Emergent BioSolutions Q3 2026 Earnings Call Transcript

Emergent BioSolutions (NYSE:EBS) reported third-quarter financial results on Monday. The transcript from the company’s third-quarter earnings call has been provided below.

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View the webcast at https://events.q4inc.com/attendee/688313100

Summary

Emergent BioSolutions reported third quarter 2026 revenue of $110 million, consistent with expectations, bringing year-to-date revenue to $500 million.

The company continues its multi-year transformation plan focusing on operating performance, cost structure alignment, and balance sheet strengthening.

Year-to-date adjusted EBITDA was $128 million with a 25% margin, and operating cash flow stood at $122 million.

Emergent executed a $24 million CYFENDUS contract modification and delivered products to the U.S. government, while international sales reached 13 countries.

The company maintains a leading position in the naloxone market with products like NARCAN Nasal Spray and Kloxxado Nasal Spray.

Future guidance expects total 2026 revenues between $600 million and $645 million, with updated adjusted gross margin guidance of 45% to 47%.

Emergent is progressing with its pan-Ebola therapeutic program and AI partnerships for clinical development.

Rich Lindahl, CFO, announced his retirement effective December 31, 2026, with Frank Vargo assuming the interim CFO role.

Full Transcript

OPERATOR

2026 earnings call. After today’s prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Frank Vargo, VP and Treasurer. Frank, please go ahead.

Frank Vargo (Vice President, Treasurer)

Good afternoon everyone and thank you for joining us as Emergent discusses its operational and financial results for the third quarter of 2026. As is customary, today’s call is open to all participants, is being recorded and is copyrighted by Emergent BioSolutions. In addition to today’s press release, a slide presentation accompanying this webcast is available to all webcast participants. Turning to Slide 2, during today’s call, Emergent may make projections and other forward-looking statements related to business, future events, prospects or future performance. These forward-looking statements are based on our current intentions, beliefs and expectations regarding future events. Any forward-looking statements speak only as of the date of this conference call and, except as required by law, Emergent does not undertake to update any forward-looking statement to reflect new information, events or circumstances.

Investors should consider this cautionary statement as well as the risk factors identified in Emergent periodic reports filed with the SEC when evaluating these forward-looking statements. During today’s call, Emergent may also discuss certain non-GAAP financial measures that include adjustments to GAAP figures. To provide additional transparency regarding the company’s operating performance, please refer to the tables included in today’s press release.

Turning to Slide 3, the agenda for today’s call includes remarks from Joe Papa, President and Chief Executive Officer, who will provide an update on the company’s transformation plan, business performance and key highlights. Rich Lindahl, EVP and Chief Financial Officer, will then review the third quarter 2026 financial results and provide an update on full year 2026 guidance. Joe Papa will conclude with a discussion of the company’s key catalysts for growth followed by a question and answer session.

Finally, for the benefit of those who may be listening to the replay of this webcast, this call was held and recorded on November 2, 2026. Since that time, Emergent may have made announcements related to topics discussed during today’s call. With that, I will now turn the call over to Joe Papa. Joe.

Joe Papa (President and Chief Executive Officer)

Hello everyone, and thank you for joining us to discuss Emergent third quarter 2026 financial results. This is Joe Papa, President and Chief Executive Officer of Emergent, and I’m joined today by Rich Lindahl, our Chief Financial Officer. This afternoon I will share an update on our multi-year transformation plan, the actions we implemented during the quarter to strengthen the business, and the progress we are making across our diversified medical countermeasures and naloxone portfolios.

Rich will then review our third quarter financial results and our outlook for the remainder of 2026. I will close with the growth catalysts and priorities that will guide us as we finish the year. Then we’ll open up the call for Q&A. Before we begin though, I want to acknowledge an important milestone. This November marks 20 years since Emergent’s initial public offering in November 2006. As we reflect on that anniversary, our mission to protect and save lives remains our foundation. We are focused on building upon that legacy as we advance our transformation and position Emergent for the future. I’d also like to take a moment to recognize Rich. After 17 years as a public company CFO, of which approximately nine years were spent at Emergent, Rich has decided to retire effective December 31, 2026.

Frank Vargo, our Vice President and Treasurer, will assume the role of interim CFO on January 1, 2027. To support a seamless transition, Rich will continue to serve as a senior executive advisor through March 31, 2027. Rich has been a trusted partner to me, our board and our leadership team. He has helped guide Emergent through periods of significant change, strengthened our financial discipline, and played an important role in the progress we have made to position the company for the future.

He’s also built a very strong and highly talented finance and IT organization. We are fortunate to have an experienced leader in Frank who knows our business, understands our priorities, and will provide continuity and disciplined financial stewardship during this transition. On behalf of the board and our colleagues, I want to thank Rich for his leadership, his commitment to Emergent’s mission, and his dedication to our people. I’ll now begin the presentation on slide 4. For more than 25 years, Emergent has prepared for and responded to complex public health threats. Our mission remains clear: to protect and save lives. That mission is especially important in a world where biological threats are evolving, geopolitical uncertainty is elevated, and advances in technology, including artificial intelligence, can create both new opportunities and new risks. We continue to believe that Emergent is the leader in biodefense preparedness and naloxone, serving patients, customers and government partners around the world.

Turning to slide 6, against that backdrop, our multi-year transformation plan continues to guide our business and strategic decisions. We are focused on improving operating performance, aligning our cost structure, strengthening the balance sheet, advancing growth opportunities where Emergent has differentiated capabilities, and maintaining a strong commitment to patient safety, quality and compliance. Let’s move to slide 8. After an exceptional, better-than-expected second quarter performance of 234 million in revenue, our third quarter results were consistent with expectations, with 110 million in revenue within our guidance range. This brings our year-to-date revenue to 500 million. Additional highlights from the quarter include our overall profitability and cash generation to support investment in growth. Year-to-date adjusted EBITDA reached 128 million, a 25% margin, with 122 million in operating cash flow.

Cash stood at 176 million with 226 million in liquidity. Financial discipline remained a priority for us. We repurchased 75 million in bond principal and continued cost prioritization is occurring. Our MCM business delivered solid performance. We executed a 24 million CYFENDUS contract modification and made deliveries to the U.S. government by the close of Q3. We also completed a TEMBEXA tablet delivery from a contract modification awarded in March of this year. Internationally, we completed product sales to more than 13 countries in the third quarter, which demonstrates the diversification of our MCM business and the importance of biodefense preparedness internationally.

Around the world, naloxone remains central to community preparedness. We maintain our U.S. market-leading position while we continue to be competitive in the market to ensure customers have access to both NARCAN Nasal Spray and Kloxxado Nasal Spray when needed. Our growth initiatives are progressing. Importantly, we are taking a disciplined approach when it comes to the evaluation and pursuit of certain business development opportunities. The Canton manufacturing facility restart milestones remain on track, and we are proud to celebrate this restart with the local Commonwealth officials.

Finally, we are progressing the pan-Ebola therapeutic program and AI partnerships for clinical development work. We have a handful of other AI and machine learning platforms that we are engaging for pipeline and growth opportunities. We plan to advance this critical work while remaining focused on patient safety, quality and compliance. Turning to Slide 9, I’d like to highlight the recent reports on the rising threat of AI and bioterrorism, national security, and the role Emergent can play in collaboration with other companies on potentially addressing such risks. In August we issued a call to cross-collaborate with AI leaders including Anthropic and OpenAI on key areas like threat detection and to develop a preparedness framework. We expect to continue these efforts and be a potential partner in AI bioterrorism prevention efforts today and into the future.

On Slide 10, let’s take a look at our MCM results. Through the great efforts of our MCM team, we secured 59 million in revenue in the third quarter, which was driven by an executed 24 million CYFENDUS contract modification. The product was delivered to the U.S. government within the quarter, while the team also completed the majority of a TEMBEXA tablet delivery from a March 2026 contract modification with the U.S. government. To date, we executed all six anticipated U.S. government contract modifications.

On the international side, we supplied a diverse mix of MCM to 13 different countries and closed 19 sales during the quarter. International sales and product orders contributed 72 million of revenue, representing 22% of year-to-date MCM revenue. On Slide 11, the decline in opioid overdose deaths is encouraging. Powerful synthetic opioids and accidental poisoning continue to make preparedness very important across the U.S. and Canada. Our focus remains increasing on access to overdose reversal medications, with over-the-counter NARCAN continuing a standard of care and Kloxxado 8 milligram offering another important option. In the U.S., we continue supporting states, law enforcement and harm reduction organizations as well as retail partners and workplace funds, increasing access and the availability for vulnerable populations.

We continue seeing strong growth of NARCAN across Canada, and the Government of Canada recently instituted a standing offer which creates a multi-year pathway for NARCAN. To this end, we’re complementing access with public awareness through our Ready to Rescue campaigns and college educational engagements. These are important efforts to help increase access, awareness and the availability of NARCAN and Kloxxado to save lives. Let me now hand the call over to Rich. Following Rich’s comments, I’ll spend some time elaborating on our business outlook and growth catalysts. Rich.

Rich Lindahl (Executive Vice President, Chief Financial Officer)

Thank you, Joe. Good afternoon, everyone, and thank you for joining us today. Our third quarter results reflect continued execution against our transformation priorities. Revenue was within our guidance range, we maintained disciplined control of operating expenses, and we continue to generate strong cash flow while taking decisive actions to align our cost structure with current business realities. In August, we implemented restructuring actions across the organization to improve efficiency and better align resources with our strategic priorities.

We continue to expect these actions to generate approximately $40 million of annualized savings, the initial impact becoming evident in the fourth quarter of 2026. We also continued to strengthen the balance sheet. During the quarter we repurchased $75 million aggregate principal amount of our unsecured bonds for $68 million of cash. Together with the April term loan refinancing and strong operating cash generation, this action further reduced gross debt while net leverage remained stable.

Turning to Slide 13, third quarter revenue was less than $110 million within our prior guidance range compared with $231 million in the third quarter of 2025. The year-over-year comparison was primarily influenced by the timing of MCM deliveries. As a reminder, our strong second quarter 2026 results reflected accelerated deliveries, which now skews the third quarter’s comparison to the prior year. At the same time, this factor also drove robust receivable collections and cash flow from operations.

In the third quarter of 2026, adjusted EBITDA was negative $5 million and adjusted gross margin was 28%. Our profitability in the quarter was influenced by the timing of revenue, product mix, and the competitive market dynamics. In the commercial segment, SG&A and R&D operating expenses were $56 million including $8 million of restructuring costs compared with $52 million in the third quarter of 2025. Excluding those restructuring costs, SG&A and R&D operating expenses were lower year over year, demonstrating effective cost management.

Moving to Slide 14, MCM revenue declined year over year primarily due to the timing of U.S. government product deliveries. Commercial revenue also declined as the naloxone market is experiencing competitive pricing and volume pressure. The performance of naloxone was consistent with our prior outlook, and pricing compared to Q2 2026 was relatively stable. Bio services and contracts and grants revenue remained a smaller component of the overall mix.

Turning to Slide 15, year-to-date revenue was $500 million in line with our expectations. Adjusted EBITDA was $128 million, representing a 25% margin. Adjusted gross margin was 49%, reflecting our continued focus on operating efficiency even in light of product mix. Year-to-date operating expenses were $167 million including $8 million of restructuring costs, compared with $176 million in the prior year period. Moving to Slide 16, the year-to-date revenue comparison reflects the impact of the large one-time international MCM order in 2025. Commercial revenue trends incorporate reduced naloxone pricing and volume in the U.S. Public Interest channel, partially offset by strength in our Canadian naloxone business. Overall, the portfolio continues to benefit from our strong ongoing collaborative engagement with U.S. and international government customers and from our established market-leading position in naloxone.

On Slide 17 we highlight our rigorous balance sheet management. We ended the quarter with $176 million of cash and $226 million of total liquidity. Year-to-date operating cash flow was $122 million as our focus on working capital management produced very strong conversion from year-to-date adjusted EBITDA of $128 million. Following our $75 million bond repurchase, gross debt was $514 million at September 30, 2026, compared with $693 million a year ago.

Net debt was $339 million compared with $448 million, and net leverage remains stable at 2.4 times trailing twelve-month adjusted EBITDA compared with 1.9 times a year ago. Transitioning to Slide 18, the progress on our balance sheet is even more evident when viewed over the course of the turnaround. Through the third quarter of 2026, we generated $352 million cumulative operating cash flow. Gross debt declined by $354 million, or 41% from year-end 2023, while net debt has declined by $418 million or 55%, reflecting the net positive impact of our strategic asset divestitures. Over the same period, net leverage decreased from approximately 16 times to approximately 2.4 times.

Turning to Slide 19, our capital allocation priorities remain balanced. We continue to support international MCM growth initiatives, invest in internal R&D programs including the approximately $50 million Ebanga milestone payment made earlier this year, and maintain focus on business development opportunities. At the same time, we refinanced our term loan, repurchased $75 million of unsecured bond principal, and repurchased 2 million shares year to date for $18.1 million.

We ended the quarter with $37.3 million remaining under the share repurchase authorization. Turning to Slide 20, we’re updating our full year 2026 guidance. We now expect total revenues of $600 million to $645 million, reflecting our current outlook for both the MCM and commercial segments in our medical countermeasures business. We now expect full-year revenues to decline versus the prior year, and based on the timing of remaining international MCM deliveries and U.S. government procurement as we close out 2026, our ongoing dialogue with the U.S. government and allied nations continues to indicate strong demand.

However, the timing of certain deliveries may fall outside the fourth quarter. In our commercial segment, which is primarily driven by NARCAN, we continue to hold the leading market position year to date. Performance is in line with our expectations, though we’re currently tracking toward the lower end of our 20% to 25% range of revenue reduction versus 2025. At the same time, we’re raising our adjusted gross margin guidance to a range of 45% to 47%, a 300 basis point improvement versus our August guidance.

This reflects our continued focus on operational improvements across our manufacturing network, the impact of product mix, and recent stabilization of NARCAN pricing in the U.S. Public Interest channel. Finally, we now expect adjusted EBITDA of $110 million to $140 million, with the upper end of the range consistent with the midpoint of our prior guidance. This update primarily reflects our revenue outlook while we continue to maintain disciplined control of operating expenses as we execute our turnaround.

In summary, third quarter revenue was within our guidance range. Year to date, adjusted EBITDA was $128 million and we generated $122 million of operating cash flow through September. We maintained a strong cash position, stayed focused on expense management, and took meaningful restructuring actions to improve our cost structure and prepare the business for the future. We also continued to strengthen the balance sheet through proactive debt management.

The repurchase of our unsecured bonds, together with the April refinancing and sustained cash generation, reduced gross debt further while preserving stable net leverage and ample liquidity. We will continue to allocate capital thoughtfully across debt reduction, targeted investments in growth, and shareholder returns while maintaining our commitment to patient safety, quality, and compliance. With that, I’ll turn the call back to Joe to discuss our business outlook and growth catalysts before we move to Q&A.

Joe Papa (President and Chief Executive Officer)

Thank you, Rich. Turning to Slide 22, I’d like to briefly touch on the key catalysts we believe can enable growth in 2026 and beyond. Our growth organization is focused on programs where Emergent BioSolutions has differentiated expertise, clear mission alignment, the potential to create sustainable value. This includes advancing our pan-Ebola therapeutic program, evaluating a pan-flu vaccine opportunity, progressing work related to Vexa Evangel, raxibacumab, and selectively evaluating external opportunities that fit our capabilities and financial criteria.

Turning to Slide 23, our near-term pipeline and current asset strategy is focused on maximizing value programs where Emergent BioSolutions has differentiated experience, clear mission alignment, and the potential to support sustainable growth. And moving to our summary and close on Slide 24, our third quarter results reflect continued execution across the business and the delivery of our U.S. government partner order. As we look at the remainder of 2026, our priorities are clear. First, stay focused on our mission to protect and save lives while prioritizing growth, quality, our people every day. Second, deliver for our government and public health customers by meeting commitments, pursuing additional U.S. international opportunities, and strengthening domestic preparedness capabilities.

Third, effectively compete in naloxone by protecting our leadership position, responding competitively to pricing and procurement dynamics, expanding access through different offerings and configurations, and fourth, advance focused growth programs through our integrated growth organization with clear decision points and disciplined capital allocation. We have made meaningful progress, but we also recognize there is much work to do ahead of us. We’re entering the final month of 2026 with a leaner operating model, a more focused growth agenda, stronger financial discipline, and a portfolio that addresses some of the most consequential public health risks facing communities around the world. With that, I look forward to your questions. Operator, please open the line for any questions.

OPERATOR

We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Ram Selvaraju with H.C. Wainwright.

Your line is now open. Please go ahead.

Ram Selvaraju (Analyst)

Thanks very much for taking our questions. I was just wondering if you could provide us with some additional granularity regarding the underlying market dynamics in the NARCAN market segment, particularly as this pertains to the current state of the competitive landscape as well as drivers of underlying market demand, particularly with respect to, as I think you alluded to during your prepared remarks, the presence of increasingly potent opioid analogs, sort of next generation beyond fentanyl.

And I was also wondering if you could comment on current broad spectrum international demand for smallpox vaccine products, particularly in light of the recent awards that have been announced for MVA-BN. And if you think that this may point to increasing demand overall, both within the U.S. and ex-U.S. for your smallpox vaccine product. Thank you.

Joe Papa (President and Chief Executive Officer)

Okay, Ron, thank you for the question. Quite a bit there and I’ll try to make sure I get all pieces of it, but if I leave any out, please come back to me on it. So basically, the market dynamic on Narcan remains good in the sense that there are still way too many people dying from opioid overdose. So there’s still significant demand opportunity for opioid overdose medications. We’ve got to bring down that death rate. It’s come down a lot, but we believe there’s still much more we can do, and we want to make sure we continue to increase access for Narcan because we believe that’s what saves lives.

When you have somebody who overdoses, if Narcan is available, you can save that life. So we need to just continue to make Narcan more available. And we’re doing everything we can, but that’s the biggest issue out there. Number two, funding continues to be an important issue. It’s, we believe, a bipartisan, supported opportunity. We see both on the congressional Republican and congressional Democrat sides, there is support for what people believe Narcan can do to help save lives, making sure the product is available. Beyond that, on the funding side, we also know that there’s a number of legal class action settlements by big pharma companies that distributed opioids.

Those funds are available and will be available over the next 10 years. We think that’s going to help on the funding side to continue to make products like Narcan, therapeutic products, available and funded so that patients can get access when they need it. And of course, because first and foremost we made Narcan over the counter in 2023, we think that’s a big part of making it more accessible because it’s over the counter. So those are the issues we face. We did see earlier in the year some new competitors get approval in the naloxone space, but at this time they have not made a major impact on the market. But we continue to monitor that and we’re keeping a close eye on it. And what’s important as we sit here today, Narcan still has the market-leading position, and we think that’s an important differentiator for us because patients and their family member caregivers all know the Narcan brand name and also the way that we distribute it to make it more accessible.

So those are the issues that we see in the marketplace. On the demand side as it relates to stronger drugs, there’s no doubt that is true, whether it be fentanyl, carfentanil, some of the other products that are out there. We want to make sure that once again, Narcan is available, and for us, it’s just making sure Narcan’s going to work. But at times you may need a higher, more potent product. We think that’s the other avenue that the caregivers, first responders, will pursue: having both the 4 milligram naloxone Narcan, which is the gold standard, but also the 8 milligram naloxone.

We want to continue to make sure both drugs are available, whatever the first responders need to help patients with. The second question was… I’m sorry, remind me of smallpox. I know it was… What was your question again? The international side.

Ron

Yeah, related to, you know, international demand, you know, especially as when we look at, you know, recent orders that have been placed for MVA-BN, you know what implications this may have for ongoing underlying demand for ACAM2000.

Joe Papa (President and Chief Executive Officer)

So ACAM2000, we feel once again it’s a gold standard. The predecessor product, ACAM, was a product that essentially eradicated smallpox around the world. So ACAM still is a very important position. It’s a single-dose requirement. It’s been used around the world. So we think ACAM still is a very important product there. Our expectation is that countries are going to continue to think about what’s needed for their own stockpiles. We’ve been working very closely with governments around the world, as well as the U.S., of course, about the stockpile, and the good news is that ACAM is an important product to help them be prepared for whatever the issues are.

In addition to ACAM, though, we also do and spend a lot of time on Tembexa, a therapeutic, so that we have the Tembexa along with ACAM as a portfolio of product both for the vaccine side but also for the therapeutic side if indeed needed. Personal opinion is that there’s a lot of concern that companies will use AI to create new pathogens. The bad actors that may use AI to create new pathogens, something like smallpox would be probably one of the things they think about because of the simplicity that they could potentially work on, looking at how they can weaponize smallpox and make smallpox even more concerning for people.

So we want to make sure we’re prepared as we think about what could happen in the future and how we work with AI companies to be prepared for whatever the circumstances that the bad actors could come forward with. Thank you for your question, Ron. Operator, next question.

OPERATOR

Thank you. Your next question comes from the line of Jessica Fye with J.P. Morgan. Your line is now open. Please go ahead.

Abdullah (Analyst)

Hey, this is Abdullah for Jess. Can you give more specific visibility into when the MCM orders that slipped out of 3Q are expected to land? Is this 4Q catch-up, a 2027 push-out, or is it still unscheduled?

Joe Papa (President and Chief Executive Officer)

Thank you. Sure. I’m going to start, but Rich, you may want to add to it. I think what you’re really asking is, you know, our visibility to the fourth quarter and what we’re expecting for this year and then, you know, some parts of it obviously extended to 2027. I think that’s what you’re asking. I think we’ve got, you know, right now we’ve worked very closely with the U.S. government to ensure that we understand their needs. We have regular ongoing meetings with the government to make sure we understand what their needs are, but also with needs of the Canadian government, other governments around the world we continue to work very closely with to ensure we understand their needs and expectations. And we have a back and forth to make sure that both sides, whether it’s us as a supplier or them as customers, will get what they need to make sure that we work on the needs for the stockpile.

But there’s very good back and forth and conversations with them. I think we have, you know, reasonably good visibility into that. Yeah, sometimes orders do slip from quarter to quarter, depending on specifics, but for the most part, I think we’ve got pretty good visibility into the programs. And as we said, what’s great about the third quarter results is that we shipped to 13 countries in the third quarter, which is another important part of the diversification that we’ve been striving for to ensure that, you know, we certainly have a very strong position with the U.S. government, but having the additional countries around the world gives us that diversification, which we think is very helpful for us in terms of smoothing out the revenue over time.

Rich Lindahl (Executive Vice President, Chief Financial Officer)

Yeah, I think the other thing I’d add is that, you know, we provided a range, obviously, of revenue guidance for the full year. And the things that are driving that range to one end to the other are the potential for some orders internationally, as well as with the U.S. government, to materialize this year or in the early part of next year. And then also there’s a range of variability around the ultimate, you know, kind of where the naloxone revenues land in the year.

So that’s what’s implied by the range of revenue.

Joe Papa (President and Chief Executive Officer)

Operator, our next question, please.

OPERATOR

There are no further questions at this time. I will now turn the call back to Joe Papa for closing remarks.

Joe Papa (President and Chief Executive Officer)

Well, thank you everyone for joining today. Very much appreciated the questions as well. We look forward to continuing to work with you and answer your questions. But we appreciate very much your time today. Thank you, everyone. Have a great day.

OPERATOR

This concludes today’s call. Thank you for attending. You may now disconnect.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.