Emergent BioSolutions Reports First Quarter 2024 Financial Results

• First Quarter 2024 Total Revenues of $300.4 million, above the prior guidance range
• First Quarter 2024 Net Income of $9.0 million and Adjusted EBITDA of $66.9 million
• Updates FY 2024 guidance

GAITHERSBURG, Md., May 01, 2024 (GLOBE NEWSWIRE) -- Emergent BioSolutions Inc. (NYSE: EBS) today reported financial results for the first quarter ended March 31, 2024.

"We delivered a strong quarter with growth across all our key products,” said Joe Papa, President and CEO at Emergent. “We also took significant actions to improve our debt position, reduce operating expenses and strengthen our financial flexibility. Emergent's transformation will not happen overnight. The actions we are implementing today, combined with the assets Emergent possesses, will enable us to move faster, reach farther and be more nimble. The public health threats we collectively face are changing, and so is Emergent.”

FINANCIAL HIGHLIGHTS ⁽¹⁾

Q1 2024 vs. Q1 2023

SELECT Q1 2024 AND OTHER RECENT BUSINESS UPDATES

• Appointed industry leader Joseph C. Papa as new President, CEO and Director
• Was awarded procurement contract valued up to $235.8 Million to supply BioThrax® (Anthrax Vaccine Adsorbed) to the U.S. Department of Defense
• Received "no action indicated" (NAI) status for Baltimore Bayview Manufacturing Facility
• Continued progress on strengthening our fundamentals with key focus on our Medical Countermeasure (“MCM”) and NARCAN^® products
• Amended our senior secured credit facility

FIRST QUARTER 2024 FINANCIAL PERFORMANCE ⁽¹⁾

Revenues

The Company uses the following categories in discussing product/service level revenues:

• NARCAN^® — comprises contributions from NARCAN^® Nasal Spray
• Other Commercial Products - comprises contributions from Vaxchora^® and Vivotif^®, which we sold to Bavarian Nordic as part of our travel health business in May 2023
• Anthrax MCM — comprises potential contributions from CYFENDUS^®, previously known as AV7909, BioThrax^®, Anthrasil^® and Raxibacumab
• Smallpox MCM — comprises potential contributions from ACAM2000^®, VIGIV and TEMBEXA^®
• Other Products — comprises potential contributions from BAT^®, RSDL^® and Trobigard^®
• Bioservices — comprises service and lease revenues from the Bioservices business

Products Revenue, net

NARCAN^®

For Q1 2024, revenues from NARCAN^® (naloxone HCl) Nasal Spray increased $18.1 million, or 18%, as compared with Q1 2023. The increase was primarily driven by higher branded NARCAN^® sales to U.S. public interest channels and sales of OTC NARCAN^®, partially offset by lower Canadian retail sales of branded NARCAN^®.

Other Commercial Products

For Q1 2024, revenues from Other Commercial Products decreased $5.8 million, or 100%, as compared with Q1 2023. The decrease was due to no sales of our Vaxchora^® and Vivotif^® products during the current quarter, which we sold to Bavarian Nordic as part of our travel health business in May 2023.

Anthrax MCM

For Q1 2024, revenues from Anthrax MCM increased $34.0 million, or 155%, as compared with Q1 2023. The increase reflects the impact of timing of sales related to CYFENDUS^® and BioThrax^®. Anthrax vaccine product sales are primarily made under annual purchase options exercised by the USG. Fluctuations in revenues result from the timing of the exercise of annual purchase options, the timing of USG purchases, the availability of governmental funding and Company delivery of orders that follow.

Smallpox MCM

For Q1 2024, revenues from Smallpox MCM increased $43.0 million as compared with Q1 2023. The increase was primarily due to higher VIGIV and ACAM2000^® sales due to timing. Fluctuations in revenues from Smallpox MCM result from the timing of the exercise of annual purchase options in the existing procurement contracts, the timing of USG purchases, the availability of governmental funding and Company delivery of orders that follow.

Other Products

For Q1 2024, revenues from other product sales increased $41.2 million as compared with Q1 2023. The increase was primarily due to higher BAT and RSDL^® product sales due to timing.

Bioservices Revenues

Services

For Q1 2024, revenues from Bioservices services increased $5.7 million, or 45%, as compared with Q1 2023. The increase was driven by an increase in production at the Company's Camden facility, partially offset by decreases in production at the Company’s Canton and Winnipeg facilities.

Leases

For Q1 2024, revenues from Bioservices leases decreased $1.6 million, or 89%, as compared with Q1 2023. The decrease was related to the completion of a lease for a Bioservices customer at our Canton facility.

Contracts and Grants

For Q1 2024, revenues from contracts and grants increased $1.5 million, or 23%, as compared with Q1 2023. The increase was due to development work in connection with Ebanga^TM, partially offset by the close out of other development initiatives.

Operating Expenses

Cost of Commercial Product Sales

For Q1 2024, cost of Commercial product sales increased $6.3 million, or 14%, as compared with Q1 2023. The increase was primarily due to higher sales of OTC NARCAN^®, which launched during the third quarter of 2023, partially offset by lower Canadian retail sales of branded NARCAN^®.

Cost of MCM Product Sales

For Q1 2024, cost of MCM product sales increased $6.8 million, or 12%, as compared with Q1 2023. The increase was primarily due to higher sales of BAT^®, VIGIV, BioThrax^® and CYFENDUS^®, partially offset by a decrease in shutdown costs.

Cost of Bioservices

For Q1 2024, cost of Bioservices decreased $21.4 million, or 41%, as compared with Q1 2023. The decrease was primarily due to a reduction in overhead costs at the Company’s Camden and Bayview facilities, coupled with no production activities at the Company’s Canton facility. The decrease in costs at the Camden facility was partially offset by increases in production activity following the remediation of matters related to the FDA's warning letter, which was closed out in October 2023.

Research and Development Expenses

For Q1 2024, R&D expenses decreased $25.6 million, or 63%, as compared with Q1 2023. The decrease was primarily due to the sale of our development program for CHIKV VLP to Bavarian Nordic and reduction in related overhead costs, as well as a reduction in overhead costs driven by the headcount reductions as a result of restructuring. The decrease was partially offset by an increase in expense related to development activities for Ebanga^TM.

Selling, General and Administrative Expenses

For Q1 2024, SG&A expenses decreased $16.6 million, or 16%, as compared with Q1 2023. The decrease was primarily due to decreases in compensation and other employee costs as a result of the restructuring initiatives that began during the first quarter of 2023 and a reduction in professional services fees related to general corporate initiatives in the prior year, including organizational transformation consulting fees. These decreases were partially offset by an increase in marketing expenses related to the launch of OTC NARCAN^® and higher legal services fees.

ADDITIONAL FINANCIAL INFORMATION ⁽¹⁾

Capital Expenditures

For Q1 2024, capital expenditures decreased largely due to lower product development activities across the Company’s facilities.

SEGMENT INFORMATION

In the fourth quarter of 2023, we realigned our reportable operating segments to reflect recent changes in our internal operating and reporting process. The Company now manages the business with a focus on three reportable segments: (1) a Commercial Products segment consisting of our NARCAN^® and other commercial products which were sold as part of our travel health business in the second quarter of 2023; (2) a MCM Products segment consisting of the Anthrax - MCM, Smallpox - MCM and Other products and (3) a services segment (“Services”) consisting of our Bioservices. The Company evaluates the performance of these reportable segments based on revenue and segment adjusted gross margin, which is a non-GAAP financial measure. 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.

FIRST QUARTER 2024 SEGMENT RESULTS

Commercial Products gross margin increased $6.0 million, or 10%, to $66.4 million in the quarter, as compared with $60.4 million in the prior year quarter. Commercial Products gross margin percentage decreased 1 percentage point to 56% for the quarter ended March 31, 2024. The decrease was largely due to the higher sales of OTC NARCAN^® and lower branded NARCAN^® sales. Commercial Products segment adjusted gross margin is consistent with gross margin.

MCM Products gross margin increased $111.4 million to $93.2 million in the quarter, as compared with $(18.2) million in the prior year quarter. MCM Products gross margin percentage increased 109 percentage points to 60% for the quarter ended March 31, 2024. The increase was primarily due to a favorable sales mix which was weighted more heavily towards higher margin products and a decrease in shutdown costs compared to the prior quarter. MCM Product segment adjusted gross margin in the current year period