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Emergent's (EBS) Q4 Earnings Miss, Sales Beat Estimates

Emergent BioSolutions Inc. EBS reported an adjusted loss of 31 cents per share in fourth-quarter 2022, against the Zacks Consensus Estimate of earnings of 32 cents. The reported earnings also missed our model estimate for earnings of 18 cents. In the year-ago quarter, EBS reported earnings of $4.50 per share.

Revenues in the reported quarter were $330.7 million, down 54% from the prior-year period’s level. The revenue decline was caused by a reduction in COVID-related contract development and manufacturing (CDMO) revenues. Revenues beat both the Zacks Consensus Estimate and our model estimates of $311.4 million.

Shares of Emergent were down 5.0% in pre-market trading on Feb 28 following the earnings announcement. This was attributable to the significant deviation of earnings from Wall Street estimates. The stock has declined 66.2% in the past year compared with the industry’s 11.8% fall.

Zacks Investment Research
Zacks Investment Research


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Quarter in Detail

Total product sales decreased 30.0% from the year-ago quarter’s level to $305.7 million, owing to the year-over-year decreased sales of the Anthrax vaccine, Narcan nasal spray, ACAM2000 and other products. The decline was partially offset as the company started recording Tembexa product sales in fourth-quarter 2022.

Sales of anthrax vaccines (BioThrax and AV7909) were $50.9 million in the reported quarter, down 63.0% year over year. This decline can be attributed to a decrease in deliveries of AV7909 to the U.S Government’s Strategic National Stockpile (SNS).

Narcan (naloxone HCl) nasal spray added $91.1 million to product sales, down 24.0% year over year. The decline in sales was likely due to erosion in sales following the launch of a generic in December 2021. The downside was slightly offset by higher volumes of Narcan sprays sold to public interest customers in the United States and Canada.

Following the acquisition of worldwide rights to Tembexa last September, the company added product sales of $117.6 million during the quarter.

Emergent did not report any product sales from its smallpox vaccine ACAM2000 in the fourth quarter. In the year-ago period, the company had recorded $125.8 million from ACAM2000 sales. This major deterioration was caused by the timing of deliveries to the U.S Government.

Other product sales were $46.1 million, down 8% year over year.

Revenues from contracts and grants plunged 90% year over year to $7.1 million.

Total CDMO revenues reached $17.9 million, compared to the year-ago quarter’s revenues of $218.3 million. While CDMO services revenues declined 65.0% year over year to $17.7 million, CDMO lease revenues were $0.2 million, a substantial fall from the year-ago quarter revenue of $167.1 million.

This significant decline in CDMO services revenues was due to no combined revenues from AstraZeneca AZN and Janssen, a Johnson & Johnson JNJ subsidiary, during the quarter.

In July 2020, J&J and Emergent entered into an agreement to provide contract development and manufacturing (CDMO) services for J&J’s single-shot, adenovirus-based COVID-19 vaccine for five years. In June 2022, the companies announced their decision to terminate the deal, citing contract breaches.

The decline in CDMO lease revenues was largely due to no revenues during the quarter from the lease components of the contracts with the Center for Innovation in Advanced Development and Manufacturing (“CIADM”) and the J&J-subsidiary Janssen.

We note that Emergent suffered a setback in 2021 when there was a manufacturing mishap at its Bayview facility where COVID-19 vaccine ingredients of J&J and AstraZeneca reportedly got mixed and led to several faulty batches of J&J’s vaccine. Emergent lost its contract for AstraZeneca’s vaccine following the mishap.

Emergent reported an adjusted EBITDA of $34.2 million for the fourth quarter, down 82% year over year.

Full-Year Results

Emergent reported revenues of $1.12 billion, down 37.0% year over year. The company reported an adjusted loss of $2.23 per share for 2022, against earnings of $6.02 in the year-ago period.

2023 Guidance

Emergent has issued fresh guidance for total revenues, adjusted EBITDA and CDMO services. The company also revised the categories used in discussing product/service level revenues.

The company expects to record full-year 2023 revenues in the range of $1.10-$1.20 billion. For first-quarter 2023, total revenue is expected to be between $130-$150 million.

Management expects Anthrax Medical Countermeasures (Anthrax MCM) sales — comprising of AV7909, BioThrax, Anthrasil and raxibacumab — in the range of $260-$280 million. Revenues from the Narcan nasal spray are expected to be between $290-$310 million. Product sales from Smallpox MCM (comprising ACAM2000, Vigiv and Tembexa) are expected to add $235-$255 million to total revenues. The company expects to record $165-$185 million from other product sales.

Emergent expects CDMO revenues to be in the range of $115-$135 million.

Emergent also anticipates adjusted net income(loss) within $(80)-$(30) million. Adjusted EBITDA is expected to be between $75-$125 million.

Emergent Biosolutions Inc. Price

 

Emergent Biosolutions Inc. Price
Emergent Biosolutions Inc. Price

Emergent Biosolutions Inc. price | Emergent Biosolutions Inc. Quote

 

Zacks Rank & Stocks to Consider

Currently, Emergent BioSolutions has a Zacks Rank #1 (Strong Buy).

Another better-ranked stock in the overall healthcare sector is Adaptive Biotechnologies Corporation ADPT, which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Estimates for Adaptive Biotechnologies’ 2023 loss per share have narrowed from $1.31 to $1.15 in the past 60 days. Shares of Adaptive Biotechnologies have declined 41.6% in the past year.

Earnings of Adaptive Biotechnologies beat estimates in three of the last four quarters and missed the mark on one occasion, the average surprise being 10.75%. In the last reported quarter, ADPT delivered an earnings surprise of 24.32%.

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AstraZeneca PLC (AZN) : Free Stock Analysis Report

Johnson & Johnson (JNJ) : Free Stock Analysis Report

Emergent Biosolutions Inc. (EBS) : Free Stock Analysis Report

Adaptive Biotechnologies Corporation (ADPT) : Free Stock Analysis Report

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