Emergent BioSolutions Inc. (NYSE: EBS) today reported selected financial results for the third quarter ended September 30, 2023. The selected financial results reported include limited third quarter and year-to-date results, as well as selected balance sheet and cash flow information. As part of our quarterly review process, the Company determined that its state deferred tax liability was overstated as of December 31, 2022, resulting in an understatement of the income tax benefits reflected on the Company’s income statement. While these non-cash items do not have any impact on the Company’s liquidity, cash flow, historical management compensation or covenant compliance, we have concluded that it is appropriate to delay the disclosure of full third quarter and year-to-date earnings information and the filing of our Quarterly Report on Form 10-Q for the period ended September 30, 2023 while we work to correct our prior period financial statements. We expect to complete this work in the near future.

"As we work diligently toward filing our Form 10-Q, Emergent continues to strengthen its financial position and streamline operations, which remains critical to the company’s strategy to return to growth and preserve its unique capabilities to help protect and enhance life,” said interim Chief Executive Officer Haywood Miller. “We are proud of the progress we are making across our core products business, including the recent over-the-counter launch of NARCAN^® Nasal Spray, which expands access and awareness to help save more lives impacted by the devastating opioid crisis. As we look ahead, we plan to continue protecting against public health threats for years to come.”

FINANCIAL HIGHLIGHTS ⁽¹⁾

Quarter to Date (“QTD”) Q3 2023

Year to Date (“YTD”) 2023

SELECT Q3 2023 AND OTHER RECENT BUSINESS UPDATES

• Announced U.S. Food and Drug Administration (“FDA”) approval of CYFENDUS^TM (Anthrax Vaccine Adsorbed, Adjuvanted), previously known as AV7909, a two-dose anthrax vaccine for post-exposure prophylaxis use
• Awarded a 10-year contract by the Biomedical Advanced Research and Development Authority (“BARDA”) for advanced development, manufacturing scale-up, and procurement of Ebanga^TM(ansuvimab-zykl) product, a treatment for Ebola
• Launched NARCAN^® Nasal Spray Over-The-Counter (“NARCAN^® OTC”), broadening our customer base and sales channels to retail pharmacies and digital commerce websites as well as through physician-directed or standing order prescriptions at retail pharmacies, health departments, local law enforcement agencies, community-based organizations, substance abuse centers and other federal agencies
• The FDA closed out its inspection of the Company’s Camden facility and issued a “close-out letter” of its Warning Letter issued in August 2022
• Continued progress on strengthening our fundamentals with key focus on our NARCAN^® Nasal Spray and Medical Countermeasure (“MCM”) products

Q3 2023 FINANCIAL PERFORMANCE ⁽¹⁾

Revenues

Beginning in 2023, the Company revised the categories used in discussing product/service level revenues. The new categories are:

• Anthrax MCM — comprises potential contributions from CYFENDUS^TM , previously known as AV7909, BioThrax^®, Anthrasil^® and Raxibacumab
• NARCAN^® Nasal Spray — comprises contributions from NARCAN^® Nasal Spray
• Smallpox MCM — comprises potential contributions from ACAM2000^®, VIGIV and Tembexa^®
• Other Products — comprises potential contributions from BAT^®, RSDL^® and Trobigard^®, as well as Vaxchora and Vivotif, which we sold to Bavarian Nordic as part of our travel health business.
• Contract development and manufacturing (“CDMO”) — comprises service and lease revenues from the contract development and manufacturing business

Operating Expenses

Restructuring Expenses

During Q3 2023, the Company incurred restructuring expense in connection with an organizational restructuring plan (the “August 2023 Plan”) announced on August 8, 2023. The Company incurred approximately $20.5 million in charges in connection with the August 2023 Plan during Q3 2023. These charges consisted primarily of charges related to severance payments, transition services, and employee benefits. All activities related to the August 2023 Plan were substantially completed during the third quarter of 2023. Also during Q3 2023, the Company made a $(0.2) million adjustment to the incurred charges in connection with the organizational restructuring plan announced on January 9, 2023. Restructuring costs are recognized as an operating expense within the Condensed Consolidated Statement of Operations and are classified based on the Company’s classification policy for each category of operating expense.

ADDITIONAL FINANCIAL INFORMATION ⁽¹⁾

Capital Expenditures

Segment Information

The Company manages the business with a focus on two reportable segments: the Products segment, which includes the Anthrax MCM products, NARCAN^® Nasal Spray, Smallpox MCM products and Other products; and the Services segment, which consists of CDMO services. The Company evaluates the performance of these reportable segments based on revenue and Adjusted Gross Margin, which is a non-GAAP financial measure. Segment revenue includes external customer sales, but does not include inter-segment services. The Company does not allocate contracts and grants, R&D, SG&A, amortization of intangible assets, interest and other income (expense) or taxes to its evaluation of the performance of these segments.

2023 FINANCIAL FORECAST

The Company provides the following updated financial forecast for the full year 2023, in both instances reflecting management's expectations based on the most current information available and taking into account the actual performance in Q1, Q2 and Q3 2023.

Full Year 2023

The updated 2023 financial forecast as of November 8, 2023 reflects the following key considerations.

• Total Revenues — Consistent with prior guidance, due to ongoing strength in NARCAN^® Nasal Spray, offset by potential procurement timing for CYFENDUS^TM in the near term. 
• Anthrax MCM — Revised, reflecting delivery timing for short-term CYFENDUS^TM volume following FDA-approval as procurement transitions from BARDA to the Strategic National Stockpile.
• NARCAN^® Nasal Spray — Revised, reflecting continued robust demand from the U.S. public interest channel, Canada, and launch of NARCAN^® OTC.
• Smallpox MCM — Revised, reflecting delivery of ACAM2000^® and guidance on procurement of VIGIV and Tembexa^®
• Other Products — Revised, reflecting reduced expectations for RSDL^®.
• CDMO — Revised, reflecting expectations for remainder of the year within prior guidance range.

FOOTNOTES

⁽¹⁾ All financial information included in this release is unaudited. 
⁽²⁾ See “Reconciliation of Non-GAAP Measures” and the "Reconciliation of Loss before income taxes to Adjusted EBITDA" and  "Reconciliation of Total Revenues to Adjusted Revenues, Cost of Sales to Adjusted Cost of Sales, and Gross Margin and Gross Margin % to Adjusted Gross Margin and Adjusted Gross Margin %" tables for the definitions and reconciliations of these non-GAAP financial measures to the most closely related GAAP financial measures.
⁽³⁾ Product sales, net are reported net of variable consideration including returns, rebates, wholesaler fees and prompt pay discounts in accordance with U.S. generally accepted accounting principles.