Emergent BioSolutions Inc. (NYSE: EBS) today reported financial
results for the second quarter ended June 30, 2022.
“Central to Emergent's mission - to protect and enhance life -
is our ability to provide quality products and services for the
benefit of our patients and customers,” said Robert G. Kramer,
president and CEO of Emergent BioSolutions. “We continue to focus
on combating critical public health threats with our core medical
countermeasure and commercial businesses, executing on our growth
strategy with M&A opportunities, and further strengthening our
public-private partnerships, development pipeline, and
manufacturing network to reinforce the durability of our
diversified business."
FINANCIAL HIGHLIGHTS (1)
($ in millions, except per
share amounts) |
Q2 2022 |
Q2 2021 |
% Change |
Total
Revenues |
$ |
242.7 |
|
$ |
397.5 |
|
(39 |
)% |
Net Income (Loss) |
$ |
(56.4 |
) |
$ |
4.6 |
|
* |
Net Income (Loss) per Diluted Share |
$ |
(1.13 |
) |
$ |
0.09 |
|
* |
Adjusted Net Income (Loss) (2) |
$ |
(42.8 |
) |
$ |
18.0 |
|
* |
Adjusted Net Income (Loss) (2) per Diluted Share |
$ |
(0.86 |
) |
$ |
0.33 |
|
* |
Adjusted EBITDA (2) |
$ |
(28.8 |
) |
$ |
49.5 |
|
* |
Gross Margin % (2) |
|
28 |
% |
|
39 |
% |
|
Adjusted Gross Margin % (2) |
|
28 |
% |
|
39 |
% |
|
* % change is greater than +/- 100% |
|
($ in millions, except per
share amounts) |
YTD 2022 |
YTD 2021 |
% Change |
Total
Revenues |
$ |
550.2 |
|
$ |
740.5 |
|
(26 |
)% |
Net Income (Loss) |
$ |
(60.1 |
) |
$ |
74.3 |
|
* |
Net Income (Loss) per Diluted Share |
$ |
(1.19 |
) |
$ |
1.37 |
|
* |
Adjusted Net Income (Loss) (2) |
$ |
(33.7 |
) |
$ |
101.6 |
|
* |
Adjusted Net Income (Loss) (2) per Diluted Share |
$ |
(0.67 |
) |
$ |
1.87 |
|
* |
Adjusted EBITDA (2) |
$ |
7.2 |
|
$ |
173.0 |
|
(96 |
)% |
Gross Margin % (2) |
|
39 |
% |
|
53 |
% |
|
Adjusted Gross Margin % (2) |
|
39 |
% |
|
53 |
% |
|
* % change is greater than +/- 100% |
|
SELECT Q2 2022 AND OTHER RECENT BUSINESS
UPDATES
- Executed an agreement to acquire from Chimerix its worldwide
rights to TEMBEXA(R) (brincidofovir), the first FDA-approved
smallpox oral antiviral for all ages; continue to anticipate
transaction closing in Q3 2022.
- Announced that the U.S. Food and Drug Administration (FDA) has
accepted for review the Biologics License Application (BLA) for
AV7909 (Anthrax Vaccine Adsorbed, Adjuvanted), the company's new
anthrax vaccine candidate; the goal date for a decision by the FDA
is in April 2023.
- Announced a collaboration with Ridgeback Biotherapeutics
(“Ridgeback Bio”) to expand the availability of Ebanga™
(Ansuvimab-zykl), a monoclonal antibody therapeutic approved by the
FDA in December 2020 for the treatment of Ebola.
- Initiated a phase 3 safety and immunogenicity study to evaluate
CHIKV VLP, the Company's single-dose chikungunya vaccine candidate,
in adults 65 and older, in addition to the current phase 3 study in
individuals aged 12 to 64, for which enrollment into the study is
ongoing.
- Continued to repurchase the Company's common stock under an
existing authorization by the Board of Directors to management to
repurchase up to $250.0 million through November 11, 2022;
during the quarter ended June 30, 2022, the Company purchased
an additional 0.7 million shares for $23.3 million,
resulting in an aggregate of approximately 4.4 million shares
for $187.9 million since initiating repurchases in Q4
2021.
- Expanded the Company's leadership with the appointment of
Sujata Dayal to the board of directors; Ms. Dayal was appointed a
member of both the Nominating and Governance Committee as well as
the Special Committee on Manufacturing and Quality Oversight.
Q2 2022 FINANCIAL PERFORMANCE (1)
Revenues
($ in millions) |
Q2 2022 |
Q2 2021 |
% Change |
Product sales, net (3): |
• Anthrax vaccines |
$ |
95.6 |
|
$ |
51.5 |
|
86 |
% |
•
Nasal naloxone products |
|
101.6 |
|
|
106.2 |
|
(4 |
)% |
•
Other (4) |
|
40.0 |
|
|
23.5 |
|
70 |
% |
Total product sales, net |
$ |
237.2 |
|
$ |
181.2 |
|
31 |
% |
Contract development and manufacturing (CDMO): |
•
Services |
$ |
2.7 |
|
$ |
103.6 |
|
(97 |
)% |
•
Leases |
|
(4.5 |
) |
|
87.3 |
|
* |
Total CDMO |
|
(1.8 |
) |
|
190.9 |
|
* |
Contracts and grants |
|
7.3 |
|
|
25.4 |
|
(71 |
)% |
Total revenues |
$ |
242.7 |
|
$ |
397.5 |
|
(39 |
)% |
* % change is greater than +/- 100% |
|
Product Sales, netAnthrax vaccinesFor Q2 2022,
revenues from Anthrax vaccines increased $44.1 million as compared
to Q2 2021. The increase is largely driven by timing of deliveries
to the U.S. government (USG), specifically the Strategic National
Stockpile (SNS). The Company received an AV7909 contract
modification in September 2021 valued at approximately $399.0
million to deliver additional AV7909 doses through March 2023.
Nasal naloxone productsFor Q2 2022, revenues from nasal naloxone
products decreased $4.6 million as compared to Q2 2021. The
decrease was driven by a reduction in commercial retail sales
following the launch of a generic in December 2021. This decrease
was offset by strong growth in unit sales of branded NARCAN®
(naloxone HCl) Nasal Spray to public interest customers in the U.S.
and customers in Canada, as well as from sales of the authorized
generic product licensed to Sandoz, which launched in December
2021.
Other (4)For Q2 2022, revenues from other product sales
increased $16.5 million as compared to Q2 2021. The increase
was primarily due to sales of two of the Company's
Government/Medical Countermeasure (MCM) products: i) VIGIV
[Vaccinia Immune Globulin Intravenous (Human)], driven by timing of
deliveries to the SNS; and ii) BAT® [Botulism Antitoxin Heptavalent
(A, B, C, D, E, F, G) - (Equine)] , driven by timing of deliveries
to international customers.
Contract Development and ManufacturingCDMO
Services For Q2 2022, revenues from contract development and
manufacturing services decreased $100.9 million as compared to Q2
2021. This decrease is largely due to lower combined revenues of
$82.0 million from AstraZeneca and Janssen reflecting the
impact of reduced production activities at the Bayview facility as
a result of a cessation of manufacturing activities under the
AstraZeneca contract which occurred in 2021, and a pause and
eventual cessation of manufacturing activities under the Janssen
contract which began in Q1 2022. Additionally for Q2 2022, the
Company reversed $8.3 million of previously recognized revenue
under the Janssen contract to align cumulative revenue recognized
with cumulative cash collections. The decrease also reflects
reduced production at the Camden facility in the quarter driven by
additional investments in strengthening quality and compliance that
restricted the Company’s ability to optimally utilize the existing
capacity at the site. These declines in revenues were offset by an
increase in contracted manufacturing activities at the Winnipeg
facility.
CDMO LeasesFor Q2 2022, revenues from contract development and
manufacturing leases decreased $91.8 million as compared to Q2
2021. The decrease was primarily due to the completion of the
Company's public-private partnership with BARDA in November 2021,
which contributed $70.4 million in Q2 2021 and a
$21.9 million decrease in lease revenues related to the
Janssen contract. Included in the $21.9 million decrease, the
Company reversed $5.0 million of previously recognized revenue
under the Janssen contract to align cumulative revenue recognized
with cumulative cash collections.
Contracts and GrantsFor Q2 2022, revenues from
contracts and grants decreased $18.1 million as compared to Q2
2021. The decrease is primarily due to lower revenue from BARDA as
a result of the completion of the Center for Innovation and
Advanced Development and Manufacturing (CIADM) agreement, which
occurred in November 2021, as well as decreases in development
activities associated with various other externally funded R&D
projects, most notably the AV7909 program, which has now completed
its clinical phase and for which a BLA is currently under review by
the FDA with an anticipated goal date for completion in April
2023.
Operating Expenses
($ in millions) |
Q2 2022 |
Q2 2021 |
% Change |
Cost of product sales |
$ |
91.0 |
|
$ |
81.2 |
|
12 |
% |
Cost of CDMO |
|
78.8 |
|
|
146.6 |
|
(46 |
)% |
Research and development |
|
49.8 |
|
|
48.9 |
|
2 |
% |
Selling, general and
administrative |
|
81.1 |
|
|
91.2 |
|
(11 |
)% |
Amortization of intangible
assets |
|
14.0 |
|
|
15.1 |
|
(7 |
)% |
Total operating expenses |
$ |
314.7 |
|
$ |
383.0 |
|
|
|
|
|
|
|
|
|
|
Cost of Product SalesFor Q2 2022, cost of
product sales increased $9.8 million as compared to Q2 2021. The
increase is primarily due to the higher volume of product
sales.
Cost of CDMOFor Q2 2022, cost of CDMO decreased
$67.8 million as compared to Q2 2021. The decrease is primarily due
to reduced production activities across our CDMO network in Q2 2022
compared to Q2 2021 resulting in decreased raw materials
consumption, as well as a $41.5 million inventory write-off in
Q2 2021. These decreases were partially offset by increased costs
at the Company's Winnipeg facility due to an increase in
manufacturing activities and Camden facility due to additional
investments in quality enhancement and improvement initiatives.
Research and DevelopmentFor Q2 2022, research
and development expenses were consistent with Q2 2021 reflecting
the Company's continued commitment to investment in important
pipeline programs addressing additional public health preparedness
and response areas of focus.
Selling, General and AdministrativeFor Q2 2022,
selling, general and administrative expenses decreased $10.1
million due to reduced professional services and marketing costs
partially offset by higher compensation costs.
Additional Financial
Information
Segment InformationDuring Q1
2022, the Company began assessing its operating performance by
focusing on two reportable segments: 1) a products segment
(Products) consisting of the MCM and Commercial products business
lines; and 2) a services segment (Services) consisting of the CDMO
services business line. The Company evaluates the performance of
these reportable segments based on revenue and adjusted gross
margin. Segment revenue includes external customer sales but does
not include inter-segment services. The Company does not allocate
contracts and grants, R&D, SG&A, amortization of intangible
assets, interest and other income (expense) or taxes to its
evaluation of the performance of these segments.
($ in
millions) |
Products |
Services |
Three Months Ended June 30, |
|
2022 |
|
|
2021 |
|
% Change |
|
2022 |
|
|
2021 |
|
% Change |
Revenues |
$ |
237.2 |
|
$ |
181.2 |
|
31 |
% |
$ |
(1.8 |
) |
$ |
190.9 |
|
* |
|
|
|
|
|
|
|
Cost of
sales |
|
91.0 |
|
|
81.2 |
|
12 |
% |
|
78.8 |
|
|
146.6 |
|
(46 |
)% |
Less: Changes in fair value of contingent consideration |
|
(1.3 |
) |
|
(0.6 |
) |
* |
|
— |
|
|
— |
|
* |
Adjusted cost of sales |
$ |
89.7 |
|
$ |
80.6 |
|
11 |
% |
$ |
78.8 |
|
$ |
146.6 |
|
(46 |
)% |
|
Gross margin ** |
$ |
146.2 |
|
$ |
100.0 |
|
46 |
% |
$ |
(80.6 |
) |
$ |
44.3 |
|
* |
Gross margin % ** |
|
62 |
% |
|
55 |
% |
700 bps |
NM |
|
23 |
% |
|
|
Adjusted gross margin *** |
$ |
147.5 |
|
$ |
100.6 |
|
47 |
% |
$ |
(80.6 |
) |
$ |
44.3 |
|
* |
Adjusted gross margin % *** |
|
62 |
% |
|
56 |
% |
600 bps |
NM |
|
23 |
% |
|
* % change is greater than +/- 100% |
** Gross margin is calculated as Revenues less
cost of sales. Gross margin % is calculated as gross margin divided
by Revenues. |
*** Adjusted gross margin is calculated as
Revenues less Adjusted cost of sales. Adjusted gross margin % is
calculated as Adjusted gross margin divided by Revenues. |
NM - Not Meaningful |
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in
millions) |
Products |
Services |
Six Months Ended June 30, |
|
2022 |
|
|
2021 |
|
% Change |
|
2022 |
|
|
2021 |
|
% Change |
Revenues |
$ |
474.3 |
|
$ |
319.1 |
|
49 |
% |
$ |
59.0 |
|
$ |
374.7 |
|
(84 |
)% |
|
|
|
|
|
|
|
Cost of sales |
|
171.3 |
|
|
133.8 |
|
28 |
% |
|
154.4 |
|
|
193.3 |
|
(20 |
)% |
Less: Changes in fair value of contingent consideration |
|
(1.8 |
) |
|
(1.7 |
) |
6 |
% |
|
— |
|
|
— |
|
* |
Adjusted cost of sales |
$ |
169.5 |
|
$ |
132.1 |
|
28 |
% |
$ |
154.4 |
|
$ |
193.3 |
|
(20 |
)% |
|
Gross margin ** |
$ |
303.0 |
|
$ |
185.3 |
|
64 |
% |
$ |
(95.4 |
) |
$ |
181.4 |
|
* |
Gross margin % ** |
|
64 |
% |
|
58 |
% |
600 bps |
NM |
|
48 |
% |
|
|
Adjusted gross margin *** |
$ |
304.8 |
|
$ |
187.0 |
|
63 |
% |
$ |
(95.4 |
) |
$ |
181.4 |
|
* |
Adjusted gross margin % *** |
|
64 |
% |
|
59 |
% |
500 bps |
NM |
|
48 |
% |
|
* % change is greater than +/- 100% |
** Gross margin is calculated as Revenues less
cost of sales. Gross margin % is calculated as gross margin divided
by Revenues. |
*** Adjusted gross margin is calculated as
Revenues less Adjusted cost of sales. Adjusted gross margin % is
calculated as Adjusted gross margin divided by Revenues. |
NM - Not Meaningful |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three and six months ended June 30, 2022, Product
gross margin increased $46.2 million and $117.7 million,
respectively, as compared to the three and six months ended
June 30, 2021. Product adjusted gross margin for the three and
six months ended June 30, 2022 increased $45.5 million
and $117.8 million, respectively, as compared to the three and
six months ended June 30, 2021. The increases in Product gross
margin and Product adjusted gross margin are primarily due to
increased volumes and changes in product mix.
For the three months ended June 30, 2022, Services gross margin
and Services adjusted gross margin decreased $124.9 million as
compared to the three months ended June 30, 2021. For the six
months ended June 30, 2022, Services gross margin and Services
adjusted gross margin decreased $276.8 million as compared to
the six months ended June 30, 2021. The decreases in 2022 are
primarily due to the decline in revenue at the Bayview facility as
a result of the completion of the Company's arrangement with BARDA,
the pause in manufacturing activities for improvement and
modifications, and an increase in professional services costs.
CDMO Metrics
|
As of
6/30/2022 |
|
As of
3/31/2022 |
|
% Change |
CDMO Customers
(5) |
70 |
|
71 |
|
(1 |
)% |
($ in millions) |
In Q2 2022 |
In Q1 2022 |
% Change |
CDMO New
Business Secured (6) |
$ |
16.0 |
|
$ |
33.7 |
|
(53 |
)% |
|
|
|
|
|
|
|
|
|
As of June 30, 2022, the number of CDMO customers declined by
one versus the prior reported period of March 31, 2022. The
mix of customers for the Company's CDMO services remains largely a
combination of small and medium sized biopharmaceutical
companies.
During the three months ended June 30, 2022, the Company secured
new CDMO services business of $16.0 million. This new business was
on behalf of existing customers for non-COVID related work on both
new and existing projects and molecules.
Capital Expenditures
($ in millions) |
Q2 2022 |
Q2 2021 |
% Change |
Gross capital
expenditures |
$ |
32.1 |
|
$ |
67.0 |
|
(52 |
)% |
Less: capital expenditures reimbursed |
|
— |
|
|
11.4 |
|
(100 |
)% |
Net capital expenditures |
$ |
32.1 |
|
$ |
55.6 |
|
(42 |
)% |
Gross capital expenditures as a % of total revenues |
|
13 |
% |
|
17 |
% |
(4 |
)% |
Net capital expenditures as a % of total revenues |
|
13 |
% |
|
14 |
% |
(1 |
)% |
* % change is greater than +/- 100% |
|
For the three months ended June 30, 2022, capital expenditures
decreased largely due to less spending associated with the
expansion project at the Company's Rockville facility, which has
progressed to a less capital intensive phase. The Company
anticipates completing this expansion project by year end 2022.
2022 FINANCIAL FORECAST(1)
The Company has resumed providing financial guidance for 2022
and announces the following update to its full year 2022
forecast.
METRIC($ in millions) |
Updated Range(as of 8/1/22) |
Previous Range(as of 4/28/22) |
Anthrax Vaccines |
$280-$300 |
$280-$300 |
ACAM2000 |
$225-$250 |
$190-$210 |
Nasal Naloxone Products |
$300-$340 |
$240-$310 |
Other Products + C&G |
$235-$240 |
$200-$260 |
CDMO Revenues |
$105-$125 |
N/A |
Total Revenues |
$1,150-$1,250 |
N/A |
Adjusted Net Income (Loss)(2) |
$(15)-$10 |
N/A |
Adjusted EBITDA(2) |
$80-$120 |
N/A |
Gross Margin |
41%-45% |
N/A |
N/A - Not Applicable |
|
Assumptions
The Company's 2022 financial forecast takes into consideration
the following assumptions.
2022 Product and Contract and Grant Revenues
- Anthrax vaccines revenues are expected to continue at similar
levels to 2021 under the terms of the Company's existing contract
with 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 2021
deliveries.
- Nasal naloxone products revenues reflect the formation of a
generic market and comprise revenues from a combination of NARCAN
Nasal Spray and the authorized generic of NARCAN Nasal Spray, a
product licensed to Sandoz and launched in late 2021 and one in
which the Company retains a financial interest.
- Other Products + Contracts and Grants revenues: 1) other
products revenues reflect continued procurement of other products
not highlighted on a standalone basis from various government
customers under existing multi-year contracts; 2) contracts and
grants revenues reflect continued funding of select development
programs from various government and other non-dilutive
sources.
CDMO
- CDMO revenues are expected to re-baseline throughout the year
as the Company transitions the business to a focus on non-COVID
projects and on expanding its drug product capabilities as it
progresses toward a higher level of capacity utilization
principally at the Camden, Rockville and Winnipeg sites. CDMO
revenues exclude further contribution from Janssen.
Other
- Pipeline progress is expected across the R&D portfolio with
the advancement of the CHIKV VLP Phase 3 clinical trials, the FDA
acceptance of the Company's BLA filing for AV7909, and anticipated
advancements of a number of early-stage programs.
- Capital expenditures, net of reimbursement, are expected to be
approximately 10% of total revenues at the midpoint, reflecting
ongoing investments in capacity and capability expansions related
to the CDMO business and the Company's R&D programs, and
aligned with the average over the previous five-year period.
The updated forecasted ranges do not take into account the
impact of the addition of TEMBEXA, the acquisition of which is
expected to close in the third quarter of 2022.
Q3 2022 Total Revenues
The Company is also providing a forecast for Q3 2022 total
revenues of $230 - $270 million.
FOOTNOTES
(1) All financial information incorporated within this release
is unaudited. (2) See "Reconciliation of Net Income (Loss) to
Adjusted Net Income (Loss)," "Reconciliation of Net Income (Loss)
to Adjusted EBITDA," and "Adjusted Revenues" for a definition of
terms and the reconciliation tables.(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 can include a
combination of sales of any of the following products: BAT, VIGIV,
Anthrasil, raxibacumab, RSDL, Trobigard, Vivotif, and Vaxchora.(5)
CDMO Customer is defined as a client (commercial, government, NGO)
for whom the Company has performed CDMO services where there is
evidence of meeting all of the following criteria: i) completion of
any billable project milestones in the preceding 24-month period,
indicating ongoing work; ii) secured project work planned in the
future, which has not yet been invoiced, capturing future work not
yet indicated in the invoice record; and, iii) neither the Company
nor the client having yet to formally terminate the last remaining
project, thereby removing any client for whom work has fully
concluded.(6) CDMO New Business Secured is defined as initial value
of contracts secured as well as incremental value of existing
contracts modified within the indicated period.
CONFERENCE CALL, PRESENTATION SUPPLEMENT AND WEBCAST
INFORMATION
Company management will host a conference call at 5:00 pm
(Eastern Time) today, August 1, 2022, to discuss these
financial results. The conference call and presentation supplement
can be accessed from the Company's website or through the
following:
Advanced registration is required to participate by phone.Visit
https://register.vevent.com/register/BIf66c9ca4b8a34754a22943c20e4a7e4d
to register and receive an email with the dial-in number, passcode
and registrant ID.
Live Webcast Information:Visit
https://edge.media-server.com/mmc/p/6xug58g4 for the webcast.
A replay of the call can be accessed from the Investors page of
the Company's website.
ABOUT EMERGENT BIOSOLUTIONS INC.
At Emergent, our mission is to protect and enhance life. For
over 20 years, we’ve been at work defending people from things we
hope will never happen—so we are prepared just in case they ever
do. We provide solutions for complex and urgent public health
threats through a portfolio of vaccines and therapeutics that we
develop and manufacture for governments and consumers. We also
offer a range of integrated contract development and manufacturing
services for pharmaceutical and biotechnology customers. To learn
more about how we plan to protect or enhance 1 billion lives by
2030, visit our website and follow us on LinkedIn, Twitter, and
Instagram.
RECONCILIATION OF NON-GAAP MEASURES
This press release contains financial measures (Adjusted
Net Income (Loss), Adjusted EBITDA (Earnings Before Interest,
Taxes, Depreciation and Amortization), Adjusted Gross Margin,
Adjusted Product Gross Margin, Adjusted CDMO Gross Margin, Adjusted
Revenues 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. For its non-GAAP
measures, the Company adjusts for specified items that can be
highly variable or difficult to predict, or reflect the non-cash
impact of charges or accounting changes. As needed, such
adjustments are tax effected utilizing the federal statutory tax
rate for the U.S., except for changes in the fair value of
contingent consideration as the vast majority is non-deductible for
tax purposes. 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. For more
information on these non-GAAP financial measures, please see the
tables captioned "Reconciliation of Net Income (Loss) to Adjusted
Net Income (Loss)," "Reconciliation of Net Income (Loss) to
Adjusted EBITDA," "Reconciliation of Gross Margin and Adjusted
Gross Margin" and "Reconciliation of Net Research and Development
Expenses" included at the end of this release.
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 earnings 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, certain future financial metrics and
related projections and statements regarding our ability to meet
such projections in the anticipated timeframe, if at all, and more
specifically, statements regarding our 2022 anthrax vaccine
revenues and the timing of expected deliveries of AV7909, 2022
ACAM2000 revenues and the timing of related deliveries, 2022 nasal
naloxone product revenues and the impact of the generic market on
NARCAN Nasal Spray and anticipated financial benefits from our
financial interest in the authorized generic launched by Sandoz;
2022 other products and contracts and grants revenues and continued
procurement of other products not highlighted on a standalone
basis; the continuation of stable base revenues from certain
multi-year MCM procurement contracts; the continued demand for
naloxone products in the U.S. and Canada; the re-baselining of CDMO
revenues in 2022 and the Company's focus on non-COVID projects and
expansion of its drug product capabilities; pipeline progress
across our R&D portfolio and ongoing advancement of the CHIKV
VLP Phase 3 clinical trial; the status and timing of our BLA for
AV7909; the anticipated closing of the acquisition of TEMBEXA®
(brincidofovir) from Chimerix; the anticipated level of and
benefits to be derived from future capital expenditures, including
capacity expansion in our CDMO program and Bayview facility
modifications; future CDMO business opportunities and long-term
potential of the Services segment; other long-term growth potential
or durability of our business; 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 earnings 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 availability of U.S.
government funding for contracts related to procurement of our
medical countermeasures, including AV7909, BioThrax and ACAM2000,
among others, as well as contracts related to development of
medical countermeasures; our ability to meet our commitments to
continued quality and manufacturing compliance at our manufacturing
facilities; the impact of a generic marketplace on NARCAN Nasal
Spray and future NARCAN Nasal Spray sales; our ability to perform
under our contracts with the U.S. government, including the timing
of and specifications relating to deliveries; whether we will
realize the full benefit of our investments in additional
manufacturing and quality control systems; our ability to provide
CDMO services for the development and/or manufacture of product
candidates of our customers at required levels and on required
timelines; 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
and maintain regulatory approvals for our product candidates and
the timing of any such approvals; changes to U.S. government
priorities for the strategic national stockpile; our ability to
negotiate additional U.S. government procurement or follow-on
contracts for our public health threat products that have expired
or will be expiring; our ability to negotiate new CDMO contracts
and the negotiation of further commitments or contracts related to
the collaboration and deployment of capacity toward future
commercial manufacturing under our existing CDMO contracts; the
outcomes associated with pending shareholder 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 our
3.875% Senior Unsecured Notes due 2028; procurement 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 ongoing impact of the COVID-19 pandemic on
our markets, operations and employees as well as those of our
customers and suppliers; the impact on our revenues from and
duration of declines in sales of our vaccine products that target
travelers due to the reduction of international travel caused by
the COVID-19 pandemic; our ability to identify and acquire
companies, businesses, products or product candidates that satisfy
our selection criteria; 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 Relationsburrowsr@ebsi.com(240) 413-1917 |
Media ContactMatt HartwigSenior Director, Media
Relationsmediarelations@ebsi.com |
|
|
Emergent BioSolutions Inc. |
Condensed Consolidated Balance Sheets |
(unaudited, in millions, except per share
data) |
|
|
|
|
|
June 30, 2022 |
|
December 31, 2021 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
358.1 |
|
|
$ |
576.1 |
|
Restricted cash |
|
0.2 |
|
|
|
0.2 |
|
Accounts receivable, net |
|
175.0 |
|
|
|
274.7 |
|
Inventories, net |
|
425.5 |
|
|
|
350.8 |
|
Prepaid expenses and other current assets |
|
125.4 |
|
|
|
70.3 |
|
Total current assets |
|
1,084.2 |
|
|
|
1,272.1 |
|
|
|
|
|
Property, plant and equipment, net |
|
798.4 |
|
|
|
800.1 |
|
Intangible assets, net |
|
576.6 |
|
|
|
604.6 |
|
Goodwill |
|
224.9 |
|
|
|
224.9 |
|
Other assets |
|
51.3 |
|
|
|
57.3 |
|
Total assets |
$ |
2,735.4 |
|
|
$ |
2,959.0 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
106.2 |
|
|
$ |
128.9 |
|
Accrued expenses |
|
40.3 |
|
|
|
51.7 |
|
Accrued compensation |
|
74.4 |
|
|
|
88.7 |
|
Debt, current portion |
|
31.6 |
|
|
|
31.6 |
|
Other current liabilities |
|
24.2 |
|
|
|
72.9 |
|
Total current liabilities |
|
276.7 |
|
|
|
373.8 |
|
|
|
|
|
Debt, net of current portion |
|
793.6 |
|
|
|
809.4 |
|
Deferred tax liability |
|
93.4 |
|
|
|
94.9 |
|
Other liabilities |
|
58.5 |
|
|
|
61.9 |
|
Total liabilities |
$ |
1,222.2 |
|
|
$ |
1,340.0 |
|
|
|
|
|
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, 55.5 and
55.1 shares issued; 49.9 and 51.3 shares outstanding,
respectively |
|
0.1 |
|
|
|
0.1 |
|
Treasury stock, at cost, 5.6 and 3.8 common shares,
respectively |
|
(227.7 |
) |
|
|
(152.2 |
) |
Additional paid-in capital |
|
849.2 |
|
|
|
829.4 |
|
Accumulated other comprehensive loss, net |
|
(6.1 |
) |
|
|
(16.1 |
) |
Retained earnings |
|
897.7 |
|
|
|
957.8 |
|
Total stockholders' equity |
|
1,513.2 |
|
|
|
1,619.0 |
|
Total liabilities and stockholders' equity |
$ |
2,735.4 |
|
|
$ |
2,959.0 |
|
|
|
|
|
|
|
|
|
Emergent BioSolutions Inc. |
Condensed Consolidated Statements of
Operations |
(unaudited, in millions, except per share
data) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
Product sales, net |
|
$ |
237.2 |
|
|
$ |
181.2 |
|
|
$ |
474.3 |
|
|
$ |
319.1 |
|
Contract development and
manufacturing: |
|
|
|
|
|
|
|
|
Services |
|
|
2.7 |
|
|
|
103.6 |
|
|
|
54.5 |
|
|
|
171.2 |
|
Leases |
|
|
(4.5 |
) |
|
|
87.3 |
|
|
|
4.5 |
|
|
|
203.5 |
|
Total contract development and
manufacturing |
|
|
(1.8 |
) |
|
|
190.9 |
|
|
|
59.0 |
|
|
|
374.7 |
|
Contracts and grants |
|
|
7.3 |
|
|
|
25.4 |
|
|
|
16.9 |
|
|
|
46.7 |
|
Total revenues |
|
|
242.7 |
|
|
|
397.5 |
|
|
|
550.2 |
|
|
|
740.5 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Cost of product sales |
|
|
91.0 |
|
|
|
81.2 |
|
|
|
171.3 |
|
|
|
133.8 |
|
Cost of contract development
and manufacturing |
|
|
78.8 |
|
|
|
146.6 |
|
|
|
154.4 |
|
|
|
193.3 |
|
Research and development |
|
|
49.8 |
|
|
|
48.9 |
|
|
|
96.2 |
|
|
|
101.4 |
|
Selling, general and
administrative |
|
|
81.1 |
|
|
|
91.2 |
|
|
|
165.9 |
|
|
|
172.1 |
|
Amortization of intangible
assets |
|
|
14.0 |
|
|
|
15.1 |
|
|
|
28.0 |
|
|
|
30.0 |
|
Total operating expenses |
|
|
314.7 |
|
|
|
383.0 |
|
|
|
615.8 |
|
|
|
630.6 |
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations |
|
|
(72.0 |
) |
|
|
14.5 |
|
|
|
(65.6 |
) |
|
|
109.9 |
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(7.8 |
) |
|
|
(8.6 |
) |
|
|
(16.0 |
) |
|
|
(17.1 |
) |
Other, net |
|
|
(3.0 |
) |
|
|
1.3 |
|
|
|
(5.0 |
) |
|
|
(0.4 |
) |
Total other income (expense),
net |
|
|
(10.8 |
) |
|
|
(7.3 |
) |
|
|
(21.0 |
) |
|
|
(17.5 |
) |
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes |
|
|
(82.8 |
) |
|
|
7.2 |
|
|
|
(86.6 |
) |
|
|
92.4 |
|
Income taxes |
|
|
26.4 |
|
|
|
(2.6 |
) |
|
|
26.5 |
|
|
|
(18.1 |
) |
Net income (loss) |
|
$ |
(56.4 |
) |
|
$ |
4.6 |
|
|
$ |
(60.1 |
) |
|
$ |
74.3 |
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common
share* |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(1.13 |
) |
|
$ |
0.09 |
|
|
$ |
(1.19 |
) |
|
$ |
1.40 |
|
Diluted |
|
$ |
(1.13 |
) |
|
$ |
0.09 |
|
|
$ |
(1.19 |
) |
|
$ |
1.37 |
|
|
|
|
|
|
|
|
|
|
Shares used in computing net
income (loss) per common share |
|
|
|
|
|
|
|
|
Basic |
|
|
50.0 |
|
|
|
53.6 |
|
|
|
50.3 |
|
|
|
53.5 |
|
Diluted |
|
|
50.0 |
|
|
|
54.0 |
|
|
|
50.3 |
|
|
|
54.3 |
|
|
|
|
|
|
|
|
|
|
* Any differences
in the calculation of net income (loss) per common share is due to
rounding. |
|
Emergent BioSolutions Inc.
Condensed Consolidated Statements of Cash
Flows(unaudited, in millions)
|
Six Months Ended June 30, |
|
|
2022 |
|
|
|
2021 |
|
Cash flows used in operating
activities: |
|
|
|
Net income (loss) |
$ |
(60.1 |
) |
|
$ |
74.3 |
|
Adjustments to reconcile net income (loss) to net cash used in
operating activities: |
|
|
|
Share-based compensation expense |
|
22.2 |
|
|
|
21.9 |
|
Depreciation and amortization |
|
75.4 |
|
|
|
61.9 |
|
Change in fair value of contingent consideration, net |
|
1.8 |
|
|
|
1.7 |
|
Amortization of deferred financing costs |
|
2.0 |
|
|
|
2.0 |
|
Deferred income taxes |
|
2.6 |
|
|
|
(3.2 |
) |
Other |
|
2.2 |
|
|
|
2.0 |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
97.7 |
|
|
|
(34.7 |
) |
Inventories |
|
(75.5 |
) |
|
|
(79.7 |
) |
Prepaid expenses and other assets |
|
(19.4 |
) |
|
|
(2.4 |
) |
Accounts payable |
|
(7.6 |
) |
|
|
8.0 |
|
Accrued expenses and other liabilities |
|
(82.8 |
) |
|
|
(55.4 |
) |
Accrued compensation |
|
(14.1 |
) |
|
|
(21.4 |
) |
Contract liabilities |
|
2.7 |
|
|
|
0.4 |
|
Net cash used in operating activities: |
|
(52.9 |
) |
|
|
(24.6 |
) |
Cash flows used in investing
activities: |
|
|
|
Purchases of property, plant and equipment |
|
(64.3 |
) |
|
|
(123.1 |
) |
Net cash used in investing activities: |
|
(64.3 |
) |
|
|
(123.1 |
) |
Cash flows used in financing
activities: |
|
|
|
Purchases of treasury stock |
|
(81.9 |
) |
|
|
— |
|
Principal payments on term loan facility |
|
(16.9 |
) |
|
|
(11.3 |
) |
Principal payments on convertible senior notes |
|
— |
|
|
|
(10.6 |
) |
Proceeds from share-based compensation activity |
|
3.0 |
|
|
|
10.0 |
|
Taxes paid for share-based compensation activity |
|
(5.4 |
) |
|
|
(13.0 |
) |
Contingent consideration payments |
|
— |
|
|
|
(1.1 |
) |
Net cash used in financing activities: |
|
(101.2 |
) |
|
|
(26.0 |
) |
Effect of exchange rate changes on cash, cash equivalents and
restricted cash |
|
0.4 |
|
|
|
(0.1 |
) |
Net change in cash, cash equivalents and restricted cash |
|
(218.0 |
) |
|
|
(173.8 |
) |
Cash, cash equivalents and restricted cash at beginning of
period |
|
576.3 |
|
|
|
621.5 |
|
Cash, cash equivalents and restricted cash at end of period |
$ |
358.3 |
|
|
$ |
447.7 |
|
|
|
|
|
Reconciliation of Net Income (Loss) to Adjusted Net
Income (Loss) (1)
($ in millions,
except per share value) |
Three Months Ended June 30, |
|
2022 |
|
|
2021 |
|
Source |
Net income (loss) |
$ |
(56.4 |
) |
$ |
4.6 |
|
|
Adjustments: |
Non-cash amortization charges |
|
14.9 |
|
|
16.1 |
|
Intangible Asset Amortization, Other Income |
Changes in fair value of contingent consideration |
|
1.3 |
|
|
0.6 |
|
Product COGS |
Acquisition-related costs (transaction & integration) |
|
0.8 |
|
|
0.1 |
|
SG&A |
Tax effect |
|
(3.4 |
) |
|
(3.4 |
) |
|
Total adjustments: |
$ |
13.6 |
|
$ |
13.4 |
|
|
Adjusted net income
(loss) |
$ |
(42.8 |
) |
$ |
18.0 |
|
|
Adjusted net income (loss) per
diluted share |
$ |
(0.86 |
) |
$ |
0.33 |
|
|
|
|
|
|
|
|
|
|
($ in millions,
except per share value) |
Six Months Ended June 30, |
|
2022 |
|
|
2021 |
|
Source |
Net income (loss) |
$ |
(60.1 |
) |
$ |
74.3 |
|
|
Adjustments: |
Non-cash amortization charges |
|
30.0 |
|
|
32.1 |
|
Intangible Asset Amortization, Other Income |
Changes in fair value of contingent consideration |
|
1.8 |
|
|
1.7 |
|
Product COGS |
Acquisition-related costs (transaction & integration) |
|
1.2 |
|
|
0.3 |
|
SG&A |
Tax effect |
|
(6.6 |
) |
|
(6.8 |
) |
|
Total adjustments |
$ |
26.4 |
|
$ |
27.3 |
|
|
Adjusted net income
(loss) |
$ |
(33.7 |
) |
$ |
101.6 |
|
|
Adjusted net income (loss) per
diluted share |
$ |
(0.67 |
) |
$ |
1.87 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income (Loss) to Adjusted EBITDA
(1)
($ in
millions) |
Three Months Ended June 30, |
|
2022 |
|
|
|
2021 |
|
Net income (loss) |
$ |
(56.4 |
) |
|
$ |
4.6 |
|
Adjustments: |
|
|
|
|
|
|
|
Depreciation & amortization |
|
44.5 |
|
|
|
33.2 |
|
Income taxes |
|
(26.4 |
) |
|
|
2.6 |
|
Total interest expense, net |
|
7.4 |
|
|
|
8.4 |
|
Changes in fair value of contingent consideration |
|
1.3 |
|
|
|
0.6 |
|
Acquisition-related costs (transaction & integration) |
|
0.8 |
|
|
|
0.1 |
|
Total adjustments |
$ |
27.6 |
|
|
$ |
44.9 |
|
Adjusted EBITDA |
$ |
(28.8 |
) |
|
$ |
49.5 |
|
|
|
|
|
|
|
|
|
($ in
millions) |
Six Months Ended June 30, |
|
2022 |
|
|
|
2021 |
|
Net income
(loss) |
$ |
(60.1 |
) |
|
$ |
74.3 |
|
Adjustments: |
|
|
|
|
|
|
|
Depreciation & amortization |
|
75.4 |
|
|
|
61.9 |
|
Income taxes |
|
(26.5 |
) |
|
|
18.1 |
|
Total interest expense, net |
|
15.4 |
|
|
|
16.7 |
|
Changes in fair value of contingent consideration |
|
1.8 |
|
|
|
1.7 |
|
Acquisition-related costs (transaction & integration) |
|
1.2 |
|
|
|
0.3 |
|
Total adjustments |
$ |
67.3 |
|
|
$ |
98.7 |
|
Adjusted EBITDA |
$ |
7.2 |
|
|
$ |
173.0 |
|
|
|
|
|
|
|
|
|
Reconciliation of Gross Margin and Adjusted Gross Margin
(1)
($ in
millions) |
Three Months Ended June 30, |
|
2022 |
|
|
|
2021 |
|
Total revenues |
$ |
242.7 |
|
|
$ |
397.5 |
|
Contracts and grants revenues |
|
(7.3 |
) |
|
|
(25.4 |
) |
Adjusted revenues |
|
235.4 |
|
|
|
372.1 |
|
|
|
|
|
|
|
|
|
Cost of product sales |
|
91.0 |
|
|
|
81.2 |
|
Cost of contract development and manufacturing |
|
78.8 |
|
|
|
146.6 |
|
Cost of product sales and cost
of contract development and manufacturing services ("COGS") |
|
169.8 |
|
|
|
227.8 |
|
Less: Changes in fair value of contingent consideration |
|
1.3 |
|
|
|
0.6 |
|
Adjusted COGS |
$ |
168.5 |
|
|
$ |
227.2 |
|
|
|
|
|
|
|
|
|
Gross margin (adjusted
revenues minus COGS) |
$ |
65.6 |
|
|
$ |
144.3 |
|
Gross margin % (gross margin
divided by adjusted revenues) |
|
28 |
% |
|
|
39 |
% |
|
|
|
|
|
|
|
|
Adjusted gross margin
(adjusted revenues minus adjusted COGS) |
$ |
66.9 |
|
|
$ |
144.9 |
|
Adjusted gross margin %
(adjusted gross margin divided by adjusted revenues) |
|
28 |
% |
|
|
39 |
% |
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
($ in millions) |
|
2022 |
|
|
|
2021 |
|
Total revenues |
$ |
550.2 |
|
|
$ |
740.5 |
|
Contract and grants revenues |
|
(16.9 |
) |
|
|
(46.7 |
) |
Adjusted revenues |
|
533.3 |
|
|
|
693.8 |
|
|
|
|
|
|
|
|
|
Cost of product sales |
|
171.3 |
|
|
|
133.8 |
|
Cost of contract development and manufacturing |
|
154.4 |
|
|
|
193.3 |
|
Cost of product sales and cost
of contract development and manufacturing services ("COGS") |
|
325.7 |
|
|
|
327.1 |
|
Less: Changes in fair value of contingent consideration |
|
1.8 |
|
|
|
1.7 |
|
Adjusted COGS |
$ |
323.9 |
|
|
$ |
325.4 |
|
|
|
|
|
|
|
|
|
Gross margin (adjusted
revenues minus COGS) |
$ |
207.6 |
|
|
$ |
366.7 |
|
Gross margin % (gross margin
divided by adjusted revenues) |
|
39 |
% |
|
|
53 |
% |
|
|
|
|
|
|
|
|
Adjusted gross margin
(adjusted revenues minus adjusted COGS) |
$ |
209.4 |
|
|
$ |
368.4 |
|
Adjusted gross margin %
(adjusted gross margin divided by adjusted revenues) |
|
39 |
% |
|
|
53 |
% |
|
|
|
|
|
|
|
|
Reconciliation of Net Research and Development Expenses
(1)
($ in millions) |
Three Months
Ended June 30, |
|
2022 |
|
|
|
2021 |
|
Research and
development expenses |
$ |
49.8 |
|
|
$ |
48.9 |
|
Adjustments: |
|
|
|
|
|
|
|
Contracts and grants revenue |
|
(7.3 |
) |
|
|
(25.4 |
) |
Net research and development expenses |
$ |
42.5 |
|
|
$ |
23.5 |
|
Adjusted revenue (Total revenues less contracts and grants
revenue) |
$ |
235.4 |
|
|
$ |
372.1 |
|
Net R&D as % of adjusted revenue (Net R&D margin) |
|
18 |
% |
|
|
6 |
% |
|
|
|
|
|
|
|
|
($ in millions) |
Six Months Ended June 30, |
|
2022 |
|
|
|
2021 |
|
Research and
development expenses |
$ |
96.2 |
|
|
$ |
101.4 |
|
Adjustments: |
|
|
|
|
|
|
|
Contracts and grants revenue |
|
(16.9 |
) |
|
|
(46.7 |
) |
Net research and development expenses |
$ |
79.3 |
|
|
$ |
54.7 |
|
Adjusted revenue (Total revenues less contracts and grants
revenue) |
$ |
533.3 |
|
|
$ |
693.8 |
|
Net R&D as % of adjusted revenue (Net R&D margin) |
|
15 |
% |
|
|
8 |
% |
|
|
|
|
|
|
|
|
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