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Emergent (EBS) Q4 Earnings, Revenues Surpass Estimates

Zacks Equity Research

Emergent BioSolutions Inc.’s EBS fourth-quarter 2018 earnings of 75 cents per share beat the Zacks Consensus Estimate of 61 cents and also came in higher than the year-ago bottom-line figure of 74 cents.

Revenues in the reported quarter surged 39.7% from the year-ago period’s level to $270.7 million, primarily backed by high product sales owing to the company’s recent acquisitions. The top line also surpassed the Zacks Consensus Estimate of $268 million.

Shares of Emergent have rallied 32.3% in the past year against the industry’s decline of 17.7%.

Quarter in Detail

Total product sales rose 34.4% to $217.4 million from the year-earlier quarter’s tally. The revenue uptick was mainly on the back of contribution from Narcan nasal spray, Vivotif and Vaxchora vaccine, all of which was acquired last October.

BioThrax’s sales increased 25.5% year over year in the reported quarter to $134.3 million. Other product sales declined to $41.4 million from $54.7 million in the comparable quarter last year. Newly acquired product Narcan (naloxone HCl) nasal spray added $41.7 million to product sales.

Other product sales are driven almost entirely by the incremental contribution of ACAM2000 and raxibacumab, which did not generate sales in the prior-year period. Notably, raxibacumab and ACAM2000 were acquired by Emergent from GlaxoSmithkline GSK and Sanofi SNY, respectively, during the fourth quarter of 2017.

Contracts, grants and collaboration revenues soared 66% year over year to $26.4 million, primarily owing to greater R&D activities, associated with certain development funding programs, most notably, NuThrax (anthrax vaccine).

Contract manufacturing revenues jumped 66% to $26.9 million compared with the year-ago tally. This upside was primarily attributed to the completion of certain contract manufacturing services at the company’s Camden site.

Research and development (R&D) expenses were $52 million, up 82% from the level in the comparable period a year ago. This downside was due to higher costs associated with contract development services pertaining to NuThrax (anthrax vaccine).

Selling, general and administrative (SG&A) expenses were $81 million, up 94% from the level in the comparable quarter last year. This downside was thanks to higher cost incurred from the acquisition of PaxVax and Adapt Pharma.

Emergent recorded total revenues of $782.4 million in 2018, up 39% year over year. Total product sales were $606.5 million, up 44% year over year. For 2018, the company reported adjusted net income of $2.33 per share.

2019 Outlook

Emergent expects revenues in the range of $1.06-$1.14 billion in 2019. The company anticipates adjusted net income in the band of $150-$180 million and adjusted EBITDA in the range of $280-$310 million.

In the first quarter of 2019, the company anticipates total revenues within $185-$205 million.

The above forecasts for both the first quarter and full-year 2019 come in line with the previously issued preliminary guidance, provided by Emergent last month.

Other Updates

Last month, Emergent’s board of directors appointed Robert G. Kramer, Sr. as the company’s new president and chief executive officer (CEO). He will succeed Daniel J. Abdun-Nabi, the current CEO, who decided to retire and also step down as a board member, effective Apr 1, 2019.

Last December, Emergent submitted an application to the FDA for the emergency use authorization of its anthrax vaccine candidate, NuThrax, following a public health emergency involving Bacillus anthracis. The regulatory agency will review the application and a decision is expected in the first half of 2019.

Emergent along with European partner Valneva SE announced positive interim data from an early stage study on the Zika vaccine candidate, VLA1601, last November. The candidate, currently being evaluated in a phase I program, met the primary endpoint by achieving a favorable safety profile in all doses and schedules tested. Final data from the analysis is awaited in the first quarter of 2019.

Emergent Biosolutions Inc. Price, Consensus and EPS Surprise

Emergent Biosolutions Inc. Price, Consensus and EPS Surprise | Emergent Biosolutions Inc. Quote

Zacks Rank & Stock to Consider

Emergent currently carries a Zacks Rank #4 (Sell).

A better-ranked stock in the healthcare sector is Celgene Corporation CELG, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Celgene’s earnings estimates have moved 4.7% north for 2019 over the past 60 days.

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