Emergent BioSolutions(EBS) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues for Q4 2024 were $195 million, a decrease compared to the prior year due to lower NARCAN sales and Amtrac sales timing, partially offset by adjusted EBITDA of$21 million, an increase of $18 million year-over-year [27] - Full-year 2024 total revenues were approximately$1.04 billion, roughly flat compared to the prior year, with total adjusted EBITDA of $183 million, a positive swing of$205 million from a negative $22 million in 2023 [29] - Total adjusted gross margin for 2024 was$457 million, an annual improvement of $121 million or 1200 basis points as a percentage of revenue [29] Business Line Data and Key Metrics Changes - Total product sales for 2024 were$909 million, a slight decline from the prior year, with increased smallpox revenue offset by lower NARCAN sales [30] - NARCAN maintained a competitive price and market-leading distribution capabilities, with full-year volume consistent with 2023 levels [31] - The company achieved $130 million in reduced operating expenditures while meeting core product commitments [17] Market Data and Key Metrics Changes - Emergent BioSolutions distributed 11 million two-dose cartons (22 million doses) of NARCAN across the US and Canada in 2024, maintaining a leading market share in the growing naloxone nasal spray market [18] - The company secured$550 million in medical countermeasure (MCM) contract awards in 2024, supporting public health preparedness [19] Company Strategy and Development Direction - The company is executing a multi-year transformational plan aimed at stabilizing and ultimately transforming the business to generate long-term profitable growth [14] - Key goals for 2025 include strong profit follow-through from 2024, rebuilding the product pipeline, optimizing manufacturing operations, and strategic capital deployment for growth opportunities [20] - The company is focused on addressing public health threats and expanding access to NARCAN, with plans to leverage its distribution capabilities for Kloxado nasal spray [53][84] Management's Comments on Operating Environment and Future Outlook - Management expressed a conservative approach to 2025 guidance due to potential shifts in government administration and timing uncertainties [22] - Despite a conservative outlook, management anticipates a strong first quarter of 2025, supported by the momentum from 2024 [100] - The company is optimistic about the potential for growth in its MCM products and the ongoing support for biodefense initiatives [55] Other Important Information - The company completed $117 million in asset sales and received a$50 million payment from Janssen Pharmaceuticals as part of a settlement agreement [33] - Total liquidity at the end of 2024 was $200 million, with net debt reduced by$156 million or 21% since the beginning of 2024 [36] Q&A Session Summary Question: Can you provide specifics on NARCAN guidance regarding volume and price? - Management noted that pricing stabilized in the second half of 2024, but a follow-through impact from prior reductions is expected to affect full-year results [67][68] Question: How do you see adjusted EBITDA evolving in 2026 and beyond? - Management indicated that diversification of the business and additional organic opportunities will contribute to growth in adjusted EBITDA, but specifics for 2026 were not provided [72][76] Question: What is the outlook for Kloxado's market positioning? - Management plans to leverage existing distribution capabilities to facilitate access to Kloxado, particularly in response to increasing fentanyl overdoses [84][86] Question: Is Kloxado already available within the NARCAN direct system? - Management confirmed that logistics are being worked through, with expectations for Kloxado to be available in the next 30 to 60 days [93][94] Question: What are the expectations for near-term contract adjustments for BioDefense products? - Management expects the US government to continue executing contracts and issuing procurement orders throughout 2025, following the pattern established in 2024 [99]