On January 7, 2019 Emergent BioSolutions Inc. (NYSE: EBS) reported selected preliminary unaudited 2018 financial results and its financial forecast for 2019 (Press release, Emergent BioSolutions, JAN 7, 2019, View Source;p=RssLanding&cat=news&id=2382272 [SID1234532526]).
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Daniel J. Abdun-Nabi, chief executive officer of Emergent BioSolutions, said, "Our preliminary results for 2018 reflect another year of strong financial and operational performance as we continue to execute our strategy. As we enter 2019, we anticipate revenues topping $1 billion for the first time in our corporate history driven by solid organic growth in each of our business units together with contributions from the products that we acquired in 2018. Importantly, we also anticipate significant growth in each of our profitability metrics while simultaneously expanding our portfolio of advanced stage product candidates that address serious global public health threats. We remain steadfast in our commitment to enable governments and commercial customers worldwide to address their public health threat preparedness and response needs as we further our mission of protecting and enhancing life."
PRELIMINARY 2018 FINANCIAL RESULTS (Unaudited)
The company is providing the following preliminary, unaudited financial results for full year 2018.
See "Reconciliation of Net Income to Adjusted Net Income, EBITDA and Adjusted EBITDA" for a definition of terms and a reconciliation table.
Total Revenue
For the full year 2018, the company anticipates total revenue of $779 to $784 million, the midpoint of which represents a $221 million or 39% increase from 2017. This annual increase is due primarily to the contribution of sales of ACAM2000, (Smallpox (Vaccinia) Vaccine, Live), raxibacumab and NARCAN (naloxone HCl) Nasal Spray in 2018 as well as higher CMO revenue, offset by lower BioThrax (Anthrax Vaccine Adsorbed) revenue.
Net Income (GAAP and Adjusted)
For the full year 2018, the company anticipates net income of $60 to $64 million and adjusted net income of $117 to $121 million. The midpoint of the adjusted net income range represents a $23 million or 24% increase from 2017 and reflects the impact of higher product sales and CMO services revenue as well as the positive impact of a lower estimated effective tax rate. (See "Reconciliation of Net Income to Adjusted Net Income and EBITDA" for a definition of terms and a reconciliation table.)
Note
The preliminary 2018 financial results are subject to revision and will be finalized upon completion of the company’s external audit, which is anticipated in late February 2019. Once the external audit is completed, the company may report financial results that could differ, and the differences could be material.
2019 FINANCIAL FORECAST
See "Reconciliation of Net Income to Adjusted Net Income, EBITDA and Adjusted EBITDA" for a definition of terms and a reconciliation table.
For the full year of 2019, the company’s financial forecast includes the impact of the following items:
continued deliveries of BioThrax to the Strategic National Stockpile (SNS) under the current procurement contract with the Centers for Disease Control and Prevention (CDC), (the contract and the SNS are now managed by the Office of the Assistant Secretary for Preparedness and Response (ASPR));
initial deliveries of NuThrax (anthrax vaccine adsorbed with CPG 7909 adjuvant) to the SNS following expected Emergency Use Authorization pre-approval by the U.S. Food and Drug Administration (FDA) under the company’s current development and procurement contract with the Biomedical Advanced Research and Development Authority (BARDA);
full year sales of NARCAN Nasal Spray, Vaxchora (Cholera Vaccine, Live, Oral), and Vivotif (Typhoid Vaccine Live Oral Ty21a), all of which were acquired in the fourth quarter of 2018;
deliveries of ACAM2000 to the SNS under the anticipated follow-on procurement contract with the ASPR;
deliveries of raxibacumab to the SNS under the current procurement contract with BARDA;
domestic and international sales of the other medical countermeasures that comprise Other Product sales;
continued CDMO services revenue;
increased Contract & Grant revenue due to anticipated increased work related to development projects funded by third parties; and
continued investment in discretionary development projects funded by the company targeting opportunities in medical countermeasures for emerging infectious diseases and other public health threats.
The outlook for 2019 does not include estimates for potential new corporate development or other M&A transactions.
Q1 2019 REVENUE FORECAST
For the first quarter of 2019, the company anticipates total revenues of $185 to $205 million.
PRESENTATION WEBCAST
The company will provide an update on the current business and discuss preliminary 2018 financial results, the forecast and corporate goals for 2019, and long-term goals for 2020 during its presentation at the 37th Annual J.P. Morgan Healthcare Conference on January 8, 2019 at 11:00 AM Pacific time.
A live webcast of the presentation can be accessed through Emergent’s website. Visit www.emergentbiosolutions.com and select the "Investors" section. An on-demand replay of the webcast can also be accessed in the investors section after the presentation has concluded.
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME, EBITDA AND ADJUSTED EBITDA
This press release contains two financial measures (Adjusted Net Income and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), and Adjusted EBITDA) that are considered "non-GAAP" financial measures under applicable Securities and Exchange Commission rules and regulations. These non-GAAP financial measures should be considered supplemental to and not a substitute for financial information prepared in accordance with generally accepted accounting principles. The Company’s definition of these non-GAAP measures may differ from similarly titled measures used by others. Adjusted Net Income adjusts for specified items that can be highly variable or difficult to predict, or reflect the non-cash impact of charges resulting from purchase accounting (which are all tax effected utilizing the statutory tax rate for the US). EBITDA reflects net income excluding the impact of depreciation, amortization, interest expense and provision for income taxes. Adjusted EBITDA also excludes specified items that can be highly variable and the non-cash impact of certain purchase accounting adjustments (which are all tax effected utilizing the statutory tax rate for the US). The Company views these non-GAAP financial measures as a means to facilitate management’s financial and operational decision-making, including evaluation of the Company’s historical operating results and comparison to competitors’ operating results. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company’s operations that, when viewed with GAAP results and the reconciliations to the corresponding GAAP financial measure, may provide a more complete understanding of factors and trends affecting the Company’s business.
The determination of the amounts that are excluded from these non-GAAP financial measures are a matter of management judgment and depend upon, among other factors, the nature of the underlying expense or income amounts. Because non-GAAP financial measures exclude the effect of items that will increase or decrease the Company’s reported results of operations, management strongly encourages investors to review the Company’s consolidated financial statements and publicly filed reports in their entirety.