EBS - Emergent BioSolutions Reports Third Quarter 2023 Financial Results | Benzinga
- Third Quarter 2023 Total Revenues of $271M, above the prior guidance range
- Third Quarter 2023 Pre-Tax Loss of $(266)M and Adjusted EBITDA(2) of $20M
- Updates FY 2023 guidance
GAITHERSBURG, Md., Nov. 08, 2023 (GLOBE NEWSWIRE) -- Emergent BioSolutions Inc. (NYSE:EBS) today reported selected financial results for the third quarter ended September 30, 2023. The selected financial results reported include limited third quarter and year-to-date results, as well as selected balance sheet and cash flow information. As part of our quarterly review process, the Company determined that its state deferred tax liability was overstated as of December 31, 2022, resulting in an understatement of the income tax benefits reflected on the Company's income statement. While these non-cash items do not have any impact on the Company's liquidity, cash flow, historical management compensation or covenant compliance, we have concluded that it is appropriate to delay the disclosure of full third quarter and year-to-date earnings information and the filing of our Quarterly Report on Form 10-Q for the period ended September 30, 2023 while we work to correct our prior period financial statements. We expect to complete this work in the near future.
"As we work diligently toward filing our Form 10-Q, Emergent continues to strengthen its financial position and streamline operations, which remains critical to the company's strategy to return to growth and preserve its unique capabilities to help protect and enhance life," said interim Chief Executive Officer Haywood Miller. "We are proud of the progress we are making across our core products business, including the recent over-the-counter launch of NARCAN® Nasal Spray, which expands access and awareness to help save more lives impacted by the devastating opioid crisis. As we look ahead, we plan to continue protecting against public health threats for years to come."
FINANCIAL HIGHLIGHTS (1)
Quarter to Date ("QTD") Q3 2023
| ($ in millions) |
| Q3 2023 |
| Total Revenues |
| $ |
| 270.5 |
| Loss before income taxes |
| $ |
| (265.9 |
| ) |
| Adjusted EBITDA (2) |
| $ |
| 19.8 |
| Gross Margin % |
| 33 |
| % |
| Adjusted Gross Margin % (2) |
| 38 |
| % |
Year to Date ("YTD") 2023
| ($ in millions) |
| YTD 2023 |
| Total Revenues |
| $ |
| 773.5 |
| Loss before income taxes |
| $ |
| (677.0 |
| ) |
| Adjusted EBITDA(2) |
| $ |
| (26.0 |
| ) |
| Gross Margin % |
| 31 |
| % |
| Adjusted Gross Margin %(2) |
| 33 |
| % |
SELECT Q3 2023 AND OTHER RECENT BUSINESS UPDATES
- Announced U.S. Food and Drug Administration ("FDA") approval of CYFENDUSTM (Anthrax Vaccine Adsorbed, Adjuvanted), previously known as AV7909, a two-dose anthrax vaccine for post-exposure prophylaxis use
- Awarded a 10-year contract by the Biomedical Advanced Research and Development Authority ("BARDA") for advanced development, manufacturing scale-up, and procurement of EbangaTM (ansuvimab-zykl) product, a treatment for Ebola
- Launched NARCAN® Nasal Spray Over-The-Counter ("NARCAN® OTC"), broadening our customer base and sales channels to retail pharmacies and digital commerce websites as well as through physician-directed or standing order prescriptions at retail pharmacies, health departments, local law enforcement agencies, community-based organizations, substance abuse centers and other federal agencies
- The FDA closed out its inspection of the Company's Camden facility and issued a "close-out letter" of its Warning Letter issued in August 2022
- Continued progress on strengthening our fundamentals with key focus on our NARCAN® Nasal Spray and Medical Countermeasure ("MCM") products
Q3 2023 FINANCIAL PERFORMANCE (1)
Revenues
Beginning in 2023, the Company revised the categories used in discussing product/service level revenues. The new categories are:
- Anthrax MCM — comprises potential contributions from CYFENDUSTM , previously known as AV7909, BioThrax®, Anthrasil® and Raxibacumab
- NARCAN® Nasal Spray — comprises contributions from NARCAN® Nasal Spray
- Smallpox MCM — comprises potential contributions from ACAM2000®, VIGIV and Tembexa®
- Other Products — comprises potential contributions from BAT®, RSDL® and Trobigard®, as well as Vaxchora and Vivotif, which we sold to Bavarian Nordic as part of our travel health business.
- Contract development and manufacturing ("CDMO") — comprises service and lease revenues from the contract development and manufacturing business
| ($ in millions) |
| Q3 2023 |
| Product sales, net(3): |
| Anthrax MCM |
| $ |
| 32.9 |
| NARCAN® Nasal Spray |
| 142.1 |
| Smallpox MCM |
| 24.7 |
| Other Products |
| 50.1 |
| Total product sales, net |
| $ |
| 249.8 |
| CDMO Revenues: |
| Services |
| $ |
| 13.2 |
| Leases |
| 1.0 |
| Total CDMO Revenues |
| $ |
| 14.2 |
| Contracts and grants |
| $ |
| 6.5 |
| Total revenues |
| $ |
| 270.5 |
Operating Expenses
| ($ in millions) |
| Q3 2023 |
| Cost of product sales, net |
| $ |
| 132.5 |
| Cost of CDMO |
| 44.3 |
| Goodwill impairment |
| 218.2 |
| Research and development ("R&D") |
| 15.3 |
| Selling, general and administrative ("SG&A") |
| 86.0 |
| Amortization of intangible assets |
| 16.3 |
| Total operating expenses |
| $ |
| 512.6 |
Restructuring Expenses
During Q3 2023, the Company incurred restructuring expense in connection with an organizational restructuring plan (the "August 2023 Plan") announced on August 8, 2023. The Company incurred approximately $20.5 million in charges in connection with the August 2023 Plan during Q3 2023. These charges consisted primarily of charges related to severance payments, transition services, and employee benefits. All activities related to the August 2023 Plan were substantially completed during the third quarter of 2023. Also during Q3 2023, the Company made a $(0.2) million adjustment to the incurred charges in connection with the organizational restructuring plan announced on January 9, 2023. Restructuring costs are recognized as an operating expense within the Condensed Consolidated Statement of Operations and are classified based on the Company's classification policy for each category of operating expense.
ADDITIONAL FINANCIAL INFORMATION (1)
Capital Expenditures
| ($ in millions) |
| Q3 2023 |
| Capital expenditures |
| $ |
| 12.6 |
| Capital expenditures as a % of total revenues |
| 5 |
| % |
Segment Information
The Company manages the business with a focus on two reportable segments: the Products segment, which includes the Anthrax MCM products, NARCAN® Nasal Spray, Smallpox MCM products and Other products; and the Services segment, which consists of CDMO services. The Company evaluates the performance of these reportable segments based on revenue and 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.
| ($ in millions) |
| Products |
| Services |
| Quarter Ended September 30, |
| Quarter Ended September 30, |
| 2023 |
| 2023 |
| Revenues |
| $ |
| 249.8 |
| $ |
| 14.2 |
| Cost of sales |
| $ |
| 132.5 |
| $ |
| 44.3 |
| Less: Changes in fair value of contingent consideration |
| (1.1 |
| ) |
| — |
| Less: Restructuring costs |
| 5.0 |
| 8.1 |
| Adjusted cost of sales ** |
| $ |
| 128.6 |
| $ |
| 36.2 |
| Gross margin *** |
| $ |
| 117.3 |
| $ |
| (30.1 |
| ) |
| Gross margin % *** |
| 47 |
| % |
| (212 |
| )% |
| Adjusted gross margin **** |
| $ |
| 121.2 |
| $ |
| (22.0 |
| ) |
| Adjusted gross margin % **** |
| 49 |
| % |
| (155 |
| )% |
| ** Adjusted cost of sales, which is a non-GAAP financial measure, is calculated as cost of sales less restructuring costs, and other special items and non-cash items related to changes in fair value of contingent consideration and inventory step-up provision. See "Reconciliation of Non-GAAP Measures" for the reconciliation of this non-GAAP measure to the most closely related GAAP financial measure. |
| *** Gross margin is calculated as revenues less cost of sales. Gross margin % is calculated as gross margin divided by revenues. |
| **** Adjusted gross margin, which is a non-GAAP financial measure, is calculated as revenues less Adjusted cost of sales. Adjusted gross margin %, which is a non-GAAP financial measure, is calculated as Adjusted gross margin divided by revenues. See "Reconciliation of Non-GAAP Measures" for the reconciliation of these non-GAAP measures to the most closely related GAAP financial measures. |
| ($ in millions) |
| Products |
| Services |
| Nine Months Ended September 30, |
| Nine Months Ended September 30, |
| 2023 |
| 2023 |
| Revenues |
| $ |
| 695.4 |
| $ |
| 58.5 |
| Cost of sales |
| $ |
| 369.2 |
| $ |
| 152.2 |
| Less: Changes in fair value of contingent consideration |
| (0.4 |
| ) |
| — |
| Less: Inventory step-up provision |
| 1.9 |
| — |
| Less: Restructuring costs |
| 7.0 |
| 8.1 |
| Adjusted cost of sales ** |
| $ |
| 360.7 |
| $ |
| 144.1 |
| Gross margin *** |
| $ |
| 326.2 |
| $ |
| (93.7 |
| ) |
| Gross margin % *** |
| 47 |
| % |
| (160 |
| )% |
| Adjusted gross margin **** |
| $ |
| 334.7 |
| $ |
| (85.6 |