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Emergent BioSolutions Reports Financial Results for Fourth Quarter 2021
- Reports Q4 2021 total revenues of $723M and Adjusted EBITDA of $348M resulting in FY 2021 total revenues of $1,793M and Adjusted EBITDA of $518M, in line with prior guidance
- Updates full year 2022 guidance; provides guidance on Q1 2022 total revenues
GAITHERSBURG, Md., Feb. 24, 2022 (GLOBE NEWSWIRE) -- Emergent BioSolutions Inc. (NYSE: EBS) today reported financial results for the fourth quarter and year ended December 31, 2021.
"Emergent’s performance in 2021 is a testament to our strategic focus and highly capable team," said Robert G. Kramer, president and CEO of Emergent BioSolutions. "Looking forward, I am encouraged by the stability and durability of our diversified business lines and exciting R&D portfolio, supported by our improved operational structure that better aligns us with patients and customers, and more effectively positions us for success."
FINANCIAL HIGHLIGHTS (1)
Q4 2021 vs. Q4 2020
| ($ in millions, except per share amounts) | Q4 2021 | Q4 2020 | % Change |
| Total Revenues | $723.2 | $583.0 | 24% |
| Net Income | $189.3 | $185.4 | 2% |
| Net Income per Diluted Share | $3.50 | $3.44 | 2% |
| Adjusted Net Income (2) | $243.4 | $198.8 | 22% |
| Adjusted Net Income (2) per Diluted Share | $4.50 | $3.67 | 23% |
| Adjusted EBITDA (2) | $347.9 | $290.9 | 20% |
| Gross Margin % (2) | 67% | 69% | |
| Adjusted Gross Margin % (2) | 67% | 69% |
Full Year 2021 vs. Full Year 2020
| ($ in millions, except per share amounts) | Full Year 2021 | Full Year 2020 | % Change |
| Total Revenues | $1,792.7 | $1,555.4 | 15% |
| Net Income | $230.9 | $305.1 | (24)% |
| Net Income per Diluted Share | $4.27 | $5.67 | (25)% |
| Adjusted Net Income (2) | $325.7 | $423.9 | (23)% |
| Adjusted Net Income (2) per Diluted Share | $6.02 | $7.88 | (24)% |
| Adjusted EBITDA (2) | $517.6 | $630.4 | (18)% |
| Gross Margin % (2) | 54% | 64% | |
| Adjusted Gross Margin % (2) | 55% | 67% |
SELECT Q4 2021 AND OTHER RECENT BUSINESS UPDATES
- Announced a supply agreement with Sandoz for them to distribute an authorized generic of NARCAN® (naloxone HCl) Nasal Spray 4 mg, which is available in the U.S. via retail pharmacies and institutions, including hospitals
- Initiated 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 investigational anthrax vaccine candidate
- Initiated a pivotal Phase 3 safety and immunogenicity study to evaluate CHIKV VLP, the Company's single-dose chikungunya virus virus-like particle (VLP) vaccine candidate
- Initiated a Phase 1 safety, tolerability, and immunogenicity study to evaluate UniFlu, the Company’s universal influenza vaccine candidate comprised of multiple components intended to induce broad and supra-seasonal immunity against influenza A viruses
- Announced the Company’s Board of Directors authorization to management to repurchase up to $250 million of the Company’s common stock through November 11, 2022; as of December 31, 2021, the Company repurchased approximately 2.6 million shares for $112.6 million, an average price per share of $42.67
- Announced the retirement of the Company's founder and executive chairman, Fuad El-Hibri, effective April 1, 2022
Q4 2021 FINANCIAL PERFORMANCE (1)
| ($ in millions) | Q4 2021 | Q4 2020 | % Change | ||
| Product sales, net (3): | |||||
| • Anthrax vaccines | $137.7 | $115.7 | 19% | ||
| • ACAM2000® | $125.8 | $129.3 | (3)% | ||
| • Nasal naloxone products | $120.6 | $77.4 | 56% | ||
| • Other (4) | $50.2 | $18.5 | * | ||
| Total product sales, net | $434.3 | $340.9 | 27% | ||
| Contract development and manufacturing (CDMO): | |||||
| • Services | $51.2 | $64.0 | (20)% | ||
| • Leases | $167.1 | $135.1 | 24% | ||
| Total CDMO | $218.3 | $199.1 | 10% | ||
| Contracts and grants | $70.6 | $43.0 | 64% | ||
| Total revenues | $723.2 | $583.0 | 24% | ||
| * % change is greater than 100% | |||||
Product Sales, net
Anthrax vaccines
For Q4 2021, revenues from anthrax vaccines increased $22.0 million as compared to Q4 2020. The increase is largely driven by an increase in deliveries of AV7909 to the U.S. government (USG), specifically the Strategic National Stockpile (SNS). The Company received an AV7909 contract modification in September 2021 and began delivering additional doses of AV7909 under that modification, which covers a period of 18 months and is valued at approximately $399 million.
ACAM2000
For Q4 2021, revenues from ACAM2000® (Smallpox (Vaccinia) Vaccine, Live) decreased $3.5 million as compared to Q4 2020. The decrease is largely driven by the timing of deliveries to the USG. The revenues recognized in Q4 2021 reflect delivery of doses into the SNS resulting from the July 2021 exercise by the USG of the second of nine annual contract term extension options pursuant to the Company's 10-year supply agreement with the USG. This latest option is valued at approximately $182 million.
Nasal naloxone products
For Q4 2021, revenues from nasal naloxone products increased $43.2 million as compared to Q4 2020. The increase is driven by continued demand for NARCAN® (naloxone HCI) Nasal Spray across customer channels in the U.S. and Canada. The increase also reflects the impact of revenues related to the authorized generic of NARCAN® (naloxone HCI) Nasal Spray 4mg, a product licensed to Sandoz and launched in late 2021 and one in which the Company retains a financial interest.
Other (4)
For Q4 2021, revenues from other product sales increased $31.7 million as compared to Q4 2020. The increase is largely due to sales of VIGIV [Vaccinia Immune Globulin Intravenous (Human)], driven by timing of deliveries to the USG and based on the June 2021 exercise by the USG of the second of nine annual contract term extension options pursuant to the Company's 10-year supply agreement with the USG. This latest option is valued at approximately $56 million.
Contract Development and Manufacturing (CDMO)
CDMO Services
For Q4 2021, revenue from contract development and manufacturing services decreased $12.8 million as compared to Q4 2020. This decrease is largely due to the discontinuation of manufacturing activities related to the Company's arrangement with AstraZeneca as was previously announced in the second quarter of 2021. Additionally, there was less activity as compared to Q4 2020 due to routine maintenance in the Company's manufacturing network.
CDMO Leases
For Q4 2021, revenue from contract development and manufacturing leases increased $32.0 million as compared to Q4 2020. This increase is largely due to the timing of $155.7 million in final cash collections associated with the Center for Innovation in Advanced Development and Manufacturing (CIADM) public-private partnership with the Biomedical Advanced Research and Development Authority (BARDA), an arrangement that was mutually terminated by both parties in the fourth quarter. The Company anticipates ongoing CDMO lease revenues in subsequent periods related primarily to its existing CDMO manufacturing agreement with Johnson & Johnson, a portion of which is considered a lease.
Contracts and Grants
For Q4 2021, revenues from contracts and grants increased $27.6 million as compared to Q4 2020. The increase is a result of $59.7 million being recognized in Q4 2021, primarily deferred revenue, as a result of the CIADM base contract termination offset by a decrease in third party development activities.
Operating Expenses
| ($ in millions) | Q4 2021 | Q4 2020 | % Change | |
| Cost of product sales | $145.0 | $104.4 | 39% | |
| Cost of CDMO | $67.9 | $63.9 | 6% | |
| Research and development | $83.0 | $59.5 | 39% | |
| Selling, general and administrative | $94.2 | $82.1 | 15% | |
| Goodwill impairment | $41.7 | $— | * | |
| Amortization of intangible assets | $14.0 | $15.0 | (7)% | |
| Total operating expenses | $445.8 | $324.9 | 37% | |
| * % change is greater than 100% | ||||
Cost of Product Sales
For Q4 2021, cost of product sales increased $40.6 million as compared to Q4 2020. The increase is primarily due to a higher volume of product sales, specifically nasal naloxone products, AV7909 and VIGIV.
Cost of CDMO
For Q4 2021, cost of CDMO increased $4.0 million as compared to Q4 2020. The increase is primarily due to additional costs at the Company's Bayview facility to further support enhancements to quality systems and capabilities at the site.
Research and Development
For Q4 2021, research and development expenses increased $23.5 million as compared to Q4 2020. The increase is primarily due to the non-cash write-off of $38.0 million associated with a contract asset balance resulting from the CIADM contract termination.
Selling, General and Administrative
For Q4 2021, selling, general and administrative expenses increased $12.1 million as compared to Q4 2020. The increase is primarily due to professional services costs.
Goodwill Impairment
During Q4 2021, the Company performed its annual impairment testing reflecting its revised reporting unit structure. Pursuant to this analysis, the Company recognized a $41.7 million non-cash impairment of goodwill in the Commercial reporting unit.
ADDITIONAL FINANCIAL INFORMATION
Product Gross Margin (2)
| ($ in millions) | Q4 2021 | Q4 2020 | % Change |
| Product gross margin | $289.3 | $236.5 | 22% |
| Product gross margin % (product gross margin divided by product revenues) (2) | 67% | 69% | (2)% |
For Q4 2021, product gross margin increased $52.8 million as compared to Q4 2020. The increase is primarily due to the increase in product sales. Product gross margin percent decreased primarily due to changes in product mix.
CDMO Gross Margin and Adjusted CDMO Gross Margin (2)
| ($ in millions) | Q4 2021 | Q4 2020 | % Change |
| CDMO gross margin | ($16.7) | $0.1 | * |
| CDMO gross margin % (CDMO gross margin divided by CDMO revenues) (2) | (33)% | —% | * |
| Adjusted CDMO gross margin | ($5.3) | $12.4 | * |
| Adjusted CDMO gross margin % (adjusted CDMO gross margin divided by adjusted CDMO revenues) (2) | (8)% | 16% | * |
| * % change is greater than 100% | |||
For Q4 2021, CDMO gross margin decreased $16.8 million as compared to Q4 2020. Adjusted CDMO gross margin decreased $17.7 million as compared to Q4 2020. The decline in CDMO gross margin and adjusted CDMO gross margin is primarily due to routine maintenance activity that occurred in the Company's manufacturing network in Q4 2021 that did not occur in Q4 2020 as well as increased costs to support remediation efforts for the Company's manufacturing activities at its Bayview facility.
CDMO Metrics (presentation on a sequential basis)
| ($ in millions) | In 4Q21 | In 3Q21 | % Change | ||
| CDMO New Business Secured (5) | $53.5 | $117.7 | (55)% | ||
| ($ in millions) | As of 12/31/2021 | As of 09/30/2021 | % Change |
| CDMO Backlog (6) | $837.2 | $1,002.0 | (16)% |
| CDMO Customers (7) | 70 | 71 | (1)% |
| CDMO Backlog Rollforward (6) | ($ in millions) |
| Beginning Backlog (As of 9/30/2021) | $1,002.0 |
| Less: CDMO revenue recognized in Q4 2021 | ($218.3) |
| Plus: New Business Secured in Q4 2021 (5) | $53.5 |
| Ending Backlog (As of 12/31/2021) | $837.2 |
For Q4 2021, the Company has revised the metrics it provides related to specific aspects of the CDMO business. The Company will continue to provide the CDMO New Business Secured and Backlog metrics. The Company is introducing CDMO Customers as a new metric, and is discontinuing reporting of the CDMO Opportunity Funnel. The Company believes this set of supplemental information provides more valuable and relevant context on the performance and stability of the CDMO business.
Capital Expenditures
| ($ in millions) | Q4 2021 | Q4 2020 | % Change |
| Gross capital expenditures | $46.7 | $36.0 | 30% |
| - Capital expenditures reimbursed | 60.5 | 16.7 | * |
| Net capital expenditures | ($13.8) | $19.3 | * |
| Gross capital expenditures as a % of total revenues | 6% | 6% | —% |
| Net capital expenditures as a % of total revenues | (2)% | 3% | (5)% |
| * % change is greater than 100% | |||
For Q4 2021, capital expenditures increased largely due to the Company's continued investments in expanded capacity and capabilities at the Company's Rockville manufacturing facility. The increase in gross capital expenditures was offset by the timing of reimbursements of $60.5 million related to arrangements funded by the USG. The capital expenditures related to this reimbursement were incurred in a prior period.
SELECT FULL YEAR 2021 FINANCIAL INFORMATION
Revenues
| ($ in millions) | Full Year 2021 | Full Year 2020 | % Change | ||
| Product sales, net (3): | |||||
| • Nasal naloxone products | $434.3 | $311.2 | 40% | ||
| • ACAM2000® | $206.5 | $200.3 | 3% | ||
| • Anthrax vaccines** | $259.8 | $373.8 | (30)% | ||
| • Other (4) | $123.3 | $104.5 | 18% | ||
| Total product sales, net | $1,023.9 | $989.8 | 3% | ||
| Contract development and manufacturing (CDMO): | |||||
| • Services | $334.9 | $166.7 | * | ||
| • Leases | $299.7 | $283.8 | 6% | ||
By: GlobeNewswire
- 24 Feb 2022
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