Emergent BioSolutions Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 7, 2025

There are 6 speakers on the call.

Operator

Good day, and thank you for standing by. Welcome to the First Quarter twenty twenty five Emergent BioSolutions, Inc. Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session.

Operator

To ask a question during the session, you will need to press 11 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Frank Vargo, Vice President, Assistant Treasurer. Please go ahead.

Speaker 1

Good afternoon, everyone. Thank you for joining today as Emergent discusses their operational and financial results for the first quarter twenty twenty five. As is customary, today's call is open to all participants. The call is being recorded and is copyrighted by Emergent BioSolutions. In addition to today's press release, there are a number of slides accompanying this webcast available to all webcast participants.

Speaker 1

Turning to slide two. During today's call, Emergent may make projections and other forward looking statements related to their business, future events, their prospects, or future performance. These forward looking statements are based on their current intentions, beliefs, and expectations regarding future events. Any forward looking statement speaks only as of the date of this conference call, and except as required by law, Emergent does not undertake to update any forward looking statements to reflect new information, events, or circumstances. Investors should consider this cautionary statement as well as the risk factors identified in Emergent's periodic reports filed with the SEC when evaluating their forward looking statements.

Speaker 1

During today's call, Emergent may also discuss certain non GAAP financial measures that involve adjustments to GAAP figures in order to provide greater transparency regarding Emergent's operating performance. Please refer to the tables found in today's press release. Turning to slide three, the agenda for today's call will include Joe Papa, President and Chief Executive Officer,

Speaker 2

who will comment on our turnaround progress

Speaker 3

and a

Speaker 1

high level summary of Q1 twenty twenty five performance. And Rich Lindahl, EVP and Chief Financial Officer, who will provide further details on the first quarter twenty twenty five financials, as well as provide full year guidance for 2025. Joe Papa will conclude by discussing the 2025 business outlook and key catalysts for growth, followed by q and a. Finally, for the benefit of those who may be listening to the replay of this webcast, this call was held and recorded on 05/07/2025. Since then Emergent may have made announcements related to topics discussed during today's call.

Speaker 1

And with that, I would now like to turn the call over to Joe Papa for opening remarks. Joe?

Speaker 3

Good afternoon and thank you for joining us to review our first quarter twenty twenty five earnings. This is Joe Papa, CEO of Emergent and I'm joined today by Rich Lindahl, our Chief Financial Officer. I will provide brief comments on our progress with our multiyear turnaround plan and the first quarter results. Then I'll hand it over to Rich to review the financials, and then I'll return to provide some additional commentary on our business and our 2025 priorities. And then as Frank mentioned, we'll close with a Q and A.

Speaker 3

Turning to Slide five, we continue to make great progress executing on our multiyear plan to stabilize the company, streamline our operations to improve profitability and transform the company to achieve long term sustainable growth built on Emergent's strength. Throughout the quarter, Emergent colleagues executed on our strategic plan with a laser focus on improving operational efficiency and driving profitable growth. I want to call out three great Q1 achievements, all while keeping the emergent mission statement to protect and save lives at the center of our work. We delivered on our revenue and adjusted EBITDA targets, while

Speaker 2

we further improved our cash and liquidity position. We partnered with the U. S. Government and allied nations to ensure preparedness with medical countermeasures and we delivered lifesaving Marcan nasal spray across The U. S.

Speaker 2

And Canada to patients, customers and communities.

Speaker 3

And third, we completed two strategic business development transactions that aligned with and enhanced Emergent's core capabilities. Let's turn to Slide six for a more detailed review of the great work of the Emergent team in the first quarter. Based on a great team effort, we are reaffirming revenue and adjusted EBITDA guidance for 2025. We improved our cash position in the quarter. At the end of the first quarter, we have cash of $149,000,000 on the balance sheet, which includes approximately $36,500,000 from the sale of the Bayview site in Baltimore.

Speaker 3

Additionally, we have $50,000,000 from Bavaria Nordic milestone payments, 30,000,000 was received in the first quarter and $20,000,000 addition has already been received in the second quarter. We also expect to benefit from strong receivable cash collections in the second quarter. Our net leverage is now 2.8x adjusted EBITDA, which is a remarkable achievement since it was around 5.7x back in the first quarter of twenty twenty four. With our improved cash position and $100,000,000 of the fully undrawn revolver, we have a total of $250,000,000 in liquidity available to us for strategic growth initiatives both internally and for external business development. We have focused Emergent's business today to concentrate on our core strength of medical countermeasures and opioid overdose reversal treatments.

Speaker 3

We are committed to combat the opioid overdose epidemic and help save lives. We continue to meet the demand for Naloxone with NARCAN nasal spray, which is by far the category leader. In the first quarter, we managed through two one time events with NARCAN, a third party distributor selling short dated generic naloxone inventory at a reduced price and states proceeded with caution as it relates to federal funding process for naloxone. We now have greater clarity and are encouraged by the NARCAN revenue progress we are seeing in the first six weeks of the second quarter. On MCMs, we had a very favorable quarter with a significant amount of international revenue while maintaining our strong relationship with U.

Speaker 3

S. And allied government partners. Through extensive meetings with U. S. Government stakeholders, we have a better transparency on expectations for 2025 deliveries, which supports our 2025 guidance ranges.

Speaker 3

From an R and D perspective, our new Chief Medical Officer, Simon Lowery, has created and is implementing a strategy to evaluate several of our current product line extensions. Two examples of that are a better understanding of the utility of Tambexxa in MPOXX treatment through the Africa CDC MOSA trial and our efforts to facilitate the availability of ACAM2000 for the ongoing MPOXX epidemic in Africa with the World Health Organization. Let's shift to slide seven to look at our North America centric manufacturing model in more detail. Two key points related to our emergent model. All of our MCM products are manufactured in The U.

Speaker 3

S. Or Canada and are USMCA compliant, which means they are currently not subject to tariff between U. S, Canada and Mexico. We are actively managing our future inventory orders to mitigate any material tariff impact associated with components sourced from the European Union. Based on focus and the existing information, we believe our business is relatively shield from tariff impacts.

Speaker 3

Now I'd like to turn the call over to Rich to walk through the Q1 financial results.

Speaker 2

Thank you, Joe, and good afternoon, everyone. We appreciate you joining the call. As Joe has just highlighted, we are off to a strong start in 2025 as we continue to make progress on our multiyear transformation plan. We delivered first quarter revenue in line with our guidance, enhanced our cash position and reduced our net leverage ratio. Net income in the first quarter was $68,000,000 a 656% increase versus the first quarter of twenty twenty four.

Speaker 2

In addition, we saw significant margin expansion, both on the gross margin and adjusted EBITDA margin lines versus the prior year. These metrics support our turnaround objective of focusing on highly profitable components of our business, while divesting non core, low profit assets. Both our medical countermeasure and opioid overdose reversal products deliver sustainable revenue over time and garner bipartisan support at The U. S. Government level.

Speaker 2

During the quarter, our portfolio of unique medical countermeasure and opioid overdose reversal products also continued to provide lifesaving capabilities to people around the world. In the first quarter, we had 91,000,000 of sales outside of The United States for our MCM products. As part of our multiyear transformation plan, we expect to remain focused on international expansion efforts and strengthening health preparedness at home and abroad. With that, let's move to the first quarter financials. As highlighted on Slide nine, our key financial metrics are total revenues of $222,000,000 down versus the prior year as lower NARCAN and VAC sales as well as the divestiture of RSDL and Camden were partially offset by higher international smallpox sales.

Speaker 2

Adjusted EBITDA of $78,000,000 an increase of $11,000,000 versus the prior year. Adjusted EBITDA margin of 35%, an increase of 1,300 basis points versus the prior year. Adjusted gross margin of 58% improved 700 basis points year over year as a result of product mix as well as the improved cost structure stemming from our previously announced restructuring efforts. Note that beginning with this report, we are no longer reporting services as a separate segment given the divestitures of our Camden and Bayview sites and deemphasis of our CDMO business as a driver of growth. You will still find breakouts of our Commercial Products segment and MCM Products segment results in our press release.

Speaker 2

And finally, operating expenses were down $32,000,000 or 32% versus the prior year across R and D and SG and A. Transitioning to Slide 10, our first quarter revenue highlights were total product sales of $2.00 $2,000,000 a decline versus the prior year as increased smallpox revenue from both the U. S. Government and international customers was offset by lower sales. All other revenue comprised of our services and contracts and grants revenue was $20,000,000 The year over year decline is due to the sale of our Camden CDMO facility, which is partially offset by a higher level of CNG revenue year over year from the continued U.

Speaker 2

S. Government funding of the Ibanga program for treatment of Ebola. And finally, a few notes on NARCAN. We continue to remain competitive on price and focus on our competitive advantages, including our brand recognition, market leading distribution capabilities and customer service. We attribute the year over year decline in NARCAN revenue to several factors.

Speaker 2

First, the full impact of reduced pricing in the public interest space that began to take effect in late 2Q 'twenty four. Second, volume was impacted by what we believe was a onetime sale of short dated inventory to the market by a third party distributor of generic product. And finally, the federal administration transition caused some purchasing delays as states sought to access funding programs. Having said that, as we exited the first quarter and thus far in the second quarter, we are seeing improved trends in unit volumes, which gives us confidence that a good portion of the first quarter decline was temporary in nature. On Slide 11, you can see the continued improvements in our financial metrics.

Speaker 2

As of the first quarter of twenty twenty five, we had total liquidity of $249,000,000 comprised of $149,000,000 of cash and $100,000,000 of undrawn revolver capacity. Both liquidity and cash were significantly improved year over year and versus year end 2024. Our improved cash position in Q1 twenty twenty five was aided by the receipt of the $30,000,000 Bavarian Nordic milestone payment as well as the sale of our Bayview manufacturing site for $36,500,000 We also collected the $20,000,000 Bavarian Nordic milestone and a significant amount of our accounts receivable so far in Q2, further improving our overall cash position. Our net debt in Q1 twenty twenty five was $551,000,000 a two eighty million dollars reduction or 34% since Q1 twenty twenty four. And this outcome, coupled with our strong performance in the business, allowed us to cut our net leverage in half as we ended the first quarter at 2.8 times adjusted EBITDA.

Speaker 2

We believe that a net leverage ratio of two to three times adjusted EBITDA represents an appropriate capital structure target for the business, providing the ability to actively invest in strategic growth opportunities and ultimately drive further value to our shareholders. Please turn to Slide 12, and I'll touch on our key capital allocation priorities in support of our multiyear transformation plan. First, we seek to maintain sufficient cash and liquidity to operate the business and manage the variability of working capital cash flows driven by the timing of MCM order deliveries. Next, a top priority is to deploy capital in an effective manner to drive growth. This

Speaker 4

is

Speaker 2

a critical component of our multiyear plan, and as Joe has highlighted, we'll focus on both organic and inorganic opportunities to drive near term and long term growth. Finally, we'll also consider debt repayments to strengthen our balance sheet and share repurchases to create incremental shareholder value. On 03/31/2025, we announced a $50,000,000 share repurchase program, will expire in March of twenty twenty six. Accordingly, there were no purchases made in the first quarter, and we will provide further updates with our earnings releases going forward. Transitioning to Slide 13, we are reaffirming our full year 2025 guidance as follows: total revenues of $750,000,000 to $850,000,000 adjusted EBITDA of $150,000,000 to $200,000,000 reflecting improved year over year profit margins driven by lower costs in the business.

Speaker 2

Adjusted gross margin of 48% to 51%, roughly a 500 basis point expansion at the midpoint versus 2024 results, aided by our leaner and more focused manufacturing footprint. Moving to segment level revenue guidance, MCM product sales of four thirty five million dollars to $485,000,000 across U. S. Government and international orders and commercial products, including KLXAuto, in the range of $265,000,000 to $315,000,000 As part of this guidance, we expect NARCAN to continue to maintain a leading market share of the growing total addressable naloxone nasal spray market. And for the second quarter of twenty twenty five, we are forecasting a total revenue range of 95,000,000 to $120,000,000 as we anticipate that our full year revenue will be weighted more to the second half of twenty twenty five than to the first half.

Speaker 2

Accordingly, given this implied second quarter sequential revenue decline, you should also expect second quarter profitability to decline significantly versus the first quarter and then improve meaningfully beginning in the third quarter. In closing, on Slide 14, we continue to progress on the turnaround phase of our multiyear plan with strong execution through the first quarter of twenty twenty five. We are anticipating strong profit follow through from 2024, even with lower top line revenue. Our guidance therefore implies a very strong margin improvement story. And when combined with our expectations for continued positive operating cash flow, Bavarian Nordic milestone payments and the baby manufacturing site sale, our performance positions us to capitalize on growth opportunities for the business and value creation for our shareholders.

Speaker 2

Finally, I would also like to mention that we have published our annual ESG report for 2024, which you can find under the Impact tab of our website, emergentbiosolutions.com. As a company, we continue to prioritize quality and sustainability across multiple environmental, social and governance pillars. We hope that you will review our ESG report and take note of our progress. I'll now turn the call back over to Joe to discuss our business outlook and growth catalysts. Joe?

Speaker 3

Thank you, Rich. Turning to slide 16, I'd like to provide a more detailed outlook on our business and the growth catalyst. Following rates of opioid overdose deaths, as reported by the CDC, is welcome news. At Emergent, we believe expanded OTC access to NARCAN is an important factor in the reduced opioid overdose deaths. We are making progress.

Speaker 3

However, there still is a significant public health threat, and we want to make sure we continue to work with stakeholders to bring the opioid overdose death rates in The US and Canada to zero. We believe the naloxone market will continue to experience mid single digit unit volume growth in the near future and the value of NARCAN as a trusted category leader will provide us with a differentiated and competitive pricing position. Three examples demonstrate NARCAN's leadership value. Number one, we continue to add new public interest customers and regain and retain important state customers, further demonstrating our ability to address competition. Second, we are currently in discussions with several major large employers, including one major e commerce giant, to supply thousands of boxes of NARCAN nasal spray to their locations.

Speaker 3

Third, our NARCAN direct distribution platform and strong relationships with leading distributors represents significant growth potential for the product and an opportunity to help save more lives. The wall units pictured here on the page show our team has created and several employers have installed them in offices across The U. S. And Canada. These can be purchased through our distributor partners so anyone can reach Renarcta to help respond in a time of crisis.

Speaker 3

We believe every business should have naloxone available in the same manner as defibrillators. Growth in the business to business and retail channels will make NARCAN more widely available, however, the additional funding from the opioid litigation settlement is a large and impactful way to ensure NARCAN gets into the hands of those most in need. Also, just last week we announced a three year agreement valued at approximately $65,000,000 with the province of Ontario to supply our life saving NARCAN treatment. In March, Health Canada approved our recently licensed product, Cloxidyl Needle Spray. This expands Emergent's ability to distribute multiple lifesaving opioid overdose emergency treatments to patients, customers and communities.

Speaker 3

Moving to slide 17, we have good visibility into the delivery timing of our MCM product in 2025. During the first quarter of twenty twenty five, our MCM portfolio continued to deliver strong domestic and international sales. As expected during the first quarter, we recently completed our first shipment of TENVEXA to the Strategic National Stockpile under our previously announced contract modifications as well as our first shipment of Tambexa outside of The U. S. Between these shipments, the ongoing MPOXX trial led by the African CDC, and our continued R and D work, we believe that Tambexa represents a significant opportunity for potential organic growth.

Speaker 3

In addition, we successfully delivered multiple international orders for five MCM products across smallpox and anthrax. Notably, as we consider our footprint in key areas where public health threats are on the rise, such as in Africa with the ongoing MPOXX outbreak, we continue to engage with the World Health Organization on an emergency use listing for ATM 2,000 vaccine as well as key African country leaders to offer our assistance. Moving to slide 18, we've already begun deploying strategic capital for opportunistic growth through business development. First, our investment agreement to support the research infrastructure development and expansion of Swiss Rockets, the parent company of our RocketVax venture. Additionally, as part of this endeavor, we intend to form a strategic partnership where Emergent will lead U.

Speaker 3

S. Manufacturing and commercialization of four of Rockvax's pipeline candidates. Second, our acquisition of exclusive commercial rights to Cloxidone nasal spray eight milligrams is an added tool to fight the opioid crisis. We are also continuously unlocking opportunities to create line extensions, kits and other solutions. Third, with our growth in the MCM and the naloxone market, we have signed or are in the process of negotiating contracts related to our MCM products with allies in the European Union, Middle East, Africa and Asia Pacific.

Speaker 3

Our expectation is significant cash generation through 2025, which is expected to fund future growth investments. On slide 19, we further illustrate the potential reach and validation of our plans for geographic expansion in an increasingly dangerous world. In closing, on Slide 20, our Emergent team has delivered strong financial performance in the first quarter and we reaffirm our full year revenue guidance of $750,000,000 to $850,000,000 and our adjusted EBITDA of $150,000,000 to $200,000,000 We remain on track to execute our multiyear turnaround plan, while we strive for the highest standards of quality, ethics and compliance across the entire emerging enterprise. And with that, I look forward to taking your questions. Operator, please open up the line for questions.

Operator

Our first question comes from Jessica Fye with JPMorgan. Your line is open.

Speaker 5

Hey guys, good afternoon. Thanks for taking our questions. I kind of have a handful. First, on tariffs, I think you mentioned that you're not sort of subject to the existing tariffs. Can you just talk a little bit about your manufacturing footprint, including sources of API?

Speaker 5

Does any product cross a border to pass into The U. S. For sale? Second, can you elaborate on what drove the gross margin improvement this quarter and how to think about that gross margin trajectory from this level that we saw in the first quarter? Third, when you provided the 1Q forecasted revenue range, I think it was 200,000,000 to $240,000,000 Were some of those NARCAN dynamics in motion, including that competitor selling short dated product, like was that already contemplated?

Speaker 5

And then lastly, I think in the past you had expected the naloxone market to grow mid to high single digits year over year. And I think on the call you said mid single digits. If I heard you correctly, what changed? And, can you talk about how you see the various market segments contributing to that mid single digit growth? Thank you.

Speaker 3

Sure. Had quite a few, so we'll try to make sure we get them all. But, let me start with the tariffs and then I think Rich you can take the gross margin and then I'll come back on the NARCAN and Naloxone mid single digit growth. So let me start with the tariffs. The majority of our product is manufactured and or sourced, the active ingredients, by ourselves here in The United States, so as I said, we have very limited, tariff exposure.

Speaker 3

It is true, we do obtain, at this time, one of the devices for our NARCAN comes from, Europe. However, we are working to get that straightened out

Speaker 2

and get more of it

Speaker 3

from The US going forward, but that's something we are working on. So there is some exposure, but far and away, the majority of our products are manufactured in The US, through our US manufacturing network or in Canada, but in both cases they are what we refer to as USMCA compliant. So at the current time, we don't expect a significant impact on the tariffs from our product portfolio. As I said, there is a device that NARCAN comes from overseas, but we're in good shape relative to the inventory we have on hand of that device today. So that's probably the best way I can answer the first question on tariffs in terms of importantly, we've been out front of this and making sure that, especially because of medical countermeasures, much of our infrastructure was U.

Speaker 3

S.-based prior to this, based on just important biodefense type reasons. On the segment, risk to gross margin, do want to take Sure.

Speaker 2

Yes, so there's a couple of factors at play here, Jess. First is that, as you know, as you're well aware, we've taken a lot of cost out of the business over the last year and a half to two years. And by selling Camden, by selling Bayview, we have a lot less unutilized capacity. And so that certainly has helped the gross margin side in and of itself. Secondly, the product mix in the first quarter was favorable on that front.

Speaker 2

In particular, the large amount of international orders, which tend to be higher margin, was also a factor that contributed to that improvement.

Speaker 3

On the third question, my recollection was do we contemplate some of these impacts on NARCAN, as we were doing the first quarter? The answer is yes, We we clearly knew some of this. As to exactly the magnitude of things like that, I think obviously we got smarter, as time went on in the quarter relative to, the magnitude of what the third party distributor had on hand from a short dated product. We didn't know the exact extent of it. We obviously know much more today about what it was, etcetera.

Speaker 3

So had we contemplated some of it? Yes. But certainly we we got more clarity on the and transparency on the the magnitude as time went on. And then relative to the actual question, the second part of it in terms of the federal funding, we clearly knew that there was going to be federal funding for NARCAN in the continuing resolution CR of the government, so, we certainly, know some pieces of information, but time brings you greater certainty and understanding as time went on. So we contemplated some of it, but clearly we got smarter as time went on.

Speaker 3

And then on the fourth question, I believe it was the naloxone market in terms of unit volume, and we always felt pretty, you know, similar that it was going be somewhere in that, you know, mid single digit type of growth rate. You know, at some point maybe a slightly more, slightly less, but always contemplated somewhere in around that mid single digit growth rate for our belief on the overall NARCAN and Naloxone total market growth. So we think the total pie will continue to grow, by that mid single digit type growth rate.

Speaker 5

And then within the market, can you talk about the growth for the different segments?

Speaker 3

Sure. Thanks for reminding me that part. Far and away, the largest segment is the public interest. However, as a growth driver, we do expect the business to business activities as exemplified by some of the things I mentioned in the call, you know, what we're doing with the NARCAN wall units and making sure we have those available and putting together programs like that, working with a very large e commerce partner and making Narcan available at their facilities, and also being able to sell these Narcan wall units to other businesses, across the board. All those we think are going to drive and make the business to business segment a faster growing segment, but as far and away the majority of the units still will go through public interest.

Speaker 2

Yeah. I might just add in, I think there's opportunity in Canada, and you saw that we announced that large contract, just last week with the province of Ontario, so I think that's an example of ways we can grow in Canada. And then there are also some provinces that have much less procurement of NARCAN today, and so we're actively looking at opportunities there as well to expand

Speaker 3

as I mentioned, we do have that $65,000,000 of incremental three year contracts, so that's going to certainly help us as Rich pointed out. Thanks for bringing that forward, Rich. Okay. Operator, time for another question, please.

Operator

Our next question comes from Yi Chen from H. C. Wainwright. Your line is open.

Speaker 4

Thank you for taking my question. This is Yi for Ram Selvaraju at H. C. Wainwright. I have a couple of questions.

Speaker 4

The first one is, are the international customer referenced in the March 2025 press release pertaining to the $27,000,000 in medical countermeasure incremental sales likely to place more orders before the end of this year? And if so, how much additional revenue could potentially accrue from these orders? And how might the $27,000,000 come in? Will the sales be primarily recognized in the first half or second half of twenty twenty five? And I have two follow-up.

Speaker 4

Thank you.

Speaker 3

Sure. So great question. Maybe I'm just going to back up a little bit before I answer the question. I'd say I'd remind you that a year ago, as we were thinking about the future of our business, we certainly focused on the international growth opportunity as an opportunity for us to continue to diversify our business. Fortunately, we're seeing exactly that happen.

Speaker 3

All told, in the first quarter, we achieved about $91,000,000 of international revenue. If you do the math on that, that's about 40% of our overall revenue came from outside of The U. S. And about 60% of our medical countermeasures revenue coming from outside The US. So we do think that diversification is important.

Speaker 3

Second point I'd make certainly is that, as I mentioned in the call, we view this as an increasingly dangerous world out there, and I think many of the countries are looking at their needs for medical countermeasures and trying to make sure that they are prepared, in the event something would happen. I do think that, you know, some of the outbreaks of the MPOCs that we're seeing in Africa just illustrate the point that you need to be prepared for any eventuality, and I think that's why we're seeing greater international, revenue for us, and we're certainly going to do more to try to work on that. We have a specific team that's been identified. They've been working on this probably for the past, like, six months, thinking about what can we do to continue to expand. I'm probably not going to make any specific comments about the exact magnitude of the 27,000,000 plus opportunity, but do I think there's more opportunity beyond the $27,000,000 The answer is absolutely yes.

Speaker 4

Thank you. And my second question is how will the 65,000,000 total revenue from the Ontario Ministry of Health be allocated over the next three years?

Speaker 2

Yes. So it's a three year contract. We'll see exactly how it comes in. But I think it's reasonable to assume that it could come in fairly evenly over those three years. So for modeling purposes, I'd be comfortable with that.

Speaker 4

Okay. And is Emergent likely to benefit at all from pharmaceutical and biotechnology manufacturing onshoring over the next course of coming quarters? Or does Emergent plan to sell or divest any of your manufacturing infrastructure?

Speaker 3

Sure. Great question. Probably the way I'd answer is that emergent today, we are well positioned with our manufacturing network, and it is, as I mentioned previously, predominantly US manufacturing, or or Canadian, but that is USMCA compliant. Do we have additional capacity for both drug substance and failed finish for product? The answer that is absolutely yes.

Speaker 3

So we do have capacity. While I have previously said the bioservices or contract manufacturing is not a focus, we certainly will look at that opportunistically. If companies need help as they're transitioning back to The U. S, we certainly will look to help them, especially because, as I mentioned, we do have some capacity in those sites for both drug substance or API and also for fillfinish. So we'll look to try to help.

Speaker 3

Relative to selling any additional facilities, I think at this point we like our footprint, but as a public company, if somebody puts a good price on the table for one of our facilities, of course we'd consider it. But we feel very good about what we've done so far. I think all told, we've divested sites in products that represent approximately $150,000,000 of value, so that was a big important part of reducing our total debt and importantly putting us in a stronger position from a cash point of view, today. We don't feel the need to make any more divestments, but we certainly will get them opportunistically if we can help others.

Speaker 4

Thank you. If I may squeeze in a last one, last question. Has the company been actively repurchasing stock lately? Is there any chance that repurchase program being enlarged? Thank you.

Speaker 2

Yes. We will comment on progress against the repurchase program each quarter. And we'll just have to leave it at that at this point.

Speaker 4

All right. Thank you very much.

Speaker 3

Thank We are very pleased the only thing I'd add is we're very pleased with the cash generation we have and we'll have to make decisions as to how best to utilize that cash, for the multiple objectives that Rich talked about in presentation. Operator, any other questions?

Operator

I'm showing no further questions at this time. I would now like to turn it back to Joe Papa for closing remarks.

Speaker 3

Well thank you everyone for joining us. With that ladies and gentlemen, we now conclude the call. Thank you for your participation. Please note there will be an archived version of today's webcast as well as a PDF version of the slides used during today's call will be available later today and accessible through the Investors landing page on the company website. Thank you again for joining us.

Speaker 3

We look forward to speaking with you all in the future. Goodbye, everyone.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.

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Key Takeaways

  • Emergent reaffirmed its 2025 guidance with full-year revenues of $750–$850 million and adjusted EBITDA of $150–$200 million, underpinned by a first-quarter margin expansion of 1,300 basis points versus last year.
  • The company’s cash and liquidity position improved markedly—ending Q1 with $149 million in cash (including Bayview site proceeds and Bavarian Nordic milestones), $100 million of undrawn revolver capacity, and net leverage reduced to 2.8x EBITDA from 5.7x a year ago.
  • NARCAN nasal spray maintained market leadership despite a one-off distributor discounting event and state funding delays, with mid-single-digit naloxone market volume growth expected, and new B2B/OTC expansion and large employer partnerships underway.
  • International medical countermeasure (MCM) sales reached $91 million in Q1 (about 40% of total revenue), bolstered by smallpox and anthrax orders, ongoing MPOX trials (Tambexa), and WHO/CDC collaborations for ACAM2000 in Africa.
  • Strategic business development included exclusive rights to Cloxidone nasal spray, an investment in RocketVax for U.S. manufacturing of four pipeline candidates, and a three-year, $65 million Ontario NARCAN agreement, with capital deployment focused on organic and inorganic growth.
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Earnings Conference Call
Emergent BioSolutions Q1 2025
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