Emergent BioSolutions Inc. (NYSE:EBS) today announced its financial
guidance for 2022 and selected preliminary unaudited financial
results for 2021.
“This past year we celebrated wins across the business and
overcame our share of challenges, which have made our organization
stronger,” said Robert G. Kramer, president and CEO of Emergent
BioSolutions. “We remain focused on our growth goals and dedicated
to our vision of protecting and enhancing the lives of 1 billion
people by 2030. We are confident in our core business and our
growth potential, driven by quality manufacturing, a broad R&D
portfolio, diverse M&A opportunities, and most importantly, our
talented workforce.”
“Our 2021 financial performance reflects steady growth in our
core products combined with strong CDMO services revenues stemming
from our participation in the global COVID-19 response,” said
Richard S. Lindahl, executive vice president and CFO. “In 2022 we
anticipate continued solid contributions from our
Government/Medical Countermeasure and Commercial products
businesses, more normalized performance from our CDMO services
business, and achievement of important milestones in our R&D
portfolio.”
PRELIMINARY 2021 FINANCIAL RESULTS
(Unaudited)
The Company is providing the following preliminary, unaudited
financial results for full year 2021.
(in millions) |
PRELIMINARY 2021 RESULTS(January 9, 2022) |
PRIOR 2021 GUIDANCE(November 4, 2021) |
Total Revenues |
$1,770 - $1,790 |
$1,700 - $1,800 |
Net Income |
$260 - $280 |
$260 - $295 |
Adjusted EBITDA (1) |
$500 - $525 |
$500 - $550 |
Adjusted Net Income (1) |
$315 - $335 |
$315 - $350 |
Revenue MetricsTotal revenues for 2021 are
expected to be in the range of $1,770 million to $1,790 million, an
increase at the midpoint of $225 million or 14% as compared to
2020. This growth primarily reflects increased sales of contract
development and manufacturing (CDMO) services to pharmaceutical and
biotechnology innovators and government/non-government organization
(NGO) customers, and to a lesser extent higher product sales,
primarily from NARCAN® (naloxone HCl) Nasal Spray.
Profitability MetricsThe Company anticipates
Adjusted EBITDA of $500 million to $525 million, a decrease at the
midpoint of $118 million or 19% as compared to 2020. The Company
anticipates Adjusted Net Income of $315 million to $335 million, a
decrease at the midpoint of $99 million or 23% as compared to 2020.
This decrease primarily reflects the impact of the incremental
costs at the Company's Bayview facility. (See "Reconciliation of
Non-GAAP Measures" for a definition of the terms and reconciliation
tables.)
Note:The preliminary 2021 financial
results are unaudited, subject to revision, and anticipated to be
finalized by late February 2022. The Company is in the process of
finalizing its goodwill and long-lived asset impairment assessments
for 2021. Any potential impairment has not been incorporated in
these preliminary 2021 financial results. The Company's final
audited financial results could differ materially from these
selected preliminary results.
2022 FINANCIAL GUIDANCE
The Company is providing the following guidance of selected
financial metrics for full year 2022.
(in millions) |
FULL YEAR 2022(As of January 9,
2022) |
Total Revenues |
$1,400 - $1,500 |
Adjusted EBITDA (1) |
$280 - $340 |
Adjusted Net Income (1) |
$135 - $180 |
Gross Margin % |
47% - 51% |
|
|
Product/Service Level Revenue |
|
• Anthrax Vaccines |
$280 - $300 |
• ACAM2000® |
$190 - $210 |
• Nasal Naloxone Products* |
$240 - $310 |
• CDMO Services |
$430 - $480 |
• Other Products and Contracts and Grants |
$200 - $260 |
* Includes revenues from the Company's branded NARCAN® Nasal
Spray and revenues related to the authorized generic of NARCAN®
Nasal Spray, a product licensed to Sandoz AG and launched in late
2021.
Total RevenuesThe 2022 guidance for total
revenue indicates a re-baseline of the Company's operational
performance and primarily reflects the impact to the CDMO services
business following the conclusion of the Center for Innovation in
Advanced Development and Manufacturing (CIADM) task order with the
Biomedical Advanced Research and Development Authority (BARDA) and
to the commercial products business following the formation of a
generic market for NARCAN® Nasal Spray.
Adjusted EBITDA and Adjusted Net Income (1)The
2022 guidance reflects an anticipated mix of product and services
gross margin, continued investment in research and development, and
scale efficiencies in selling, general & administration
expenses.
2022 Product/Service Level Revenues – Select
Assumptions
- Anthrax vaccines revenues are expected to continue at similar
levels to 2021 under the terms of the Company's existing contract
with BARDA.
- ACAM2000® (Smallpox (Vaccinia) Vaccine, Live) vaccine
deliveries are expected to continue under the terms of the
Company’s existing contract with the U.S. Department of Health and
Human Services (HHS) at unit volume levels consistent with 2021
deliveries.
- Nasal naloxone product revenues reflect the formation of a
generic market and comprise revenues from NARCAN® (naloxone HCl)
Nasal Spray and revenues related to the authorized generic of
NARCAN® Nasal Spray, a product licensed to Sandoz AG and launched
in late 2021.
- CDMO revenues include, among others, continued production of
COVID-19 drug substance for Johnson & Johnson.
Other 2022 Assumptions
- Gross margin is expected to be approximately 47%-51% on a GAAP
basis, influenced by the mix of product and services revenues.
- Pipeline progress is expected across the R&D portfolio with
anticipated advancements of a number of early-stage programs, the
ongoing progress of the CHIKV VLP Phase 3 clinical trial, and
completion of the Biologics License Application filing for AV7909,
the Company's next generation anthrax vaccine candidate.
- Capital expenditures, net of reimbursement, are expected to be
approximately 10% of total revenues at the midpoint, reflecting
ongoing investments in capacity and capability expansions related
to the CDMO business and the Company's R&D programs.
FOOTNOTES(1) See
“Reconciliation of Non-GAAP Measures” for a definition of terms and
applicable reconciliation tables.PRESENTATION
WEBCASTThe Company will provide an update on the current
business and discuss preliminary 2021 unaudited financial results,
the financial guidance for 2022, and long-term goals during its
presentation at the 40th Annual J.P. Morgan Healthcare Conference
on January 10, 2022 at 8:15 AM Eastern time.
A live webcast of the presentation can be accessed through
Emergent’s website. An on-demand replay of the webcast can also be
accessed in the investors section after the presentation has
concluded.
RECONCILIATION OF NON-GAAP MEASURES
(unaudited)This press release contains financial measures
(Adjusted Net Income, Adjusted EBITDA (Earnings Before Interest,
Taxes, Depreciation and Amortization and Adjusted EBITDA Margin))
that are considered “non-GAAP” financial measures under applicable
Securities and Exchange Commission rules and regulations. These
non-GAAP financial measures should be considered supplemental to
and not a substitute for financial information prepared in
accordance with generally accepted accounting principles. The
Company’s definition of these non-GAAP measures may differ from
similarly titled measures used by others. Adjusted net income
adjusts for specified items that can be highly variable or
difficult to predict, or reflect the non-cash impact of charges.
All adjustments are tax effected utilizing the federal statutory
tax rate for the US, except for changes in the fair value of
contingent consideration as the vast majority is non-deductible for
tax purposes. Adjusted EBITDA reflects net income excluding the
impact of depreciation, amortization, interest expense and income
taxes, excluding specified items that can be highly variable and
the non-cash impact of certain accounting adjustments. Adjusted
EBITDA Margin is defined as Adjusted EBITDA divided by total
revenues. The Company views these non-GAAP financial measures as a
means to facilitate management’s financial and operational
decision-making, including evaluation of the Company’s historical
operating results and comparison to competitors’ operating results.
These non-GAAP financial measures reflect an additional way of
viewing aspects of the Company’s operations that, when viewed with
GAAP results and the reconciliations to the corresponding GAAP
financial measure may provide a more complete understanding of
factors and trends affecting the Company’s business.
The determination of the amounts that are excluded from these
non-GAAP financial measures are a matter of management judgment and
depend upon, among other factors, the nature of the underlying
expense or income amounts. Because non-GAAP financial measures
exclude the effect of items that will increase or decrease the
Company’s reported results of operations, management strongly
encourages investors to review the Company’s consolidated financial
statements and publicly filed reports in their entirety.
This press release references changes in Revenues, Adjusted
EBITDA, and Adjusted Net Income from the Company’s full year 2020
performance to the mid-point of the estimated full year 2021
performance. The Company believes these metrics are an important
part of assessing performance on a year over year basis. These
changes are expressed in dollars as well as percentages. A
reconciliation of the calculation of these changes is included
below.
Reconciliation of Net Income to Adjusted Net Income
(Unaudited)
(in millions, except per share value) |
Twelve Months Ended December 31, |
2022 (Guidance) |
2021 (Estimated) |
2020 (Actual) |
Source |
Net income |
$85.0 - $130.0 |
$260.0 - $280.0 |
$305.1 |
|
Adjustments: |
|
|
|
|
+ Non-cash amortization charges |
60.0 |
64.0 |
63.4 |
Intangible Asset Amortization, Other Income |
+ Changes in fair value of contingent consideration |
1.0 |
3.0 |
31.7 |
COGS |
+ Impairment of IPR&D intangible asset |
— |
— |
29.0 |
R&D |
+ Exit and disposal costs |
— |
— |
17.2 |
COGS, SG&A, Other Income |
+ Acquisition-related costs (transaction & integration) |
2.0 |
1.0 |
0.6 |
SG&A |
Tax effect |
(13.0) |
(13.0) |
(23.1) |
|
Total adjustments: |
$50.0 |
$55.0 |
$118.8 |
|
Adjusted net income |
$135.0 - $180.0 |
$315.0 - $335.0 |
$423.9 |
|
Reconciliation of Net Income to Adjusted
EBITDA (Unaudited)
(in millions) |
Twelve Months Ended December 31, |
2022 (Guidance) |
2021 (Estimated) |
2020 (Actual) |
Source |
Net income |
$85.0 - $130.0 |
$260.0 - $280.0 |
$305.1 |
|
Adjustments: |
|
|
|
|
+ Depreciation & amortization |
125.0 |
127.0 |
114.5 |
COGS, SG&A, R&D |
+ Income taxes |
34.0 - 49.0 |
75.0 - 80.0 |
102.1 |
Income Taxes |
+ Total interest expense, net |
33.0 |
34.0 |
30.2 |
Other Expense |
+ Changes in fair value of contingent consideration |
1.0 |
3.0 |
31.7 |
COGS |
+ Impairment of IPR&D intangible asset |
— |
— |
29.0 |
R&D |
+ Exit and disposal costs |
— |
— |
17.2 |
COGS, SG&A, Other Income |
+ Acquisition-related costs (transaction & integration) |
2.0 |
1.0 |
0.6 |
SG&A |
Total adjustments |
$195.0 - $210.0 |
$240.0 - $245.0 |
$325.3 |
|
Adjusted EBITDA |
$280.0 - $340.0 |
$500.0 - $525.0 |
$630.4 |
|
Reconciliation of the 2021 Estimated Midpoint of
Revenues, Adjusted EBITDA and Adjusted Net Income and the Dollar
and Percentage Changes as compared to 2020 Actual
(Unaudited)
(in millions, except percentage increase/decrease at midpoint of
range) |
|
Twelve Months Ended December 31, |
Revenues |
Adjusted EBITDA |
Adjusted Net Income |
2021 (Estimated) Range |
$1,770.0 - $1,790.0 |
$500.0 - $525.0 |
$315.0 - $335.0 |
2021 (Estimated) Midpoint of Range |
$1,780.0 |
$512.5 |
$325.0 |
2020 (Actual) |
$1,555.4 |
$630.4 |
$423.9 |
Increase (decrease) at Midpoint of Range ($) |
$224.6 |
($117.9) |
($98.9) |
Percentage increase (decrease) at Midpoint of Range |
14.4% |
(18.7)% |
(23.3)% |
ABOUT EMERGENT BIOSOLUTIONSAt Emergent, our
mission is to protect and enhance life. We develop, manufacture,
and deliver protections against public health threats through a
pipeline of innovative vaccines and therapeutics. For over 20
years, we’ve been at work defending people from things we hope will
never happen—so that we’re prepared, just in case they ever do. We
do what we do because we see the opportunity to create a better,
more secure world. One where preparedness empowers protection from
the threats we face. And peace of mind prevails. In working
together, we envision protecting or enhancing 1 billion lives by
2030. For more information, visit our website and follow us on
LinkedIn, Twitter, and Instagram.
SAFE HARBOR STATEMENTThis press release
includes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Any statements,
other than statements of historical fact, including, without
limitation, our financial guidance and related projections and
statements regarding our ability to meet such projections in the
anticipated timeframe, if at all, statements regarding our growth
potential, growth goals, vision, M&A opportunities, future
performance and meeting milestones in our R&D portfolio, the
timing of our final 2021 financial results, future revenue levels
and the sources of such revenues, capital expenditures, gross
margin, ACAM2000 vaccine deliveries, the impact of a generic market
on NARCAN Nasal Spray, the timing of advancement of early-stage
programs and completion of a Biologics License Application filing
for AV7909, progress of the CHIKV VLP Phase 3 clinical trial, and
any other statements containing the words “will,” “believes,”
“expects,” “anticipates,” “intends,” “plans,” “targets,”
“forecasts,” “estimates” and similar expressions in conjunction
with, among other things, discussions of the Company’s outlook,
financial performance or financial condition, financial and
operation goals, strategic goals, growth strategy, product sales,
government development or procurement contracts or awards,
government appropriations, manufacturing capabilities, and the
timing of certain regulatory approvals or expenditures are
forward-looking statements. These forward-looking statements are
based on our current intentions, beliefs and expectations regarding
future events. We cannot guarantee that any forward-looking
statement will be accurate.
The reader should realize that if underlying assumptions prove
inaccurate or unknown risks or uncertainties materialize,
actual results could differ materially from our expectations.
Readers are, therefore, cautioned not to place undue reliance on
any forward-looking statement. Any forward-looking statements speak
only as of the date of this press release, and, except as required
by law, we do not undertake to update any forward-looking statement
to reflect new information, events or circumstances. There are a
number of important factors that could cause our actual results to
differ materially from those indicated by such forward-looking
statements, including the availability of U.S. government funding
for procurement of AV7909 and/or BioThrax or ACAM2000 and our other
U.S. government procurement and development contracts, the timing
of completion of our submission of the application for and our
ability to secure licensure of AV7909 from the FDA within the
anticipated timeframe, if at all, our ability to perform under our
contracts with the U.S. government, including the timing of and
specifications relating to deliveries, whether we will realize the
full benefit of our investments in additional manufacturing and
quality control systems, our ability to meet our commitments to
continued quality and manufacturing compliance at our manufacturing
facilities and the potential impact on our ability to continue
production of bulk drug substance for Johnson & Johnson’s
COVID-19 vaccine, our ability to provide CDMO services for the
development and/or manufacture of product candidates of our
customers at required levels and on required timelines, our ability
and the ability of our contractors and suppliers to maintain
compliance with Current Good Manufacturing Practices and other
regulatory obligations, our ability to obtain and maintain
regulatory approvals for our product candidates and the timing of
any such approvals, changes to U.S. government priorities for the
strategic national stockpile, our ability to negotiate additional
U.S. government procurement or follow-on contracts for our public
health threat products that have expired or will be expiring, the
negotiation of further commitments or contracts related to the
collaboration and deployment of capacity toward future commercial
manufacturing under our CDMO contracts, our ability to develop a
safe and effective treatment for COVID-19 and obtain emergency use
authorization or approval of such treatment from the FDA, our
ability to comply with the operating and financial covenants
required by our senior secured credit facilities and our 3.875%
Senior Unsecured Notes due 2028, procurement by U.S. government
entities under regulatory exemptions prior to approval by the FDA
and corresponding procurement by government entities outside of the
United States under regulatory exemptions prior to approval by the
corresponding regulatory authorities in the applicable country, the
full impact of COVID-19 disease on our markets, operations and
employees as well as those of our customers and suppliers, the
impact on our revenues from and duration of declines in sales of
our vaccine products that target travelers due to the reduction of
international travel caused by the COVID-19 pandemic, our ability
to identify and acquire companies, businesses, products or product
candidates that satisfy our selection criteria, the success of our
commercialization, marketing and manufacturing capabilities and
strategy, and the accuracy of our estimates regarding future
revenues, expenses and capital requirements and needs for
additional financing. The foregoing sets forth many, but not all,
of the factors that could cause actual results to differ from our
expectations in any forward-looking statement. The reader should
consider this cautionary statement as well as the risk factors
identified in our periodic reports filed with the Securities and
Exchange Commission when evaluating our forward-looking
statements.
Investor ContactRobert BurrowsVice President, Investor
Relationsburrowsr@ebsi.com(240) 413-1917 |
Media ContactMatt HartwigSenior Director, Media
Relationsmediarelations@ebsi.com |
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