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Emergent (EBS) Earnings Miss in Q2, Revenues Beat Estimates

Zacks Equity Research

Emergent BioSolutions Inc. EBS reported second-quarter 2019 earnings of 12 cents per share, which missed the Zacks Consensus Estimate of 16 cents and declined the year-ago quarter’s figure of $1.07.

However, revenues in the reported quarter increased 10.4% from the prior-year period to $243.2 million, primarily backed by high product sales owing to the company’s recent acquisitions and higher contracts plus grants revenues. The top line also comprehensively beat the Zacks Consensus Estimate of $213 million.

Shares of Emergent have declined 25.5% so far this year versus the industry’s rise of 0.2%.

Quarter in Detail

Total product sales inched up 1.9% to $183.5 million from the year-earlier quarter’s tally. This revenue uptick was mainly on the back of contribution from Narcan nasal spray, which was acquired from Adapt Pharma last October, and other product sales. Newly acquired product Narcan (naloxone HCl) nasal spray added $73 million to product sales.

BioThrax’s sales plunged 64% year over year in the reported quarter to $28 million. Small pox vaccine ACAM2000, acquired from Sanofi SNY in the fourth quarter of 2017, reported sales of $6.5 million, plummeting 88% year over year.

Apart from these vaccines, Emergent markets anthrax monoclonal antibody raxibacumab, also bought during the fourth quarter of 2017 from GlaxoSmithkline GSK.

Contracts, grants and collaboration revenues skyrocketed 148.5% year over year to $41 million, primarily owing to greater R&D activities associated with certain development funding programs, most notably, the anthrax vaccine AV7909.

Contract manufacturing revenues decreased 20.8% to $18.7 million from the year-ago tally. This downside was primarily due to the contracted service work that took place in second-quarter 2018 but did not recur in the same period this year.

The company recorded adjusted EBITDA of $26.2 million in the reported quarter compared with $80.4 million in 2018, reflecting a drop of 67.4%.

2019 Outlook

Emergent retained its previously issued guidance for earnings and sales. It expects revenues in the range of $1.06-$1.14 billion in 2019. The Zacks Consensus Estimate for the metric is pegged at $1.07 billion.

The company anticipates adjusted net income in the band of $150-$180 million and adjusted EBITDA in the bracket of $280-$310 million.

In the third quarter of 2019, the company anticipates total revenues within $245-$275 million. The Zacks Consensus Estimate stands at $292.9 million for the same.

Other Updates

In January, Emergent’s board of directors appointed Robert G. Kramer, Sr. as the company’s new president and CEO. He will succeed the current CEO Daniel J. Abdun-Nabi, who decided to retire and also quit as a board member effective Apr 1, 2019.

During the quarter, the company initiated a phase III study to evaluate the lot consistency, immunogenicity and safety of AV7909 with funding from BARDA, pursuant to a development and procurement contract signed in September 2016. The company is preparing to initiate the first delivery of AV7909 doses into the Strategic National Stockpile (SNS) in third-quarter 2019.

In June, Emergent received a contract award of approximately $535 million, spread over a 10-year period for the continued delivery of Vaccinia Immune Globulin Intravenous (VIGIV) product to the United States and the Strategic National Stockpile (SNS) for raising awareness related to smallpox vaccination.

Moreover, in May, Emergent’s oral typhoid vaccine Vivotif received the marketing authorization across five additional countries in the EU including France, Portugal, Poland, Czech Republic and Slovakia.

Earlier in April, Emergent announced positive interim results from the mid-stage study on its chikungunya vaccine candidate CHIKV-VLP. The company is evaluating the safety and immunogenicity of CHIKV-VLP in a phase II program across a series of dosing regimens.

Emergent Biosolutions Inc. Price, Consensus and EPS Surprise

Emergent Biosolutions Inc. Price, Consensus and EPS Surprise

Emergent Biosolutions Inc. price-consensus-eps-surprise-chart | Emergent Biosolutions Inc. Quote

Zacks Rank & Key Pick

Emergent currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the healthcare sector is Acorda Therapeutics, Inc. ACOR, which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Acorda’s loss per share estimates have been narrowed 2.2% for 2019 and 1.3% for 2020 over the past 60 days.

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