Emergent BioSolutions(EBS) - 2025 Q2 - Quarterly Results

Overview and Financial Highlights Q2 2025 Financial Highlights In Q2 2025, Emergent BioSolutions exceeded revenue guidance by $21 million, reporting $140.9 million. Despite a 45% year-over-year revenue decline, the company demonstrated a significant turnaround in profitability. Net loss narrowed by 96% to $12.0 million, and Adjusted EBITDA surged by 382% to $28.5 million, reflecting improved margins and strong execution of its transformation plan - The company exceeded the top end of its Q2 revenue guidance by $21 million and raised the low end/midpoint of its full-year 2025 profitability guidance[3][5] Q2 2025 vs. Q2 2024 Key Financial Metrics | ($ in millions, except per share) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $140.9 | $254.7 | (45)% | | Net Loss | $(12.0) | $(283.1) | 96% | | Net Loss per Diluted Share | $(0.22) | $(5.38) | 96% | | Adjusted Net Income (Loss) | $8.6 | $(122.0) | 107% | | Adjusted EBITDA | $28.5 | $(10.1) | 382% | | Adjusted EBITDA Margin | 20% | (4)% | - | - Gross Margin improved significantly, reaching 36% in Q2 2025 compared to (26)% in Q2 2024. Adjusted Gross Margin also expanded to 49% from 26% in the prior-year period[4][5] Year-to-Date (YTD) 2025 Financial Highlights For the first six months of 2025, total revenues were $363.1 million, a 35% decrease from the same period in 2024. However, the company shifted from a significant net loss to a net income of $56.0 million. Adjusted EBITDA grew by 87% to $106.1 million, with the Adjusted EBITDA margin expanding to 29% from 10% year-over-year YTD 2025 vs. YTD 2024 Key Financial Metrics | ($ in millions, except per share) | YTD 2025 | YTD 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $363.1 | $555.1 | (35)% | | Net Income (Loss) | $56.0 | $(274.1) | 120% | | Net Income (Loss) per Diluted Share | $0.99 | $(5.23) | 119% | | Adjusted Net Income (Loss) | $49.3 | $(90.9) | 154% | | Adjusted EBITDA | $106.1 | $56.8 | 87% | | Adjusted EBITDA Margin | 29% | 10% | - | Recent Business Updates The company has recently secured several key contracts and modifications, reinforcing its role in providing medical countermeasures. Notable agreements include a $65.0 million multi-year contract for NARCAN® Nasal Spray with Ontario's Ministry of Health and two contract modifications with the U.S. government totaling over $114 million for BAT® and VIGIV® - Secured a $65.0 million multi-year contract with the Ontario Ministry of Health for NARCAN® Nasal Spray[7] - Obtained two significant U.S. government contract modifications: $62.4 million for BAT® (Botulism Antitoxin) and $51.9 million for VIGIV® (Vaccinia Immune Globulin Intravenous)[7] - Expanded its NARCANDirect® platform to include KLOXXADO® Nasal Spray and was added to the Russell 3000® Index[7] Detailed Financial Performance (Q2 2025) Revenues Total revenues for Q2 2025 were $140.9 million, a 45% decrease from Q2 2024. The decline was primarily driven by a 44% drop in Naloxone product sales and a 79% reduction in 'All other revenues,' which was impacted by a one-time arbitration settlement in the prior year. However, Smallpox MCM product sales grew by 127% Q2 2025 Revenue Breakdown | ($ in millions) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Product sales, net: | | | | | Naloxone | $67.5 | $120.0 | (44)% | | Anthrax MCM | $11.6 | $38.7 | (70)% | | Smallpox MCM | $40.6 | $17.9 | 127% | | Other Products | $6.2 | $6.8 | (9)% | | Total Product sales, net | $125.9 | $183.4 | (31)% | | All other revenues | $15.0 | $71.3 | (79)% | | Total revenues | $140.9 | $254.7 | (45)% | Product Sales, net Net product sales decreased by 31% to $125.9 million. Naloxone sales fell $52.5 million due to lower OTC and Canadian sales. Anthrax MCM revenues dropped $27.1 million due to the timing of government orders. This was partially offset by a $22.7 million increase in Smallpox MCM sales, driven by higher VIGIV® sales - Naloxone revenues decreased by 44% ($52.5 million) due to lower sales of OTC NARCAN® and an unfavorable price/volume mix in Canada[10] - Anthrax MCM revenues declined by 70% ($27.1 million), primarily reflecting the timing of sales related to CYFENDUS®[10] - Smallpox MCM revenues increased by 127% ($22.7 million), mainly due to the timing of higher VIGIV® CNJ-016 sales[11] All Other Revenues All Other Revenues, comprising Services and Contracts/Grants, fell 79% to $15.0 million. The Services segment revenue decreased by 93%, largely because Q2 2024 included a one-time $50.0 million arbitration settlement with Janssen. Contracts and grants revenue increased by 61% due to development work on Ebanga™ - Services revenue decreased by $60.3 million (93%), primarily due to a one-time $50.0 million arbitration settlement with Janssen in Q2 2024 that did not recur[13] - Contracts and grants revenue increased by $4.0 million (61%), driven by development work related to Ebanga™[14] Operating Expenses Total operating expenses saw a substantial 70% year-over-year reduction to $139.3 million. This was driven by a 77% decrease in cost of sales, a 62% drop in R&D expenses due to prior-year program terminations, and a 49% reduction in SG&A from lower professional fees and restructuring benefits. Additionally, there were no impairment charges in Q2 2025, compared to a $27.2 million charge in Q2 2024 Q2 2025 Operating Expenses | ($ in millions) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Cost of product and services sales, net | $66.9 | $296.1 | (77)% | | Research and development ("R&D") | $12.5 | $32.7 | (62)% | | Selling, general and administrative ("SG&A") | $43.7 | $85.9 | (49)% | | Amortization of intangible assets | $16.2 | $16.3 | (1)% | | Impairment of long-lived assets | — | $27.2 | (100)% | | Total operating expenses | $139.3 | $458.2 | (70)% | - R&D expenses decreased by 62% primarily due to write-offs from program terminations in Q2 2024[17] - SG&A expenses decreased by 49% due to lower professional services fees and reduced compensation costs from restructuring initiatives[17] Capital Expenditures Capital expenditures for Q2 2025 were $2.9 million, a 37% decrease from $4.6 million in Q2 2024. This reduction is attributed to lower development activities across the company's facilities. As a percentage of total revenues, capital expenditures remained stable at 2% Q2 2025 Capital Expenditures | ($ in millions) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Capital expenditures | $2.9 | $4.6 | (37)% | | Capital expenditures as a % of total revenues | 2% | 2% | - | Reportable Segment Performance Q2 2025 Segment Results In Q2 2025, the Commercial Products segment experienced a 44% revenue decline and a significant drop in gross margin to 32%. In contrast, the MCM Products segment saw a smaller 8% revenue decrease but improved its gross margin to 44% from 40% year-over-year, driven by a favorable product mix Commercial Products Segment The Commercial Products segment revenue fell 44% to $67.5 million in Q2 2025. Gross margin decreased 62% to $21.7 million, with the gross margin percentage contracting significantly from 48% to 32%. This decline was primarily driven by lower sales of OTC NARCAN® and an unfavorable price and volume mix Q2 2025 Commercial Products Segment Performance | ($ in millions) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $67.5 | $120.0 | (44)% | | Gross margin | $21.7 | $57.1 | (62)% | | Gross margin % | 32% | 48% | - | | Segment adjusted gross margin | $31.3 | $66.6 | (53)% | | Segment adjusted gross margin % | 46% | 56% | - | - The decrease in gross margin and margin percentage was largely due to lower sales of OTC NARCAN® and lower branded NARCAN® sales, combined with an unfavorable price and volume mix[22] MCM Products Segment The MCM Products segment reported a modest 8% revenue decrease to $58.4 million in Q2 2025. Despite the lower revenue, gross margin increased by 1% to $25.8 million, and the gross margin percentage improved to 44% from 40% in the prior year, benefiting from a favorable sales mix of higher-margin products Q2 2025 MCM Products Segment Performance | ($ in millions) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $58.4 | $63.4 | (8)% | | Gross margin | $25.8 | $25.5 | 1% | | Gross margin % | 44% | 40% | - | | Segment adjusted gross margin | $32.2 | $35.1 | (8)% | | Segment adjusted gross margin % | 55% | 55% | - | - The increase in gross margin percentage was primarily due to a favorable sales mix weighted towards higher margin products and a decrease in shutdown costs compared to Q2 2024[24] YTD 2025 Segment Results For the first half of 2025, the Commercial Products segment's revenue dropped 53%, with its gross margin percentage falling to 29%. Conversely, the MCM Products segment's revenue was nearly flat with a 2% decline, but its gross margin grew by 12%, and the margin percentage expanded to 58%, indicating strong underlying profitability Commercial Products Segment For the six months ended June 30, 2025, the Commercial Products segment's revenue decreased by 53% to $112.8 million. Gross margin fell 71% to $33.0 million, and the gross margin percentage declined to 29% from 48% in the prior-year period, reflecting continued pressure from lower NARCAN® sales and unfavorable mix YTD 2025 Commercial Products Segment Performance | ($ in millions) | YTD 2025 | YTD 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $112.8 | $238.5 | (53)% | | Gross margin | $33.0 | $114.1 | (71)% | | Gross margin % | 29% | 48% | - | | Segment adjusted gross margin | $52.1 | $133.0 | (61)% | | Segment adjusted gross margin % | 46% | 56% | - | MCM Products Segment For the first half of 2025, the MCM Products segment's revenue was stable at $215.0 million, a 2% decrease. Gross margin increased by 12% to $125.4 million, and the gross margin percentage improved significantly to 58% from 51% year-over-year, driven by a favorable sales mix and lower shutdown costs YTD 2025 MCM Products Segment Performance | ($ in millions) | YTD 2025 | YTD 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $215.0 | $218.8 | (2)% | | Gross margin | $125.4 | $111.9 | 12% | | Gross margin % | 58% | 51% | - | | Segment adjusted gross margin | $139.6 | $128.7 | 8% | | Segment adjusted gross margin % | 65% | 59% | - | 2025 Financial Forecast Full Year 2025 Forecast Emergent has revised its full-year 2025 forecast, narrowing the total revenue range to $765-$835 million. The company raised its profitability guidance, with net income now expected to be between $40-$65 million and Adjusted EBITDA between $175-$200 million, reflecting increased confidence in its operational performance Updated Full Year 2025 Financial Forecast | METRIC ($ in millions) | Updated Range (as of 08/06/2025) | Previous Range (as of 05/07/2025) | | :--- | :--- | :--- | | Total revenues | $765 - $835 | $750 - $850 | | Net income | $40 - $65 | $20 - $70 | | Adjusted net income | $45 - $70 | $20 - $70 | | Adjusted EBITDA | $175 - $200 | $150 - $200 | | Adjusted gross margin % | 50% - 52% | 48% - 51% | Key Assumptions for 2025 Forecast | Assumption | Updated Value | | :--- | :--- | | Interest expense | $50 million | | R&D | ~7% to 8% of Revenues | | SG&A | ~26% to 27% of Revenues | | Weighted avg. fully diluted share count | ~54 million | | Capex | ~$16 million | | Depreciation & amortization | ~$100 million | Q3 2025 Forecast For the third quarter of 2025, the company forecasts total revenues to be in the range of $180 million to $210 million Q3 2025 Revenue Forecast | METRIC ($ in millions) | Q3 2025 Forecast | | :--- | :--- | | Total revenues | $180 - $210 | Consolidated Financial Statements (Unaudited) Consolidated Balance Sheets As of June 30, 2025, the company's balance sheet shows total assets of $1,417.1 million and total liabilities of $880.9 million. Cash and cash equivalents increased significantly to $267.3 million from $99.5 million at the end of 2024, while total stockholders' equity grew to $536.2 million Balance Sheet Summary (as of June 30, 2025) | ($ in millions) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $267.3 | $99.5 | | Total current assets | $719.5 | $598.7 | | Total assets | $1,417.1 | $1,389.7 | | Liabilities & Equity | | | | Total current liabilities | $127.1 | $162.4 | | Debt | $667.8 | $663.7 | | Total liabilities | $880.9 | $906.9 | | Total stockholders' equity | $536.2 | $482.8 | Consolidated Statements of Operations The statement of operations for Q2 2025 shows a net loss of $12.0 million, a substantial improvement from a $283.1 million loss in Q2 2024. For the six-month period, the company achieved a net income of $56.0 million, compared to a net loss of $274.1 million in the first half of 2024, driven by lower operating expenses Statement of Operations Summary | ($ in millions) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $140.9 | $254.7 | $363.1 | $555.1 | | Total operating expenses | $139.3 | $458.2 | $311.6 | $718.8 | | Income (loss) from operations | $1.6 | $(203.5) | $51.5 | $(163.7) | | Net income (loss) | $(12.0) | $(283.1) | $56.0 | $(274.1) | | Diluted EPS | $(0.22) | $(5.38) | $0.99 | $(5.23) | Consolidated Statements of Cash Flows For the first six months of 2025, the company generated $95.2 million in cash from operating activities, a significant turnaround from the $15.1 million used in the same period of 2024. Net cash from investing activities was $76.7 million, boosted by proceeds from asset sales. This resulted in a net increase in cash of $165.4 million, bringing the total cash, cash equivalents, and restricted cash to $271.0 million Cash Flow Summary (Six Months Ended June 30) | ($ in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $95.2 | $(15.1) | | Net cash provided by (used in) investing activities | $76.7 | $(15.4) | | Net cash used in financing activities | $(6.8) | $(10.2) | | Net change in cash, cash equivalents and restricted cash | $165.4 | $(40.7) | | Cash, cash equivalents and restricted cash, end of period | $271.0 | $71.0 | Reconciliation of Non-GAAP Financial Measures Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) This section reconciles the GAAP net loss of $12.0 million for Q2 2025 to a non-GAAP adjusted net income of $8.6 million. Key adjustments include adding back non-cash amortization charges ($18.7 million) and other items. For the six-month period, GAAP net income of $56.0 million is adjusted to a non-GAAP adjusted net income of $49.3 million Q2 2025 Reconciliation: Net Loss to Adjusted Net Income | ($ in millions) | Q2 2025 | | :--- | :--- | | Net loss (GAAP) | $(12.0) | | Non-cash amortization charges | $18.7 | | Severance and restructuring costs | $0.5 | | Changes in fair value of financial instruments | $2.9 | | Other expense (income), net items | $5.0 | | Tax effect | $(6.5) | | Adjusted net income (Non-GAAP) | $8.6 | Reconciliation of Net Income (Loss) to Adjusted EBITDA The company reconciles its Q2 2025 GAAP net loss of $12.0 million to a non-GAAP Adjusted EBITDA of $28.5 million. Major adjustments include adding back depreciation & amortization ($23.5 million), net interest expense ($13.4 million), and income tax benefit ($4.8 million). This represents a significant improvement from an Adjusted EBITDA of negative $10.1 million in Q2 2024 Q2 2025 Reconciliation: Net Loss to Adjusted EBITDA | ($ in millions) | Q2 2025 | | :--- | :--- | | Net loss (GAAP) | $(12.0) | | Depreciation & amortization | $23.5 | | Income taxes | $(4.8) | | Total interest expense, net | $13.4 | | Other adjustments | $8.4 | | Adjusted EBITDA (Non-GAAP) | $28.5 | Reconciliation of Gross Margin to Adjusted Gross Margin For Q2 2025, the GAAP gross margin of $47.2 million is reconciled to a non-GAAP adjusted gross margin of $63.3 million. The primary adjustment is the add-back of $16.2 million in intangible asset amortization. The resulting adjusted gross margin percentage was 49% Q2 2025 Reconciliation: Gross Margin to Adjusted Gross Margin | ($ in millions) | Q2 2025 | | :--- | :--- | | Gross margin (GAAP) | $47.2 | | Intangible asset amortization | $16.2 | | Restructuring costs | $(0.1) | | Adjusted gross margin (Non-GAAP) | $63.3 | | Adjusted gross margin % | 49% | Reconciliation of Forecasted Figures The report provides reconciliations for its full-year 2025 forecast. The forecasted GAAP net income of $40-$65 million is reconciled to an adjusted net income of $45-$70 million and an adjusted EBITDA of $175-$200 million. Key adjustments include non-cash amortization, depreciation, interest, and taxes - Forecasted Net Income of $40-$65 million is reconciled to Adjusted Net Income of $45-$70 million, with major adjustments for non-cash amortization ($65M) and contingent consideration milestones (-$50M)[63] - Forecasted Net Income of $40-$65 million is reconciled to Adjusted EBITDA of $175-$200 million, with key add-backs for Depreciation & Amortization ($100M) and Total Interest Expense ($55M)[65]