On January 10, 2021 Emergent BioSolutions Inc. (NYSE:EBS) reported its financial forecast for 2021 and selected preliminary unaudited financial results for 2020 (Press release, Emergent BioSolutions, JAN 10, 2021, View Source [SID1234573752]).

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"In a year full of unprecedented challenges due to the pandemic, the Emergent team’s unwavering commitment produced incredible results," said Robert G. Kramer, president and chief executive officer. "Operationally, we rapidly responded to our customers’ needs, and financially, we delivered record revenue and earnings. We are proud to be a leader in the growing public health threat market, enabled by our development and manufacturing expertise, successful public-private partnerships, and broad portfolio of products and CDMO services. We look forward to continuing to execute on our strategy and building on the momentum created in 2020 across all four of our business units."

"Our 2020 financial performance clearly demonstrates the resilience and durability of our diversified portfolio of products and services," said Richard S. Lindahl, executive vice president and chief financial officer. "We enter 2021 with positive momentum and are poised to deliver robust double-digit gains in total revenues and non-GAAP earnings for the fifth consecutive year. One year into our five-year strategy, we are increasingly confident in the growth prospects for the business."

PRELIMINARY 2020 FINANCIAL RESULTS (Unaudited)

The Company is providing the following preliminary, unaudited financial results for full year 2020.

Revenue Metrics
Total revenues for 2020 are expected to be in the range of $1,545 and $1,555 million, an increase at the midpoint of $444 million or 40% as compared to 2019. This growth primarily reflects increased sales of contract development and manufacturing (CDMO) services to pharmaceutical and biotechnology innovators and government/non-government organization (NGO) customers, as well as higher product sales.

Profitability Metrics
The Company anticipates Adjusted EBITDA of $625 to $645 million, which at the midpoint represents an increase of $355 million or 127% as compared to 2019. The Company anticipates Adjusted Net Income of $415 to $430 million, which at the midpoint represents an increase of $270 million or 177% as compared to 2019. This growth primarily reflects the forecasted increase in total revenues discussed above. (See "Reconciliation of Non-GAAP Measures" for a definition of the terms and reconciliation tables.)

Note:
The preliminary 2020 financial results are unaudited, subject to revision, and anticipated to be finalized by late February 2021. The Company’s final audited financial results could differ materially from these selected preliminary results.

2021 FINANCIAL FORECAST

The Company is providing the following forecast of selected financial metrics for full year 2021.

Total Revenues
The 2021 forecast for total revenues reflects continued growth in aggregate product revenues and significant growth in services revenue from the CDMO business.

Adjusted EBITDA and Adjusted Net Income (1)
The 2021 forecast reflects an anticipated mix of product and services gross margin, continued investment in research and development, and scale efficiencies in selling, general & administration expenses.

2021 Product/Service Level Revenues – Select Assumptions

Anthrax vaccine revenues are expected to be at a more normalized annual level and continue to primarily reflect procurement of AV7909 (Anthrax Vaccine Adsorbed, adjuvanted) under the Company’s existing contract with the Biomedical Advanced Research and Development Authority (BARDA).
ACAM2000, (Smallpox (Vaccinia) Vaccine, Live) vaccine deliveries are expected to continue under the terms of the Company’s existing contract with the U.S. Department of Health and Human Services (HHS) at unit volume levels consistent with 2020 deliveries.
Narcan (naloxone HCl) Nasal Spray revenues assume no generic competition prior to the resolution of the Company’s appeal of the patent litigation regarding the 4mg form of this intranasal spray product.
CDMO Services assumes continued growth in Development Services (DVS), Drug Substance (DS) manufacturing, and Drug Product (DP) manufacturing and Packaging for both clinical- and commercial-stage projects on behalf of a growing list of pharmaceutical and biotechnology innovators and government/NGO customers.
Other 2021 Assumptions

Gross margin is expected to be approximately 65% on a GAAP basis, influenced by the mix of product and services revenues.
A follow-on procurement contract with HHS is expected for the delivery of raxibacumab, the Company’s Food and Drug Administration-approved anthrax monoclonal antibody therapeutic, to the Strategic National Stockpile (SNS).
Pipeline progress is expected across the vaccines, therapeutics, and devices portfolios, anticipating at least one Phase 3 launch and one Biologics License Application (BLA)/Emergency Use Authorization (EUA) filing.
Capital expenditures, net of reimbursement, are expected to be in a range of 8% to 9% of total revenues, reflecting ongoing investments in capacity and capability expansions related to the CDMO business and the Company’s product portfolio.
FOOTNOTES

(1) See "Reconciliation of Non-GAAP Measures" for a definition of terms and applicable reconciliation tables.

PRESENTATION WEBCAST
The Company will provide an update on the current business and discuss preliminary 2020 financial results, the forecast and corporate goals for 2021, and long-term goals during its presentation at the 39th Annual J.P. Morgan Healthcare Conference on January 11, 2021 at 8:20 AM Eastern time.

A live webcast of the presentation can be accessed through Emergent’s website. An on-demand replay of the webcast can also be accessed in the investors section after the presentation has concluded.