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Emergent (EBS) Beats on Q3 Earnings, Tapers '20 Sales View
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Emergent BioSolutions Inc. (EBS - Free Report) reported third-quarter 2020 earnings of $2.19 per share, which beat the Zacks Consensus Estimate of $2.05 and also improved from the year-ago quarter’s earnings of $1.24.
Revenues in the reported quarter were also up 24% from the prior-year period to $385.2 million, primarily owing to an increase in contract development and manufacturing (CDMO) services revenues. However, the top line missed the Zacks Consensus Estimate of $452 million and also declined sequentially due to lower total product sales.
Shares of Emergent were down 4.6% in after-hours trading following the earnings announcement on Thursday. However, the stock has rallied 79.8% so far this year against the industry’s decrease of 1.1%.
Quarter in Detail
Total product sales declined 21% to $202.2 million from the year-earlier quarter due to decreased sales of smallpox vaccine ACAM2000.
ACAM2000, which was acquired from Sanofi (SNY - Free Report) in the fourth quarter of 2017, generated sales of $1 million, which were significantly lower year over year due to a timing delay that resulted in fewer doses for supply.
Meanwhile, the newly-acquired product Narcan (naloxone HCl) nasal spray added $88.8 million to product sales, reflecting an increase of 18% year over year. Narcan was added to Emergent’s portfolio following the acquisition of Adapt Pharma in October 2018.
Notably, sales of anthrax vaccines (BioThrax and AV7909) were $73.9 million in the reported quarter, soaring 83% year over year. Other product sales also surged 34% on a year-over-year basis to $38.5 million.
Revenues from contracts and grants decreased 27.2% year over year to $25.9 million.
Contract manufacturing revenues jumped to $157.1 million, reflecting a significant increase from the year-ago quarter’s figure. On the third-quarter conference call, management stated that the upside was on the back of contributions from the contract value related to COVID-19. The most notable one is the company's CDMO partnership with BARDA in support of the U.S. government's Operation Warp Speed program.
The company recorded adjusted EBITDA of $168.1 million in the reported quarter compared with $106.4 million in the year-ago period, up 58%.
2020 Guidance Revised
Emergent lowered its sales outlook for the current year. The company now expects total revenues of $1.52-$1.58 billion, narrowed from the previous forecast of $1.5-$1.6 billion. The Zacks Consensus Estimate for the metric stands at $1.53 billion for the year.
Meanwhile, adjusted net income is expected in the band of $375-$405 million compared with the earlier projection of $340-$390 million. Adjusted EBITDA is now anticipated in the range of $575-$615 million, higher than the past estimate of $535-$600 million.
Coronavirus Response and Other Updates
To address the global COVID-19 pandemic, Emergent inked several CDMO deals to provide manufacturing services to various companies for helping them produce their respective experimental vaccine candidates against COVID-19.
The company signed a CDMO contract with Vaxart and small biotech Novavax to help them produce their respective vaccine candidates against COVID-19. Emergent reached a five-year large-scale drug substance manufacturing agreement with pharma giant Johnson & Johnson (JNJ - Free Report) for its lead COVID-19 vaccine candidate. The deal will be effective beginning 2021.
Emergent also agreed to provide CDMO services to AstraZeneca (AZN - Free Report) for supporting the manufacturing of the latter’s COVID-19 vaccine candidate AZD1222, which is being developed in partnership with Oxford University.
This apart, in August 2020, the FDA approved the extension of the company’s Narcan nasal spray’s shelf life from 24 months to 36 months. Following this expansion nod, the nasal spray can now be used by patients for a period of three years, stretched a year more from the earlier time frame.
Along with earnings release, management notified that no generic competition for Narcan nasal spray is expected in 2020. Notably, in June 2020, a district court of New Jersey passed a decision against the patent litigation of Narcan nasal spray 4mg. The court ruled in favor of the defendants Teva Pharmaceuticals.
Emergent Biosolutions Inc. Price, Consensus and EPS Surprise
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Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Emergent (EBS) Beats on Q3 Earnings, Tapers '20 Sales View
Emergent BioSolutions Inc. (EBS - Free Report) reported third-quarter 2020 earnings of $2.19 per share, which beat the Zacks Consensus Estimate of $2.05 and also improved from the year-ago quarter’s earnings of $1.24.
Revenues in the reported quarter were also up 24% from the prior-year period to $385.2 million, primarily owing to an increase in contract development and manufacturing (CDMO) services revenues. However, the top line missed the Zacks Consensus Estimate of $452 million and also declined sequentially due to lower total product sales.
Shares of Emergent were down 4.6% in after-hours trading following the earnings announcement on Thursday. However, the stock has rallied 79.8% so far this year against the industry’s decrease of 1.1%.
Quarter in Detail
Total product sales declined 21% to $202.2 million from the year-earlier quarter due to decreased sales of smallpox vaccine ACAM2000.
ACAM2000, which was acquired from Sanofi (SNY - Free Report) in the fourth quarter of 2017, generated sales of $1 million, which were significantly lower year over year due to a timing delay that resulted in fewer doses for supply.
Meanwhile, the newly-acquired product Narcan (naloxone HCl) nasal spray added $88.8 million to product sales, reflecting an increase of 18% year over year. Narcan was added to Emergent’s portfolio following the acquisition of Adapt Pharma in October 2018.
Notably, sales of anthrax vaccines (BioThrax and AV7909) were $73.9 million in the reported quarter, soaring 83% year over year. Other product sales also surged 34% on a year-over-year basis to $38.5 million.
Revenues from contracts and grants decreased 27.2% year over year to $25.9 million.
Contract manufacturing revenues jumped to $157.1 million, reflecting a significant increase from the year-ago quarter’s figure. On the third-quarter conference call, management stated that the upside was on the back of contributions from the contract value related to COVID-19. The most notable one is the company's CDMO partnership with BARDA in support of the U.S. government's Operation Warp Speed program.
The company recorded adjusted EBITDA of $168.1 million in the reported quarter compared with $106.4 million in the year-ago period, up 58%.
2020 Guidance Revised
Emergent lowered its sales outlook for the current year. The company now expects total revenues of $1.52-$1.58 billion, narrowed from the previous forecast of $1.5-$1.6 billion. The Zacks Consensus Estimate for the metric stands at $1.53 billion for the year.
Meanwhile, adjusted net income is expected in the band of $375-$405 million compared with the earlier projection of $340-$390 million. Adjusted EBITDA is now anticipated in the range of $575-$615 million, higher than the past estimate of $535-$600 million.
Coronavirus Response and Other Updates
To address the global COVID-19 pandemic, Emergent inked several CDMO deals to provide manufacturing services to various companies for helping them produce their respective experimental vaccine candidates against COVID-19.
The company signed a CDMO contract with Vaxart and small biotech Novavax to help them produce their respective vaccine candidates against COVID-19. Emergent reached a five-year large-scale drug substance manufacturing agreement with pharma giant Johnson & Johnson (JNJ - Free Report) for its lead COVID-19 vaccine candidate. The deal will be effective beginning 2021.
Emergent also agreed to provide CDMO services to AstraZeneca (AZN - Free Report) for supporting the manufacturing of the latter’s COVID-19 vaccine candidate AZD1222, which is being developed in partnership with Oxford University.
This apart, in August 2020, the FDA approved the extension of the company’s Narcan nasal spray’s shelf life from 24 months to 36 months. Following this expansion nod, the nasal spray can now be used by patients for a period of three years, stretched a year more from the earlier time frame.
Along with earnings release, management notified that no generic competition for Narcan nasal spray is expected in 2020. Notably, in June 2020, a district court of New Jersey passed a decision against the patent litigation of Narcan nasal spray 4mg. The court ruled in favor of the defendants Teva Pharmaceuticals.
Emergent Biosolutions Inc. Price, Consensus and EPS Surprise
Emergent Biosolutions Inc. price-consensus-eps-surprise-chart | Emergent Biosolutions Inc. Quote
Zacks Rank
Emergent currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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