.2 |
|
|
15.6 |
|
Intangible Asset Amortization, Other Income |
+ Changes in fair value of contingent consideration |
|
0.4 |
|
|
12.4 |
|
COGS |
+ Exit and disposal costs |
|
0.1 |
|
|
— |
|
COGS, SG&A, Other Income |
+ Acquisition-related costs (transaction & integration) |
|
0.1 |
|
|
2.0 |
|
SG&A |
+ Impairment of IPR&D intangible asset |
|
— |
|
|
12.0 |
|
R&D |
Tax effect |
|
(3.4 |
) |
|
(6.2 |
) |
|
Total Adjustments: |
|
13.4 |
|
|
35.8 |
|
|
Adjusted Net Income |
$ |
198.8 |
|
$ |
82.7 |
|
|
Adjusted Net Income Per
Diluted Share |
$ |
3.67 |
|
$ |
1.57 |
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
(in millions, except per share value) |
|
2020 |
|
|
2019 |
|
Source |
Net Income |
$ |
305.1 |
|
$ |
54.5 |
|
|
Adjustments: |
+ Non-cash amortization charges |
|
63.4 |
|
|
61.7 |
|
Intangible Asset Amortization, Other Income |
+ Change in fair value of contingent consideration |
|
31.7 |
|
|
24.8 |
|
COGS |
+ Impairment of IPR&D |
|
29.0 |
|
|
12.0 |
|
R&D |
+ Exit and disposal costs |
|
17.2 |
|
|
— |
|
COGS, SG&A, Other Income |
+ Acquisition-related costs (transaction & integration) |
|
0.6 |
|
|
12.6 |
|
SG&A |
+ Impact of purchase accounting on inventory step-up |
|
— |
|
|
6.1 |
|
COGS |
Tax effect |
|
(23.1 |
) |
|
(19.4 |
) |
|
Total Adjustments: |
|
118.8 |
|
|
97.8 |
|
|
Adjusted Net Income |
$ |
423.9 |
|
$ |
152.3 |
|
|
Adjusted Net Income Per
Diluted Share |
$ |
7.88 |
|
$ |
2.91 |
|
|
|
|
|
|
|
|
|
|
|
Full Year Forecast |
|
(in millions) |
2021F |
Source |
Net Income |
$420.0 - $470.0 |
|
|
Adjustments: |
+ Non-cash amortization charges |
64.0 |
|
Intangible Asset Amortization, Other Income |
+ Changes in fair value of contingent consideration |
3.0 |
|
COGS |
+ Acquisition-related costs (transaction & integration) |
2.0 |
|
SG&A |
Tax effect |
(14.0 |
) |
|
Total Adjustments: |
55.0 |
|
|
Adjusted Net Income |
$475.0 - $525.0 |
|
|
|
|
|
|
Reconciliation of Net Income to EBITDA and Adjusted
EBITDA
|
Three Months Ended December 31, |
(in millions) |
|
2020 |
|
2019 |
Net Income |
$ |
185.4 |
$ |
46.9 |
Adjustments: |
|
+ Depreciation & amortization |
|
28.9 |
|
27.9 |
+ Income Taxes |
|
67.4 |
|
24.6 |
+ Total interest expense, net* |
|
8.6 |
|
8.5 |
+ Change in fair value of contingent consideration |
|
0.4 |
|
12.4 |
+ Exit and disposal costs* |
|
0.1 |
|
— |
+ Acquisition-related costs (transaction & integration) |
|
0.1 |
|
2.0 |
+ Impairment of IPR&D intangible asset |
|
— |
|
12.0 |
Total Adjustments |
|
105.5 |
|
87.4 |
Adjusted EBITDA |
$ |
290.9 |
$ |
134.3 |
* Includes
interest income of $0.1 million in 2020 and $0.7 million in
2019 |
|
|
Year Ended December 31, |
(in millions) |
2020 |
2019 |
Net Income |
$ |
305.1 |
$ |
54.5 |
Adjustments: |
|
|
+ Depreciation & amortization |
|
114.5 |
|
110.7 |
+ Total interest expense, net* |
|
30.2 |
|
36.1 |
+ Income tax expense |
|
102.1 |
|
22.9 |
+ Change in fair value of contingent consideration |
|
31.7 |
|
24.8 |
+ Impairment of IPR&D intangible asset |
|
29.0 |
|
12.0 |
+ Exit and disposal costs |
|
17.2 |
|
— |
+ Acquisition-related costs (transaction & integration) |
|
0.6 |
|
12.6 |
+ Impact of purchase accounting on inventory step-up |
|
— |
|
6.1 |
Total Adjustments |
|
325.3 |
|
225.2 |
Adjusted EBITDA |
$ |
630.4 |
$ |
279.7 |
* Includes
interest income of $1.1 million in 2020 and $2.4 million in
2019 |
|
(in millions) |
Full Year Forecast |
2021F |
Net Income |
$420.0 - $470.0 |
Adjustments: |
+ Depreciation & amortization |
133.0 |
+ Income taxes |
161.0 - 171.0 |
+ Total interest expense |
31.0 |
+ Acquisition-related costs (transaction & integration) |
2.0 |
+ Change in fair value of contingent consideration |
3.0 |
Total Adjustments |
330.0 - 340.0 |
Adjusted EBITDA |
$750.0 - $810.0 |
|
|
Reconciliation of Gross Margin and Adjusted Gross
Margin
(in millions) |
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Total revenues |
$ |
583.0 |
|
$ |
360.4 |
|
$ |
1,555.4 |
|
$ |
1,106.0 |
|
Less: Contract and grants revenues |
|
(43.0 |
) |
|
(24.1 |
) |
|
(115.1 |
) |
|
(122.5 |
) |
Adjusted
revenues |
$ |
540.0 |
|
$ |
336.3 |
|
$ |
1440.3 |
|
$ |
983.5 |
|
|
Cost of
product sales and contract development and manufacturing services
("COGS") |
$ |
168.3 |
|
$ |
132.8 |
|
$ |
524.0 |
|
$ |
433.5 |
|
- Changes in fair value of contingent consideration |
|
(0.4 |
) |
|
(12.4 |
) |
|
(31.7 |
) |
|
(24.8 |
) |
- Inventory reserves related to Travel Health vaccines |
|
1.5 |
|
|
— |
|
|
(12.6 |
) |
|
— |
|
Adjusted
COGS |
$ |
169.4 |
|
$ |
120.4 |
|
$ |
479.7 |
|
$ |
408.7 |
|
|
Gross
margin (adjusted revenues minus COGS) |
$ |
371.7 |
|
$ |
203.5 |
|
$ |
916.3 |
|
$ |
550.0 |
|
Gross
margin % (gross margin divided by adjusted revenues) |
|
69 |
% |
|
61 |
% |
|
64 |
% |
|
56 |
% |
|
Adjusted
gross margin (adjusted revenues minus adjusted COGS) |
$ |
370.6 |
|
$ |
215.9 |
|
$ |
960.6 |
|
$ |
574.8 |
|
Adjusted
gross margin % (adjusted gross margin divided by adjusted
revenues) |
|
69 |
% |
|
64 |
% |
|
67 |
% |
|
58 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Research and Development
Expenses
(in millions) |
Three Months Ended December 31, |
|
2020 |
|
|
2019 |
|
% Change |
Research and Development Expenses |
$ |
59.5 |
|
$ |
62.8 |
|
(5 |
)% |
Adjustments: |
Less: Contracts and Grants Revenue |
|
43.0 |
|
|
24.1 |
|
78 |
% |
Less: Impairment of IPR&D |
|
— |
|
|
12.0 |
|
* |
Net Research and Development
Expenses |
|
16.5 |
|
|
26.7 |
|
(38 |
)% |
Adjusted Revenue (Total
Revenue less Contracts and Grants Revenue) |
$ |
540.0 |
|
$ |
336.3 |
|
61 |
% |
Net R&D as % of Adjusted
Revenue (Net R&D Margin) |
|
3 |
% |
|
8 |
% |
(63 |
)% |
|
|
|
|
|
|
|
|
|
(in millions) |
Year Ended December 31, |
|
2020 |
|
|
2019 |
|
% Change |
Research and Development Expenses |
$ |
234.5 |
|
$ |
226.2 |
|
4 |
% |
Adjustments: |
Less: Contracts and Grants Revenue |
|
115.1 |
|
|
122.5 |
|
(6 |
)% |
Less: Impairment of IPR&D |
|
29.0 |
|
|
12.0 |
|
* |
Net Research and Development
Expenses |
|
90.4 |
|
|
91.7 |
|
(1 |
)% |
Adjusted Revenue (Total
Revenue less Contracts and Grants Revenue) |
$ |
1,440.3 |
|
$ |
983.5 |
|
46 |
% |
Net R&D as % of Adjusted
Revenue (Net R&D Margin) |
|
6 |
% |
|
9 |
% |
(33 |
)% |
|
|
|
|
|
|
|
|
|
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