Emergent BioSolutions Inc.: Emergent BioSolutions Reports Fourth Quarter and Twelve Months 2015 Financial Results and Reaffirms 2016 Outlook

Tickers: EBS
GAITHERSBURG, Md., Feb. 25, 2016 (GLOBE NEWSWIRE) -- Emergent BioSolutions Inc. (NYSE:EBS) reported financial results for the quarter and twelve months ended December 31, 2015.

2015 FINANCIAL HIGHLIGHTS

  • Total revenues: Q4 2015 of $168.1 million, +14% Y/Y; twelve months 2015 of $522.8 million, +16% Y/Y;
  • GAAP net income: Q4 2015 of $33.3 million, or $0.71 per diluted share, +11% Y/Y; twelve months 2015 of $62.9 million, or $1.41 per diluted share, +71% Y/Y;
  • Adjusted net income: Q4 2015 of $37.5 million, or $0.78 per diluted share, +8% Y/Y; twelve months 2015 of $75.6 million, or $1.60 per diluted share, +40% Y/Y;
  • EBITDA: Q4 2015 of $58.5 million, or $1.22 per diluted share, +10% Y/Y; twelve months 2015 of $130.1 million, or $2.75 per diluted share, +41% Y/Y; and
  • Adjusted EBITDA: Q4 2015 of $61.7 million, or $1.28 per diluted share, +7% Y/Y; twelve months 2015 of $137.4 million, or $2.91 per diluted share, +30% Y/Y.
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2016 FORECAST:

  • Full Year: revenue of $600 to $630 million; GAAP net income of $75 to $85 million, non-GAAP adjusted net income of $90 to $100 million, and EBITDA of $150 to $160 million
  • 1Q 2016: revenue of $105 to $120 million
'Our strong fourth quarter in 2015 continued our history of growth over the last three years both financially and operationally. Since 2012, we nearly doubled our revenues to over $520 million, achieved a net income CAGR of 38% and expanded our portfolio to nine products,' said Daniel J. Abdun-Nabi, president and chief executive officer of Emergent BioSolutions. '2016 will bring a renewed focus on addressing public health threats as we spin off Aptevo Therapeutics, our biosciences business, and enter our next phase of growth. We will continue to establish ourselves as a market leader with a global impact and work to achieve our vision of protecting and enhancing 50 million lives by 2025.'

2015 BUSINESS ACCOMPLISHMENTS

  • Announced plan to implement tax-free spin-off of Aptevo Therapeutics (the Company's Biosciences business) into a separate, publicly traded company, targeted for mid-2016;
  • Launched a new platform technology, Emergard™, the Company's military-grade auto-injector device for chemical threats being sold in international markets;
  • Received three approvals from the U.S. Food and Drug Administration (FDA):
    • Expansion of the BioThrax (Anthrax Vaccine Adsorbed) label to include post-exposure prophylaxis (PEP) against anthrax disease; the first vaccine to be licensed using the FDA Animal Rule,
    • IXINITY, a recombinant factor IX treatment for Hemophilia B, and
    • Anthrasil™, an immune globulin for the treatment for inhalational anthrax.
  • Secured over $95 million in new multi-year contract and grant funding, including the following:
    • $20 million in multiple contracts with BARDA to manufacture Ebola monoclonal antibodies, including the Company's first awarded task order under the Center for Innovation in Advanced Development and Manufacturing program,
    • A $44 million CDC contract to further supply the strategic national stockpile with the Company's Vaccinia Immune Globulin product, and
    • A $31 million BARDA contract for the advanced development of NuThrax™ (anthrax vaccine adsorbed with CPG 7909 adjuvant), the Company's next generation anthrax vaccine candidate.
  • Initiated a Phase 1 clinical trial for MOR209/ES414, an immunotherapeutic protein built on our ADAPTIR™ platform technology and targeting prostate cancer, which is being developed in collaboration with MorphoSys AG; and
  • Continued progress towards achieving licensure of Building 55.
2015 FINANCIAL PERFORMANCE

(I) Quarter Ended December 31, 2015 (unaudited)

Revenues

Product Sales

For Q4 2015, product sales were $132.6 million, an increase of 17% as compared to 2014. The increase primarily reflects increased sales of BioThrax during the quarter.

(in millions) Three Months Ended
December 31,
2015 2014 % Change
Product Sales
BioThrax $ 111.9 $ 87.9 27 %
Other biodefense 12.5 14.5 (13 )%
Total Biodefense $ 124.4 $ 102.3 22 %
Total Biosciences $ 8.2 11.0 (25 )%
Total Product Sales $ 132.6 $ 113.4 17 %
Contract Manufacturing

For Q4 2015, revenue from the Company's contract manufacturing operations was $10.5 million, an increase of 10% as compared to 2014. The increase was primarily due to the timing of fill/finish services to third parties.

Contracts, Grants and Collaborations

For Q4 2015, contracts, grants and collaborations revenue was $24.9 million, unchanged as compared to 2014.

Operating Expenses

Cost of Product Sales and Contract Manufacturing

For Q4 2015, cost of product sales and contract manufacturing was $39.8 million, an increase of 22% as compared to 2014. The increase was primarily attributable to increased sales of BioThrax to the CDC.

Research and Development

For Q4 2015, gross research and development (R&D) expenses were $32.5 million, a decrease of 17% as compared to 2014. The decrease primarily reflects lower contract service costs associated with product candidates and technology platform development activities associated with the Biosciences division.

For Q4 2015, net R&D expenses were $7.6 million, a decrease of 46% as compared to 2014, reflecting a decrease in unfunded development spending in our Biosciences division, including spending on IXINITY, a product that we launched in Q2 2015. Net R&D expenses, which are more representative of the Company's actual out-of-pocket investment in product development, are calculated as gross research and development expenses less contracts, grants and collaboration revenues.

(in millions) Three Months Ended
December 31,
2015 2014 % Change
Research and Development Expenses (Gross) $ 32.5 $ 39.0 (17 )%
Adjustments:
Contracts, grants and collaborations revenues 24.9 25.0 N/A
Net Research and Development Expenses $ 7.6 $ 14.0 (46 )%
Selling, General and Administrative

For Q4 2015, selling, general and administrative expenses were $46.0 million, an increase of 44% as compared to 2014. The increase was primarily attributable to a one-time $3.5 million reserve for potential write-off of accounts receivable within the Biosciences segment, a charge to write-off certain obsolete fixed assets, and increased information technology costs associated with the implementation of a new ERP system, as well as costs associated with the spin-off of Aptevo Therapeutics and professional services to support the Company's strategic growth initiatives.

Net Income

For Q4 2015, GAAP net income was $33.3 million, an increase of 11% as compared to 2014. For Q4 2015 and 2014, GAAP net income per diluted share is computed using the if-converted method. This method requires GAAP net income to be adjusted to reflect the impact of interest expense and amortization of debt issuance cost, both net of tax, associated with the Company's 2.875% Convertible Senior Notes due 2021. As a result, GAAP net income per diluted share for Q4 2015 is adjusted in the amount of $0.9 million, from $33.3 million to $34.2 million, and diluted shares outstanding were 48.1 million. GAAP net income per diluted share for Q4 2014 is adjusted in the amount of $0.6 million, from $30.1 million to $30.7 million, and diluted shares outstanding were 46.4 million.

(II) Twelve Months Ended December 31, 2015 (unaudited)

Revenues

Product Sales

For the twelve months of 2015, product sales were $356.9 million, an increase of 14% as compared to 2014. The increase primarily reflects increased sales of Bio