Emergent BioSolutions Reports Financial Results for Second Quarter 2022
- Reports strong core products segment performance offset by impact of continuing post-COVID transition and re-baselining of CDMO services segment
- Resumes financial guidance; provides update to full year 2022 outlook
GAITHERSBURG, Md., Aug. 01, 2022 (GLOBE NEWSWIRE) -- 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, net
Anthrax vaccines
For 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 products
For 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 Manufacturing
CDMO 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 Leases
For 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 Grants
For 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 Sales
For 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 CDMO
For 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 Development
For 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 Administrative
For Q2 2022, selling, general and administrative expenses decreased $10.1 million due to reduced professional services and marketing costs partially offset by higher compensation costs.
Additional Financial Information
Segment Information
During Q1 2022, the Company began assessing its operating performance by focusing on two reportable segments: 1) a products segment (Products) consisting of the MCM and Commercial products business lines; and 2) a services segment (Services) consisting of the CDMO services business line. The Company evaluates the performance of these reportable segments based on revenue and adjusted gross margin. Segment revenue includes external customer sales but does not include inter-segment services. The Company does not allocate contracts and grants, R&D, SG&A, amortization of intangible assets, interest and other income (expense) or taxes to its evaluation of the performance of these segments.
($ 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 | $ |
By: GlobeNewswire
- 01 Aug 2022
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