Emergent BioSolutions(EBS) - 2025 Q1 - Quarterly Results

Q1 2025 Financial Results Overview Emergent BioSolutions reported a 26% revenue decrease, but net income surged 656% and Adjusted EBITDA rose 16%, reaffirming 2025 guidance Financial Highlights Q1 2025 saw a 26% revenue decrease, but significant profitability improvements with net income up 656% and Adjusted EBITDA up 16% - CEO Joe Papa highlighted that the solid Q1 results, including revenues within guidance, increased profitability margins, and improved cash flow, demonstrate the success of the company's multi-year strategic turnaround plan[3] Q1 2025 vs. Q1 2024 Financial Highlights | ($ in millions, except per share amounts) | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $222.2 | $300.4 | (26)% | | Net Income | $68.0 | $9.0 | 656% | | Net Income per Diluted Share | $1.19 | $0.17 | 600% | | Adjusted Net Income | $40.7 | $31.1 | 31% | | Adjusted EBITDA | $77.6 | $66.9 | 16% | | Adjusted EBITDA Margin | 35% | 22% | +1300 bps | | Gross Margin % | 50% | 45% | +500 bps | | Adjusted Gross Margin % | 58% | 51% | +700 bps | Recent Business Updates Q1 2025 strategic initiatives included government contracts, NARCAN® portfolio expansion, facility divestiture, milestone payments, and a share repurchase program - Key operational and strategic activities in Q1 2025 included: * Secured a ~$20.0 million contract option to supply BioThrax® to the U.S. Department of Defense * Gained exclusive U.S. and Canadian commercial rights to KLOXXADO® (naloxone HCI) Nasal Spray * Completed the sale of the Baltimore-Bayview facility for $36.5 million * Earned $50.0 million in development milestone payments from Bavarian Nordic, with $30.0 million paid during the quarter * The Board of Directors authorized a share repurchase program of up to $50.0 million[9] First Quarter 2025 Financial Performance Overall Q1 2025 performance showed a 26% revenue decline offset by significant operating expense reductions and increased other income Revenues Total Q1 2025 revenues decreased 26% to $222.2 million, driven by lower NARCAN® and Other Products sales, partially offset by Smallpox MCM growth Revenue Breakdown by Category (Q1 2025 vs Q1 2024) | ($ in millions) | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Product sales, net: | | | | | NARCAN® | $45.3 | $118.5 | (62)% | | Anthrax MCM | $47.9 | $55.9 | (14)% | | Smallpox MCM | $106.4 | $50.2 | 112% | | Other Products | $2.3 | $49.3 | (95)% | | Total Product sales, net | $201.9 | $273.9 | (26)% | | All other revenues | $20.3 | $26.5 | (23)% | | Total revenues | $222.2 | $300.4 | (26)% | Product Sales Analysis Product sales were mixed, with sharp declines in NARCAN® and Other Products, but a significant increase in Smallpox MCM revenues - NARCAN® revenues decreased by $73.2 million (62%) primarily due to lower sales of OTC NARCAN® and an unfavorable price/volume mix in Canadian retail sales[10] - Smallpox MCM revenues increased by $56.2 million (112%) mainly due to the timing of higher ACAM2000® and TEMBEXA® sales to the U.S. government[11] - Other Products revenues decreased by $47.0 million (95%) primarily due to lower BAT® sales and the absence of RSDL® product sales following its divestiture in 2024[12] All Other Revenues Analysis Services revenue declined by 61% due to a facility sale, partially offset by a 64% increase in Contracts and Grants revenue - Services revenues decreased by $11.3 million (61%) mainly because of the sale of the Camden facility to Bora Pharmaceuticals in Q3 2024[12] - Contracts and Grants revenues increased by $5.1 million (64%) primarily due to development work associated with Ebanga™[13] Operating Expenses Total operating expenses decreased 34% to $172.3 million, primarily due to lower cost of sales and SG&A, while R&D remained flat Operating Expenses Breakdown (Q1 2025 vs Q1 2024) | ($ in millions) | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Cost of product and services sales, net | $88.5 | $144.6 | (39)% | | Research and development ("R&D") | $15.1 | $15.1 | — % | | Selling, general and administrative ("SG&A") | $52.4 | $84.7 | (38)% | | Amortization of intangible assets | $16.3 | $16.2 | 1% | | Total operating expenses | $172.3 | $260.6 | (34)% | - The 38% decrease in SG&A expenses was primarily due to lower compensation costs from restructuring, reduced marketing expenses, and lower professional and legal service fees[17] Additional Financial Information Capital expenditures significantly decreased by 67% to $3.6 million in Q1 2025, reflecting reduced development activities Capital Expenditures (Q1 2025 vs Q1 2024) | ($ in millions) | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Capital expenditures | $3.6 | $10.8 | (67)% | | Capital expenditures as a % of total revenues | 2% | 4% | | Reportable Segment Information Segment performance was mixed, with Commercial Products revenue declining significantly while MCM Products showed strong gross margin expansion Commercial Products Segment The Commercial Products segment experienced a 62% revenue decline and an 80% gross margin decrease due to lower NARCAN® sales Commercial Products Segment Performance (Q1 2025 vs Q1 2024) | ($ in millions) | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $45.3 | $118.5 | (62)% | | Gross margin | $11.3 | $57.0 | (80)% | | Gross margin % | 25% | 48% | | - The segment's adjusted gross margin, which excludes intangible asset amortization, decreased by 69% to $20.8 million, with the adjusted gross margin percentage falling to 46% from 56% in the prior year[20][21] MCM Products Segment The MCM Products segment saw a 1% revenue increase and a 15% gross margin growth, driven by a favorable sales mix and lower costs MCM Products Segment Performance (Q1 2025 vs Q1 2024) | ($ in millions) | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $156.6 | $155.4 | 1% | | Gross margin | $99.6 | $86.4 | 15% | | Gross margin % | 64% | 56% | | - The segment's adjusted gross margin increased by 15% to $107.4 million, and the adjusted gross margin percentage improved to 69% from 60% in the prior year[22][23] 2025 Financial Forecast The company reaffirmed its full-year 2025 revenue and Adjusted EBITDA guidance, while increasing its GAAP net income forecast Full Year 2025 Financial Forecast | METRIC ($ in millions) | Updated Range (as of 05/07/2025) | Action | | :--- | :--- | :--- | | Total revenues | $750 - $850 | UNCHANGED | | Net income | $20 - $70 | INCREASED | | Adjusted net income | $20 - $70 | UNCHANGED | | Adjusted EBITDA | $150 - $200 | UNCHANGED | | Adjusted gross margin % | 48% - 51% | UNCHANGED | Q2 2025 Forecast | METRIC ($ in millions) | Q2 2025 Forecast | | :--- | :--- | | Total revenues | $95 - $120 | Consolidated Financial Statements This section presents the company's balance sheets, statements of operations, and cash flows for Q1 2025 and prior periods Consolidated Balance Sheets As of March 31, 2025, total assets were $1,426.1 million, with increased cash and stable debt, leading to higher stockholders' equity Key Balance Sheet Items (in millions) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $149.1 | $99.5 | | Total current assets | $706.8 | $598.7 | | Total assets | $1,426.1 | $1,389.7 | | Total current liabilities | $111.9 | $162.4 | | Debt | $665.7 | $663.7 | | Total liabilities | $873.4 | $906.9 | | Total stockholders' equity | $552.7 | $482.8 | Consolidated Statements of Operations Q1 2025 net income surged to $68.0 million, driven by reduced operating expenses and significant other income, despite lower revenues Key Income Statement Items (in millions) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total revenues | $222.2 | $300.4 | | Total operating expenses | $172.3 | $260.6 | | Income from operations | $49.9 | $39.8 | | Total other income (expense), net | $42.8 | $(27.7) | | Net income | $68.0 | $9.0 | | Diluted EPS | $1.19 | $0.17 | Consolidated Statements of Cash Flows Q1 2025 saw improved operating cash flow and positive investing cash flow, resulting in a $47.2 million net increase in cash Key Cash Flow Items (in millions) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(11.2) | $(62.6) | | Net cash provided by (used in) investing activities | $59.5 | $(10.8) | | Net cash provided by (used in) financing activities | $(0.4) | $40.7 | | Net change in cash, cash equivalents and restricted cash | $47.2 | $(32.7) | Reconciliation of Non-GAAP Financial Measures This section reconciles non-GAAP financial measures like Adjusted Net Income and Adjusted EBITDA to their GAAP equivalents Q1 2025 Reconciliation of Net Income to Adjusted Net Income (in millions) | | Q1 2025 | | :--- | :--- | | Net income (GAAP) | $68.0 | | Total adjustments | $(27.3) | | Adjusted net income (Non-GAAP) | $40.7 | Q1 2025 Reconciliation of Net Income to Adjusted EBITDA (in millions) | | Q1 2025 | | :--- | :--- | | Net income (GAAP) | $68.0 | | Total adjustments | $9.6 | | Adjusted EBITDA (Non-GAAP) | $77.6 | FY 2025 Forecast Reconciliation of Net Income to Adjusted EBITDA (in millions) | | 2025 Full Year Forecast | | :--- | :--- | | Net income (GAAP) | $20 - $70 | | Total adjustments | $130 | | Adjusted EBITDA (Non-GAAP) | $150 - $200 |