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EB

Emergent BioSolutions Inc. (EBS)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered revenue of $222.2M, adjusted EBITDA of $77.6M (35% margin), and adjusted diluted EPS of $0.71; both profitability metrics expanded sharply YoY despite lower revenue .
  • Against Wall Street consensus (S&P Global), revenue modestly beat ($222.2M vs $219.0M*) and adjusted EPS beat ($0.71 vs $0.257*); notable positive surprise driven by mix and cost actions. Values retrieved from S&P Global.
  • Management reaffirmed FY 2025 guidance while increasing GAAP net income range ($20–$70M from $16–$66M) and guided Q2 2025 revenue to $95–$120M, implying a sequential step-down ahead of a stronger 2H .
  • Key stock-relevant drivers: large EPS beat, improved cash/liquidity (cash $149.1M; net leverage 2.8x), international MCM strength ($91M in Q1), and a $50M share repurchase authorization balanced by a near-term trough in Q2 .

What Went Well and What Went Wrong

  • What Went Well
    • “We delivered on our revenue and adjusted EBITDA targets while we further improved our cash and liquidity position” and reaffirmed guidance; cash ended Q1 at $149M and total liquidity at ~$249M including undrawn revolver .
    • International medical countermeasures (MCM) were strong: $91M in international MCM revenue (~60% of total MCM); smallpox MCM rose 112% YoY on ACAM2000/TEMBEXA timing .
    • Cost structure improvements and favorable mix expanded adjusted gross margin to 58% (+700 bps YoY) and adjusted EBITDA margin to 35% (+1,300 bps YoY) .
  • What Went Wrong
    • NARCAN revenue fell 62% YoY to $45.3M, pressured by public interest pricing resets, a one-time third-party sale of short-dated generic inventory, and funding timing in Q1 .
    • Services revenue declined 61% YoY due to the sale of the Camden facility and de-emphasis of CDMO; the Services segment no longer meets reportable thresholds .
    • Management guided Q2 2025 revenue down to $95–$120M, explicitly flagging a significant sequential decline in profitability before improvement starting Q3 .

Financial Results

MetricQ1 2024Q4 2024Q1 2025Consensus Q1 2025
Total Revenue ($USD Millions)$300.4 $194.7 $222.2 $219.0*
Diluted EPS (GAAP) ($)$0.17 $(0.58) $1.19 —
Adjusted Diluted EPS ($)$0.59 $0.05 $0.71 $0.25667*
Gross Margin % (GAAP)45% —50% —
Adjusted Gross Margin %51% —58% —
Adjusted EBITDA ($USD Millions)$66.9 $21.0 $77.6 —
Adjusted EBITDA Margin %22% —35% —

Values retrieved from S&P Global (*).
Bold highlights: adjusted EPS beat and revenue beat vs consensus.

Segment/Category ($USD Millions)Q1 2024Q1 2025
NARCAN®$118.5 $45.3
Anthrax MCM$55.9 $47.9
Smallpox MCM$50.2 $106.4
Other Products$49.3 $2.3
Total Product Sales, net$273.9 $201.9
All Other Revenues (Services + Contracts & Grants)$26.5 $20.3
Total Revenues$300.4 $222.2
KPIsQ1 2024YE 2024Q1 2025
Cash ($USD Millions)$78.5 $99.5 $149.1
Gross Debt ($USD Millions)$909.2 $700.0 $700.0
Net Debt ($USD Millions)$830.7 $600.5 $550.9
Net Leverage (Net Debt / TTM Adj. EBITDA)5.7x 3.3x 2.8x
Revolver Availability ($USD Millions)$100 $100 $100

Drivers and adjustments:

  • Adjusted net income reconciles GAAP to exclude items such as contingent consideration milestones (benefit of $50.0M), loss on assets held for sale ($12.2M), non-cash amortization ($18.6M), inventory step-up ($1.8M), and other net items .
  • Adjusted EBITDA of $77.6M reflects add-backs for D&A ($25.4M), income taxes ($24.7M), interest ($14.0M), and other adjustments; adjusted EBITDA margin rose to 35% .

Guidance Changes

MetricPeriodPrevious Guidance (as of 03/03/2025)Current Guidance (as of 05/07/2025)Change
Total Revenues ($USD Millions)FY 2025$750–$850 $750–$850 Maintained
Net Income ($USD Millions)FY 2025$16–$66 $20–$70 Raised
Adjusted Net Income ($USD Millions)FY 2025$20–$70 $20–$70 Maintained
Adjusted EBITDA ($USD Millions)FY 2025$150–$200 $150–$200 Maintained
Adjusted Gross Margin %FY 202548%–51% 48%–51% Maintained
MCM Products Revenue ($USD Millions)FY 2025$435–$485 $435–$485 Maintained
Commercial Products Revenue ($USD Millions)FY 2025$265–$315 $265–$315 Maintained
Q2 Total Revenues ($USD Millions)Q2 2025—$95–$120 New

Key assumptions for FY 2025: interest expense ~$55M; R&D ~6–7% of revenue; SG&A ~27–28% of revenue; dil. shares ~54M; capex ~$17M; D&A ~$100M .

Earnings Call Themes & Trends

TopicQ3 2024 (Q-2)Q4 2024 (Q-1)Q1 2025 (Current)Trend
Product performance (NARCAN)Price reductions stabilized; NARCAN gross margin ~50%, volumes up; competitive pricing maintained NARCAN declined YoY; mix headwinds noted One-time generic short-dated inventory impacted Q1; funding timing; improving unit trends into Q2 Stabilizing pricing; near-term demand recovery
MCM momentumSmallpox MCM strong; ACAM2000/VIG deliveries; FDA mpox indication for ACAM2000; contracts largely committed Smallpox MCM +565% YoY (Q4) on timing; multiple contract modifications International MCM revenue robust ($91M); smallpox +112% YoY; aligned 2025 deliveries Sustained strength; international expansion
Tariffs/supply chain——Limited tariff exposure due to US/Canada production; managing EU component sourcing Low risk; proactive mitigation
Capital structure & liquidityRefinancing; liquidity ~$250M; net leverage 3.3x Ending 2024 with improved cash and debt profile Cash $149M; liquidity ~$249M; net leverage 2.8x Improving leverage and liquidity
R&D execution (TEMBEXA/Ebanga)BARDA options; TEMBEXA trial plans; ACAM2000 mpox response —Africa CDC-led MOSA mpox study; Ebanga BARDA option ($16.7M) Building pipeline utility
Legal/regulatoryJanssen settlement $50M; removing going concern Legacy disputes resolved; FDA inspection status noted ESG report referenced; compliance emphasis; 7 inspections remain compliant Clean-up largely complete

Management Commentary

  • CEO Joe Papa: “We delivered on our revenue and adjusted EBITDA targets while we further improved our cash and liquidity position… We remain confident in our 2025 financial guidance and anticipate delivering a strong second half of the year.”
  • CFO Rich Lindahl: “Adjusted gross margin of 58% improved 700 basis points year-over-year as a result of product mix as well as the improved cost structure stemming from our previously announced restructuring efforts.”
  • On tariffs: “The majority of our product is manufactured… in the United States… we have very limited tariff exposure… one device for NARCAN comes from Europe; we’re working to source more from the U.S.”
  • On Q2 setup: “We anticipate that our full year revenue will be weighted more to the second half… expect second quarter profitability to decline significantly versus the first quarter and then improve meaningfully beginning in the third quarter.”

Q&A Highlights

  • NARCAN headwinds and recovery: One-time generic short-dated inventory and funding transitions weighed on Q1; management sees improved unit trends in early Q2 and expects mid-single-digit naloxone unit growth longer term .
  • Margin drivers: Gross margin improvement driven by cost actions (site divestitures reducing unutilized capacity) and favorable international MCM mix .
  • Tariff exposure: Limited due to USMCA-compliant manufacturing; some EU-sourced device components mitigated via inventory and sourcing plans .
  • Ontario NARCAN contract: $65M over three years; “reasonable to assume… fairly evenly” across the period, aiding Canadian growth .
  • Capital allocation: $50M share repurchase program authorized; updates to be provided with earnings .

Estimates Context

  • Q1 2025 comparison vs S&P Global consensus: revenue $222.2M vs $219.0M* (beat) and adjusted EPS $0.71 vs $0.25667* (beat). Values retrieved from S&P Global.
  • With guidance reaffirmed and net income raised, models may shift mix assumptions toward higher-margin MCM and incorporate Q2 trough before 2H acceleration; NARCAN pricing and funding cadence remain key sensitivities .

Key Takeaways for Investors

  • Strong profitability despite revenue decline: Adjusted EBITDA margin expanded to 35% on mix and cost reductions; cash/liquidity improved materially .
  • MCM is the engine: International demand and smallpox deliveries drove outperformance; visibility into 2025 deliveries supports guidance .
  • NARCAN pressure appears transitory: One-time inventory event and funding timing weighed on Q1; early-Q2 units improving; broader OTC/B2B initiatives and Canada contracts should help .
  • Near-term setup: Expect Q2 step-down in revenue/profitability before improvement starting Q3; consider positioning around the 2H ramp .
  • Balance sheet de-risking continues: Net debt down to $551M; net leverage 2.8x; optionality from $100M revolver and $50M buyback authorization .
  • Watch catalysts: TEMBEXA/mpox progress, ACAM2000 international engagements, BARDA/Ebanga development, and potential business development aligned to core capabilities .
  • Estimate implications: Upgrade EPS/EBITDA trajectories on margin execution; model cautious Q2, stronger 2H; monitor NARCAN pricing and public interest funding flows. Values retrieved from S&P Global.

Additional Notes and References

  • Recent business updates: KLOXXADO® US/Canada commercial rights; Rocketvax investment; Bayview sale ($36.5M); Bavarian Nordic milestones ($50M; $30M in Q1, $20M in Q2); Ontario $65M NARCAN contract .
  • Segment disclosures: Commercial Products and MCM are reportable segments; Services de-emphasized and included in “All other revenues” from Q1 2025 .