2, 2026 CALL PARTICIPANTS President and Chief Executive Officer - Joseph Papa.Executive Vice President and Chief Financial Officer - Richard Lindahl.Vice President and Treasurer - Frank Vargo.
Total Revenues -- $110.0 million, representing a 52% decrease primarily driven by the timing of medical countermeasure deliveries.Net Loss -- $32.7 million, compared to a net income of $51.2 million in the prior year period.Adjusted EBITDA -- Negative $4.6 million, reflecting the timing of revenue and product mix.Naloxone Revenue -- $43.5 million, declining 42% due to lower over-the-counter NARCAN sales driven by an unfavorable price-volume mix in U.S.
public interest channels.Anthrax MCM Revenue -- $25.1 million, reflecting an increase from $1.4 million in the prior year period driven by higher U.S.
government sales of CYFENDUS.Smallpox MCM Revenue -- $26.7 million, a 68% decrease resulting from the timing of ACAM2000 and CNJ-016 procurement.Other Product Sales -- $7.6 million, an 87% decrease primarily due to the timing of U.S.
government procurement for botulism antitoxin.Adjusted Gross Margin -- 28%, influenced by product mix and competitive dynamics in the commercial segment.Year-to-Date Operating Cash Flow -- $122.4 million, driven by receivable collections and working capital management.Total Liquidity -- $226 million, including $175.7 million in cash and cash equivalents.Net Debt -- $339 million, representing a 55% reduction from year-end 2023 levels.Bond Repurchase -- $75 million, representing the aggregate principal amount of senior unsecured notes repurchased for $68.1 million.Annualized Cost Savings -- $40 million, expected from restructuring actions implemented to improve the cost structure.Restructuring and Severance Costs -- $9.3 million, recorded during the third quarter within operating expenses.Full Year Revenue Guidance -- $600 million to $645 million, revised from the previous range of $645 million to $675 million.Full Year Adjusted EBITDA Guidance -- $110 million to $140 million, reflecting the updated revenue outlook.Full Year Adjusted Gross Margin Guidance -- 45% to 47%, an increase of 3 percentage points from previous guidance.Share Repurchases -- 2 million shares for $18.1 million year to date, with $37.3 million remaining under authorization.CYFENDUS Contract Modification -- $24 million, executed with the U.S.
government with deliveries completed within the quarter.International MCM Revenue -- $72 million year to date, representing 22% of total medical countermeasure sales.Capital Expenditures -- $3.3 million, a slight decrease from $3.4 million in the third quarter of 2025.
Need a quote from a Motley Fool analyst? Email [email protected] Lindahl stated, "the naloxone market is experiencing competitive pricing and volume pressure," which management cited as a factor influencing commercial segment performance.Management warned that the "timing of certain deliveries may fall outside the fourth quarter," resulting in a downward revision of full-year revenue guidance.
Emergent BioSolutions Inc.
(EBS -5.43%) reported third-quarter results that reflected the impact of delivery timing within its medical countermeasure portfolio and shifting dynamics in the naloxone market.
Management indicated that the multiyear transformation plan remains focused on strengthening the balance sheet and aligning the cost structure with current business needs.
The company reported significant reductions in total debt and continues to prioritize operational efficiency through restructuring initiatives.
Executive Vice President and Chief Financial Officer Richard Lindahl will retire on Dec.
31, 2026, with Vice President and Treasurer Frank Vargo assuming the role of Interim CFO on Jan.
1, 2027.The company secured a multiyear pathway for NARCAN in Canada through a standing offer executed by the Canadian government.Management reported that the restart of the Canton manufacturing facility remains on track, with recent milestones celebrated alongside local officials.CEO Joe Papa noted the company is pursuing cross-sector collaborations with AI leaders to develop a preparedness framework against biological threats.Management reported the completion of product sales to 13 different countries in the third quarter, which Papa stated demonstrates the "diversification of our MCM business." INDUSTRY GLOSSARY MCM: Medical Countermeasures, which include vaccines and treatments designed to protect against public health threats.CYFENDUS: An adjuvanted anthrax vaccine adsorbed for post-exposure prophylaxis.ACAM2000: A single-dose vaccine for protection against smallpox and mpox.NARCAN: An over-the-counter naloxone nasal spray used for the emergency reversal of opioid overdoses.KLOXXADO: An 8-milligram naloxone nasal spray offering a higher dose for opioid overdose reversal.BAT: Botulism Antitoxin Heptavalent, used for the treatment of symptomatic botulism.Ebanga: A human monoclonal antibody treatment for Ebola.
Full Conference Call Transcript Operator: Hello, everyone.
Thank you for joining us, and welcome to the Emergent BioSolutions Third Quarter 2026 Earnings Call.
[Operator Instructions] I will now hand the conference over to Frank Vargo, VP and Treasurer.
Frank, please go ahead.
Frank Vargo: Good afternoon, everyone, and thank you for joining us as Emergent discusses its operational and financial results for the third quarter of 2026.
As is customary, today's call is open to all participants, is being recorded and is copyrighted by Emergent BioSolutions.
In addition to today's press release, a slide presentation accompanying this webcast is available to all webcast participants.
Turning to Slide 2.
During today's call, Emergent may make projections and other forward-looking statements related to business, future events, prospects or future performance.
These forward-looking statements are based on our current intentions, beliefs and expectations regarding future events.
Any forward-looking statements speak 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 these forward-looking statements.
During today's call, Emergent may also discuss certain non-GAAP financial measures that include adjustments to GAAP figures to provide additional transparency regarding the company's operating performance.
Please refer to the tables included in today's press release.
Turning to Slide 3.
The agenda for today's call includes remarks from Joe Papa, President and Chief Executive Officer, who will provide an update on the company's transformation plan, business performance and key highlights.
Rich Lindahl, EVP and Chief Financial Officer, will then review the third quarter 2026 financial results and provide an update on full year 2026 guidance.
Joe Papa will conclude with a discussion of the company's key catalysts for growth, followed by a question-and-answer session.
Finally, for the benefit of those who may be listening to the replay of this webcast, this call is held and recorded on November 2, 2026.
Since that time, Emergent may have made announcements related to topics discussed during today's call.
With that, I will now turn the call over to Joe Papa.
Joe? Joseph Papa: Hello, everyone, and thank you for joining us to discuss Emergent's third quarter 2026 financial results.
This is Joe Papa, President and Chief Executive Officer of Emergent.
And I'm joined today by Rich Lindahl, our Chief Financial Officer.
This afternoon, I will share an update on our multiyear transformation plan, the actions we implemented during the quarter to strengthen the business and the progress we are making across our diversified medical countermeasure and naloxone portfolios.
Rich will then review our third quarter financial results and our outlook for the remainder of 2026.
I will close with the growth catalysts and priorities that will guide us as we finish the year.
Then we'll open up the call for Q&A.
Before we begin, though, I want to acknowledge an important milestone.
This November marks 20 years since Emergent's initial public offering in November 2006.
As we reflect on that anniversary, our mission to protect and save lives remains our foundation.
We are focused on building upon that legacy as we advance our transformation and position Emergent for the future.
I'd also like to take a moment to recognize Rich.
After 17 years as a public company CFO, of which approximately 9 years were spent at Emergent, Rich has decided to retire effective December 31, 2026.
Frank Vargo, our Vice President and Treasurer, will assume the role of Interim CFO on January 1, 2027.
To support a seamless transition, Rich will continue to serve as a Senior Executive Adviser through March 31, 2027.
Rich has been a trusted partner to me, our Board and our leadership team.
He has helped guide Emergent through periods of significant change, strengthen our financial discipline and played an important role in the progress we have made to position the company for the future.
He's also built a very strong and highly talented finance and IT organization.
We are fortunate to have an experienced leader as Frank, who knows our business, understands our priorities and will provide continuity and disciplined financial stewardship during this transition.
On behalf of the Board and our colleagues, I want to thank Rich for his leadership, his commitment to Emergent's mission and his dedication to our people.
I'll now begin the presentation on Slide 4.
For more than 25 years, Emergent has prepared for and responded to complex public health threats.
Our mission remains clear: to protect and save lives.
That mission is especially important in a world where biological threats are evolving, geopolitical uncertainty is elevated and advances in technology, including artificial intelligence can create both new opportunities and new risks.
We continue to believe that Emergent is the leader in biodefense preparedness and naloxone serving patients, customers and government partners around the world.
Turning to Slide 6.
Against that backdrop, our multiyear transformation plan continues to guide our business and strategic decisions.
We are focused on improving operating performance, aligning our cost structure, strengthening the balance sheet, advancing growth opportunities where Emergent has differentiated capabilities and maintaining a strong commitment to patient safety, quality and compliance.
Let's move to Slide 8.
After an exceptional better-than-expected second quarter performance of $234 million in revenue, our third quarter results were consistent with expectations with $110 million in revenue within our guidance range.
This brings our year-to-date revenue to $500 million.
Additional highlights from the quarter include our overall profitability and cash generation support investment in growth.
Year-to-date, adjusted EBITDA reached $128 million, a 25% margin with $122 million in operating cash flow.
Cash stood at $176 million with $226 million in liquidity.
Financial discipline remains a priority for us.
We repurchased $75 million in bond principal and continued cost prioritization is occurring.
Our MCM business delivered solid performance.
We executed a $24 million contract modification for CYFENDUS, made deliveries to the U.S.
government by the close of quarter 3.
We also completed a TEMBEXA tablet delivery from a contract modification awarded in March of this year.
Internationally, we completed product sales to more than 13 countries in the third quarter, which demonstrates the diversification of our MCM business and the importance of biodefense preparedness internationally around the world.
Naloxone remains central to community preparedness to maintain our U.S.
market-leading position, while we continue to be competitive in the market to ensure customers have access to both NARCAN Nasal Spray and KLOXXADO Nasal Spray when needed.
Our growth initiatives are progressing.
Importantly, we are taking a disciplined approach when it comes to the evaluation and pursuit of certain business development opportunities.
The Canton manufacturing facility restart milestones remain on track, and we are proud to celebrate this restart with the local Commonwealth officials.
Finally, we are progressing the pan-Ebola therapy program and AI partnerships for clinical development work.
We have a handful of other AI and machine learning platforms that we are engaging for pipeline and growth opportunities.
We plan to advance this critical work while remaining focused on patient safety, quality and compliance.
Turning to Slide 9.
I'd like to highlight the recent reports on the rising threat of AI and bio terrorism, national security and the role Emergent can play in collaboration with other companies on potentially addressing such risk.
In August, we issued a call to cross-collaborate with AI leaders including Anthropic and OpenAI on key areas like threat detection and to develop a preparedness framework.
We expect to continue these efforts and be a potential partner on AI bioterrorism, AI bioterrorism prevention efforts today and into the future.
On Slide 10, let's take a look at our MCM results.
Through the great efforts of our MCM team, we secured $59 million in revenue in the third quarter, which was driven by an executed $24 million CYFENDUS contract modification.
The product was delivered to the U.S.
government within the quarter, while the team also completed the majority of the TEMBEXA tablet delivery from a March 2026 contract modification with the U.S.
To date, we executed all 6 anticipated U.S.
government contract modifications.
On the international side, we supplied a diverse mix of MCM to 13 different countries and closed 19 sales during the quarter.
International sales and product orders contributed $72 million of revenue, representing 22% of year-to-date MCM revenue.
Preparedness very important across the U.S.
Our focus remains increasing on access to overdose reversal medications with over-the-counter NARCAN continuing the standard of care and KLOXXADO 8-milligram offering another important option.
In the U.S., we continue supporting states, law enforcement and harm reduction organizations as well as retail partners and workplaces on increasing access and the availability for vulnerable populations.
We continue seeing strong growth of NARCAN across Canada.
And the government of Canada recently executed standing offer, which creates a multiyear pathway for NARCAN.
To this end, we're complementing access with public awareness through our Ready to Rescue campaign and college educational engagement.
These are important efforts to help increase access, awareness and the availability of NARCAN and KLOXXADO to save lives.
Let me now hand the call over to Rich.
Following Rich's comments, I'll spend some time elaborating on our business outlook and growth catalysts.
Rich? Richard Lindahl: Thank you, Joe.
Good afternoon, everyone, and thank you for joining us today.
Our third quarter results reflect continued execution against our transformation priorities.
Revenue was within our guidance range.
We maintained disciplined control of operating expenses, and we continue to generate strong cash flow while taking decisive actions to align our cost structure with current business realities.
In August, we implemented restructuring actions across the organization to improve efficiency and better align resources with our strategic priorities.
We continue to expect these actions to generate approximately $40 million of annualized savings, the initial impact becoming evident in the fourth quarter of 2026.
We also continued to strengthen the balance sheet.
