Emergent BioSolutions Inc. (NYSE: EBS) today reported financial
results for the first quarter ended March 31, 2022.
“Emergent remains focused on our strategic plan to grow within
public health threat markets where we can positively impact
patients and customers,” said Robert G. Kramer, president and CEO
of Emergent BioSolutions. “Our diversified business model,
disciplined operating approach, and financial strength enable us to
continue pursuing our vision of protecting and enhancing one
billion lives by 2030.”
FINANCIAL HIGHLIGHTS (1)
($ in millions, except per share amounts) |
Q1 2022 |
Q1 2021 |
% Change |
Total Revenues |
$307.5 |
$343.0 |
(10)% |
Net (Loss) Income |
$(3.7) |
$69.7 |
* |
Net (Loss) Income per Diluted Share |
$(0.07) |
$1.28 |
* |
Adjusted Net Income (Loss)(2) |
$9.1 |
$83.6 |
(89)% |
Adjusted Net Income (Loss)(2)per Diluted Share |
$0.18 |
$1.53 |
(88)% |
Adjusted EBITDA(2) |
$36.0 |
$123.5 |
(71)% |
Gross Margin %(2) |
48% |
69% |
|
Adjusted Gross Margin %(2) |
48% |
69% |
|
* % change is greater than 100% |
SELECT Q1 2022 AND OTHER RECENT BUSINESS
UPDATES
- Completed the rolling submission to
the U.S. Food and Drug Administration (FDA) of the Biologics
License Application (BLA) for AV7909 (Anthrax Vaccine Adsorbed,
Adjuvanted), the Company's new anthrax vaccine candidate.
- Announced updates to the Company's
corporate governance:
- Appointed Zsolt Harsanyi, Ph.D., as
Chairman of the Board of Directors; and
- Appointed Keith Katkin to the Board
of Directors.
- Strengthened the Company's senior
leadership with three key hires:
- Coleen Glessner joined as EVP,
Global Quality and Ethics and Compliance, reporting to the
CEO;
- Bill Hartzel joined as SVP and Head
of the CDMO Services business, reporting to the COO; and
- Joseph Philipose joined as SVP and
Chief Ethics and Compliance Officer, reporting to the EVP, Global
Quality and Ethics and Compliance.
- Initiated a Phase 1 study evaluating
the safety, tolerability, pharmacokinetics and pharmacodynamics of
stabilized isoamyl nitrite (SIAN), a treatment being developed for
known or suspected acute cyanide poisoning, with funding from the
Biomedical Advanced Research and Development Authority (BARDA) and
in collaboration with Southwest Research Institute.
- Continued to repurchase the Company's common stock under an
existing authorization by the Board of Directors to management to
repurchase up to $250 million through November 11, 2022; during the
quarter ended March 31, 2022, the Company purchased an additional
1.1 million shares for $52.2 million, resulting in an aggregate of
approximately 3.8 million shares for $164.7 million since
initiating repurchases in Q4 2021.
Q1 2022 FINANCIAL PERFORMANCE
(1)
Revenues
($ in millions) |
Q1 2022 |
Q1 2021 |
% Change |
Product sales, net (3): |
• Anthrax vaccines |
$103.6 |
$55.0 |
88% |
• Nasal naloxone products |
$93.1 |
$74.2 |
25% |
• ACAM2000® |
$14.4 |
$— |
* |
• Other (4) |
$26.0 |
$8.7 |
* |
Total product sales, net |
$237.1 |
$137.9 |
72% |
Contract development and manufacturing (CDMO): |
• Services |
$51.8 |
$67.6 |
(23)% |
• Leases |
$9.0 |
$116.2 |
(92)% |
Total CDMO |
$60.8 |
$183.8 |
(67)% |
Contracts and grants |
$9.6 |
$21.3 |
(55)% |
Total revenues |
$307.5 |
$343.0 |
(10)% |
* % change is greater than 100% |
Product Sales, netAnthrax vaccinesFor Q1 2022,
revenues from Anthrax vaccines increased $48.6 million as compared
to Q1 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 (Anthrax Vaccine
Adsorbed, Adjuvanted) contract modification in September 2021
valued at approximately $399 million to deliver additional AV7909
doses through March 2023.
Nasal naloxone productsFor Q1 2022, revenues from nasal naloxone
products increased $18.9 million as compared to Q1 2021. The
increase is driven by strong growth in sales of NARCAN® (naloxone
HCl) Nasal Spray to U.S. public interest and Canadian customers, as
well as solid contributions from sales of the authorized generic
product licensed to Sandoz which launched in December 2021. These
increases are offset by a decrease in sales of NARCAN Nasal Spray
to the U.S. commercial retail market.
ACAM2000For Q1 2022, revenues from ACAM2000® (Smallpox
(Vaccinia) Vaccine, Live) increased $14.4 million as compared to Q1
2021. The increase is driven by international sales.
Other (4)For Q1 2022, revenues from other product sales
increased $17.3 million as compared to Q1 2021. The increase is
largely a result of sales of VIGIV [Vaccinia Immune Globulin
Intravenous (Human)] driven by timing of deliveries to the USG and
of sales of Anthrasil® (Anthrax Immune Globulin Intravenous
(Human)) driven by timing of deliveries to international
customers.
Contract Development and Manufacturing
(CDMO)CDMO ServicesFor Q1 2022, revenue from contract
development and manufacturing services decreased $15.8 million as
compared to Q1 2021. This decrease is largely due to the impact of
the Company's decision to initiate maintenance and other
modification-related work at the Bayview facility which reduced
manufacturing activities during the quarter. The decline in
revenues at Bayview was offset by an increase in manufacturing
activities at the Company's Camden and Winnipeg sites in support of
drug substance and drug product manufacturing services related to
products and product candidates of the Company's commercial
customers.
CDMO LeasesFor Q1 2022, revenue from contract development and
manufacturing leases decreased $107.2 million as compared to Q1
2021. The decrease was primarily due to the completion of the
Company's public-private partnership with BARDA in November
2021.
Contracts and GrantsFor Q1 2022, revenues from
contracts and grants decreased $11.7 million as compared to Q1
2021. The decrease is primarily due to lower revenue from BARDA as
a result of the termination of the Center for Innovation and
Advanced Development and Manufacturing (CIADM) agreement in
November 2021 as well as decreases in development activities
associated with various other externally funded R&D
projects.
Operating Expenses
($ in millions) |
Q1 2022 |
Q1 2021 |
% Change |
Cost of product sales |
$80.3 |
$52.6 |
53% |
Cost of CDMO |
$75.6 |
$46.7 |
62% |
Research and development |
$46.4 |
$52.5 |
(12)% |
Selling, general and administrative |
$84.8 |
$80.9 |
5% |
Amortization of intangible assets |
$14.0 |
$14.9 |
(6)% |
Total operating expenses |
$301.1 |
$247.6 |
|
Cost of Product SalesFor Q1 2022, cost of
product sales increased $27.7 million as compared to Q1 2021. The
increase is primarily due to the higher volume of product
sales.
Cost of CDMOFor Q1 2022, cost of CDMO increased
$28.9 million as compared to Q1 2021. The increase is driven by
professional services in support of quality functions at the
Bayview site and at the Camden and Winnipeg sites due to an
increase in manufacturing activities in Q1 2022 compared to Q1
2021.
Research and DevelopmentFor Q1 2022, research
and development expenses decreased $6.1 million as compared to Q1
2021. The decrease is primarily due to a decline in costs
associated with the development of the Company's COVID-19
therapeutic product candidates offset by an increase in costs
associated with the Phase 3 study of the Company's chikungunya
virus (CHIKV) virus-like particle (VLP) vaccine candidate.
Selling, General and AdministrativeFor Q1 2022,
selling, general and administrative expenses increased $3.9 million
due to an increase in professional services and marketing costs in
support of the expansion of the Company's business operations and
defending and supporting the Company's corporate reputation.
Additional Financial Information
Segment InformationDuring Q1 2022, the Company
began assessing its operating performance by focusing on two
reportable segments: 1) a products segment (Product) consisting of
the Government/Medical Countermeasure (MCM) and Commercial products
business lines; and 2) a services segment (Services) consisting of
the CDMO services business line. The Company evaluates the
performance of these reportable segments based on revenue and
adjusted gross margin. Segment revenue includes external customer
sales but does not include inter-segment services. The Company does
not allocate Contracts and grants, R&D, SG&A, amortization
of intangible assets, interest and other income (expense) or taxes
to its evaluation of the performance of these segments.
($ in millions) |
Products |
Services |
Q1 2022 |
Q1 2021 |
% Change |
Q1 2022 |
Q1 2021 |
% Change |
Revenue |
$237.1 |
$137.9 |
72% |
$60.8 |
$183.8 |
(67)% |
|
Cost of sales |
$80.3 |
$52.6 |
53% |
$75.6 |
$46.7 |
62% |
Less: Changes in fair value of contingent consideration |
$0.5 |
$1.1 |
(55)% |
$— |
$— |
$— |
Adjusted cost of sales |
$79.8 |
$51.5 |
55% |
$75.6 |
$46.7 |
62% |
|
Gross margin ** |
$156.8 |
$85.3 |
84% |
$(14.8) |
$137.1 |
* |
Gross margin % ** |
66% |
62% |
400 bps |
(24)% |
75% |
* |
|
Adjusted gross margin *** |
$157.3 |
$86.4 |
82% |
$(14.8) |
$137.1 |
* |
Adjusted gross margin % *** |
66% |
63% |
300 bps |
(24)% |
75% |
* |
* % change is greater than 100% or not considered meaningful |
** Gross margin is calculated as Revenue less cost of sales. Gross
margin % is calculated as gross margin divided by Revenue. |
*** Adjusted gross margin is calculated as Revenue less Adjusted
cost of sales. Adjusted gross margin % is calculated as Adjusted
gross margin divided by Revenue. |
For Q1 2022, Product margin increased $71.5
million as compared to Q1 2021. Product adjusted gross margin
increased $70.9 million as compared to Q1 2021. The increase in
Product gross margin and Product adjusted gross margin is primarily
due to increased volumes.
For Q1 2022, Services gross margin and adjusted
gross margin decreased $151.9 million as compared to Q1 2021. The
decrease in Services gross and adjusted gross margin is primarily
due to the decline in revenue at the Bayview facility as a result
of the completion of the Company's arrangement with BARDA, the
pause in manufacturing activities for improvement and
modifications, as well as an increase in professional services
costs.
CDMO Metrics
($ in millions, except CDMO customers) |
As of 3/31/2022 |
As of 12/31/2021 |
% Change |
CDMO Customers (5) |
71 |
70 |
1% |
($ in millions) |
In Q122 |
In Q421 |
% Change |
CDMO New Business Secured (6) |
$33.7 |
$53.5 |
(37)% |
For Q1 2022, the Company is temporarily suspending disclosing
CDMO Backlog as of March 31, 2022, pending further clarity on
Johnson & Johnson (J&J) COVID-19 vaccine requirements,
influenced by the fact this metric includes value from the J&J
contract. The Company will resume providing this metric at the
appropriate time.
Capital Expenditures
($ in millions) |
Q1 2022 |
Q1 2021 |
% Change |
Gross capital expenditures |
$32.2 |
$56.1 |
(43)% |
Less: capital expenditures reimbursed |
$— |
$7.2 |
(100)% |
Net capital expenditures |
$32.2 |
$48.9 |
* |
Gross capital expenditures as a % of total revenues |
10% |
16% |
(6)% |
Net capital expenditures as a % of total revenues |
10% |
14% |
(4)% |
* % change is greater than 100% |
For Q1 2022, capital expenditures decreased largely due to less
spending associated with the expansion project at the Company's
Rockville facility which is nearing completion.
2022 FINANCIAL FORECAST
The Company provides the following update to its full year 2022
forecast.
Reaffirmed Guidance
The following revenue guidance is reaffirmed for full year 2022
($ in millions):
•
Anthrax Vaccines |
$280-$300 |
• ACAM2000 |
$190-$210 |
• Nasal Naloxone Products |
$240-$310 |
• Other Products + Contracts and Grants |
$200-$260 |
Temporarily Suspended Guidance
Following the recent decision by Johnson & Johnson (J&J)
to suspend projecting COVID-19 vaccine sales for 2022 due to global
supply surplus and vaccine hesitancy in the developing world, the
Company's 2022 revenues related to its commercial supply
arrangement with J&J are uncertain. Accordingly, the following
metrics are temporarily suspended for full year 2022 pending
further clarity on J&J COVID-19 vaccine requirements:
- CDMO Revenues
- Total Revenues
- Adjusted Net Income
- Adjusted EBITDA
- Gross Margin
At the appropriate time, the Company will communicate additional
information and update the overall forecast.
Assumptions
The Company's 2022 financial forecast also 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 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.
Other
- Pipeline progress is expected across the R&D portfolio with
the ongoing advancement of the CHIKV VLP Phase 3 clinical trial,
the completion of the 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.
FOOTNOTES
(1) All financial information incorporated within this
release is unaudited.(2) See "Reconciliation of Net Income to
Adjusted Net Income," "Reconciliation of Net Income 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, April 28, 2022, to discuss these
financial results. The conference call and presentation supplement
can be accessed from the Company's website or through the
following:
Live Teleconference Information:Dial in: [US] (855) 766-6521;
[International] (262) 912-6157Conference ID: 3691528
Live Webcast Information:Visit
https://edge.media-server.com/mmc/p/84272zeq for the webcast.
A replay of the call can be accessed from the Company
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, 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 to Adjusted Net Income,"
"Reconciliation of Net Income 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, pipeline progress across
our R&D portfolio and ongoing advancement of the CHIKV VLP
Phase 3 clinical trial, the safety and efficacy of SIAN, 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 Johnson & Johnson
COVID-19 vaccine requirements and guidance; future CDMO business
opportunities and long-term potential of the Services segment;
other long-term growth potential 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 the earnings press release and investor
presentation, 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 and the potential impact
on our ability to continue production of bulk drug substance for
Johnson & Johnson’s COVID-19 vaccine, 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 Relations
burrowsr@ebsi.com(240) 413-1917
Media ContactMatt HartwigSenior Director, Media Relations
mediarelations@ebsi.com
Emergent BioSolutions Inc.Condensed Consolidated
Balance Sheets(unaudited, in millions, except per share data)
|
March 31, 2022 |
|
|
December 31, 2021 |
ASSETS |
|
|
|
|
|
Current assets:Cash and cash
equivalents |
$ |
435.8 |
|
$ |
576.1 |
Restricted cash |
|
0.2 |
|
|
0.2 |
Accounts receivable, net |
|
181.8 |
|
|
274.7 |
Inventories, net |
|
400.7 |
|
|
350.8 |
Prepaid expenses and other current assets |
|
81.8 |
|
|
70.3 |
Total current assets |
|
1,100.3 |
|
|
1,272.1 |
Property, plant and equipment,
net |
|
807.5 |
|
|
800.1 |
Intangible assets, net |
|
590.6 |
|
|
604.6 |
Goodwill |
|
224.9 |
|
|
224.9 |
Other assets |
|
57.1 |
|
|
57.3 |
Total assets |
$ |
2,780.4 |
|
$ |
2,959.0 |
LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:
Accounts payable |
$ |
107.3 |
|
$ |
128.9 |
Accrued expenses |
|
29.3 |
|
|
51.7 |
Accrued compensation |
|
56.4 |
|
|
88.7 |
Debt, current portion |
|
31.6 |
|
|
31.6 |
Other current liabilities |
|
24.6 |
|
|
72.9 |
Total current liabilities |
|
249.2 |
|
|
373.8 |
|
|
|
Contingent consideration, net
of current portion |
4.4 |
4.5 |
Debt, net of current
portion |
801.5 |
809.4 |
Deferred tax liability |
94.8 |
94.9 |
Contract liabilities, net of
current portion |
5.9 |
4.7 |
Other liabilities |
49.3 |
52.7 |
Total liabilities |
$ |
1,205.1 |
|
$ |
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, 55.3 and
55.1 shares issued: 50.4 and 51.3 shares outstanding,
respectively |
|
0.1 |
|
|
0.1 |
Additional paid-in capital |
|
834.8 |
|
|
829.4 |
Treasury stock, at cost, 4.9 and 3.8 common shares,
respectively |
|
(204.4) |
|
|
(152.2) |
Accumulated other comprehensive loss, net |
|
(9.3) |
|
|
(16.1) |
Retained earnings |
|
954.1 |
|
|
957.8 |
Total stockholders' equity |
|
1,575.3 |
|
|
1,619.0 |
Total liabilities and stockholders' equity |
|
2,780.4 |
|
|
2,959.0 |
Emergent BioSolutions Inc.Condensed Consolidated
Statements of Operations(unaudited, in millions, except per share
data)
|
Three Months Ended March 31, |
|
2022 |
|
2021 |
Revenues: |
|
|
|
|
|
|
|
Product sales, net |
$ |
237.1 |
|
|
$ |
137.9 |
|
Contract development and
manufacturing: |
|
|
|
|
|
|
|
Services |
|
51.8 |
|
|
|
67.6 |
|
Leases |
|
9.0 |
|
|
|
116.2 |
|
Total contract development and
manufacturing |
|
60.8 |
|
|
|
183.8 |
|
Contracts and grants |
|
9.6 |
|
|
|
21.3 |
|
Total revenues |
|
307.5 |
|
|
|
343.0 |
|
Operating expenses: |
|
|
|
|
Cost of product sales |
|
80.3 |
|
|
|
52.6 |
|
Cost of contract development
and manufacturing |
|
75.6 |
|
|
|
46.7 |
|
Research and development |
|
46.4 |
|
|
|
52.5 |
|
Selling, general and
administrative |
|
84.8 |
|
|
|
80.9 |
|
Amortization of intangible
assets |
|
14.0 |
|
|
|
14.9 |
|
Total operating expenses |
|
301.1 |
|
|
|
247.6 |
|
Income (loss) from
operations |
|
6.4 |
|
|
|
95.4 |
|
Other income (expense): |
|
|
|
|
Interest expense |
|
(8.2 |
) |
|
|
(8.5 |
) |
Other, net |
|
(2.0 |
) |
|
|
(1.7 |
) |
Total other income (expense),
net |
|
(10.2 |
) |
|
|
(10.2 |
) |
Income (loss) before income
taxes |
|
(3.8 |
) |
|
|
85.2 |
|
Income taxes |
|
0.1 |
|
|
|
(15.5 |
) |
Net income (loss) |
$ |
(3.7 |
) |
|
$ |
69.7 |
|
Net (loss) income per common
share* |
|
|
|
|
Basic |
$ |
(0.07 |
) |
|
$ |
1.31 |
|
Diluted |
$ |
(0.07 |
) |
|
$ |
1.28 |
|
Shares used in computing net income (loss) per common share
Basic |
|
50.7 |
|
|
|
53.3 |
|
Diluted |
|
50.7 |
|
|
|
54.5 |
|
* Any differences in the calculation of net income per common
share is due to rounding.
Emergent BioSolutions Inc.Condensed Consolidated
Statements of Cash Flows (unaudited, in millions)
|
Three Months Ended March 31, |
|
|
2022 |
|
|
|
2021 |
|
Cash flows (used in) provided by operating
activities: |
|
|
|
|
|
|
|
Net income (loss) |
$ |
(3.7 |
) |
|
$ |
69.7 |
|
Adjustments to reconcile net income to net cash (used in) provided
by operating activities: |
|
|
|
Share-based compensation expense |
|
9.9 |
|
|
|
10.5 |
|
Depreciation and amortization |
|
30.9 |
|
|
|
28.7 |
|
Change in fair value of contingent consideration, net |
|
0.5 |
|
|
|
1.1 |
|
Amortization of deferred financing costs |
|
1.0 |
|
|
|
1.0 |
|
Deferred income taxes |
|
1.9 |
|
|
|
(1.7 |
) |
Other |
|
0.6 |
|
|
|
3.5 |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
93.7 |
|
|
|
42.1 |
|
Inventories |
|
(50.1 |
) |
|
|
(99.9 |
) |
Prepaid expenses and other assets |
|
(16.6 |
) |
|
|
(10.0 |
) |
Accounts payable |
|
(14.7 |
) |
|
|
20.1 |
|
Accrued expenses and other liabilities |
|
(56.5 |
) |
|
|
(40.0 |
) |
Accrued compensation |
|
(32.2 |
) |
|
|
(29.4 |
) |
Contract liabilities |
|
(2.0 |
) |
|
|
9.4 |
|
Net cash (used in) provided by operating activities: |
|
(37.3 |
) |
|
|
5.1 |
|
Cash flows used in investing activities: |
|
|
Purchases of property, plant and equipment |
|
(32.2 |
) |
|
|
(56.1 |
) |
Net cash used in investing activities: |
|
(32.2 |
) |
|
|
(56.1 |
) |
|
|
|
Cash flows used in financing activities: |
|
|
Purchases of treasury stock |
|
(57.5 |
) |
|
|
— |
|
Principal payments on term loan facility |
|
(8.5 |
) |
|
|
(5.6 |
) |
Principal payments on convertible senior notes |
|
— |
|
|
|
(10.6 |
) |
Proceeds from share-based compensation activity |
|
0.5 |
|
|
|
6.9 |
|
Taxes paid for share-based compensation activity |
|
(5.0 |
) |
|
|
(12.2 |
) |
Contingent consideration payments |
|
— |
|
|
|
(0.7 |
) |
Net cash used in financing activities: |
|
(70.5 |
) |
|
|
(22.2 |
) |
Effect of exchange rate changes on cash, cash equivalents and
restricted cash |
|
(0.3 |
) |
|
|
(0.3 |
) |
Net change in cash, cash equivalents and restricted cash |
|
(140.3 |
) |
|
|
(73.5 |
) |
Cash, cash equivalents and restricted cash at beginning of
period |
|
576.3 |
|
|
|
621.5 |
|
Cash, cash equivalents and restricted cash at end of period |
$ |
436.0 |
|
|
$ |
548.0 |
|
Reconciliation of Net Income to Adjusted Net Income
(1)
($ in millions, except per share value) |
Three Months Ended March 31, |
2022 |
2021 |
Source |
Net income (loss) |
$(3.7) |
$69.7 |
|
Adjustments: |
Plus: Non-cash amortization charges |
15.1 |
16.0 |
Intangible Asset (IA) Amortization, Other Income |
Plus: Changes in fair value of contingent consideration |
0.5 |
1.1 |
Product COGS |
Plus: Acquisition-related costs (transaction &
integration) |
0.4 |
0.2 |
SG&A |
Tax effect |
(3.2) |
(3.4) |
|
Total adjustments: |
$12.8 |
$13.9 |
|
Adjusted net income (loss) |
$9.1 |
$83.6 |
|
Adjusted net income (loss) per diluted share |
$0.18 |
$1.53 |
|
Reconciliation of Net Income to Adjusted EBITDA
(1)
($ in millions) |
Three Months Ended March 31, |
2022 |
2021 |
Net income (loss) |
$(3.7) |
$69.7 |
Adjustments: |
Plus: Depreciation & amortization |
30.9 |
28.7 |
Plus: Income taxes |
(0.1) |
15.5 |
Plus: Total interest expense, net |
8.0 |
8.3 |
Plus: Changes in fair value of contingent consideration |
0.5 |
1.1 |
Plus: Acquisition-related costs (transaction &
integration) |
0.4 |
0.2 |
Total adjustments |
$39.7 |
$53.8 |
Adjusted EBITDA |
$36.0 |
$123.5 |
Reconciliation of Gross Margin and Adjusted Gross Margin
(1)
($ in millions) |
Three Months Ended March 31, |
2022 |
2021 |
Total revenues |
$307.5 |
$343.0 |
Less: Contracts and grants revenues |
9.6 |
21.3 |
Adjusted revenues |
$297.9 |
$321.7 |
|
|
|
Cost of product sales |
80.3 |
52.6 |
Cost of contract development and manufacturing |
75.6 |
46.7 |
Cost of product sales and cost of contract development and
manufacturing services ("COGS") |
155.9 |
99.3 |
Less: Changes in fair value of contingent consideration |
0.5 |
1.1 |
Adjusted COGS |
$155.4 |
$98.2 |
|
|
|
Gross margin (adjusted revenues minus COGS) |
$142.0 |
$222.4 |
Gross margin % (gross margin divided by adjusted revenues) |
48% |
69% |
|
|
|
Adjusted gross margin (adjusted revenues minus adjusted COGS) |
$142.5 |
$223.5 |
Adjusted gross margin % (adjusted gross margin divided by adjusted
revenues) |
48% |
69% |
Reconciliation of Net Research and Development Expenses
(1)
($ in millions) |
Three Months Ended March 31, |
2022 |
2021 |
Research and development expenses |
$46.4 |
$52.5 |
Adjustments: |
Less: Contracts and grants revenue |
9.6 |
21.3 |
Net research and development expenses |
36.8 |
31.2 |
Adjusted revenue (Total revenue less contracts and grants
revenue) |
$297.9 |
$321.7 |
Net R&D as % of adjusted revenue (Net R&D margin) |
12% |
10% |
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