Emergent Biosolutions, Inc. 2026 Q2 Earnings Call

Please go ahead. Good afternoon, everyone.

Thank you for joining us as Emergent discusses its operational and financial results for the second 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 its 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 statement speaks 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's 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 second 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 catalyst 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 August 5th, 2026. Since that time, Emergent may have made announcements related to topics discussed during today's call. With that, I would now like to turn the call over to Joe Papa.

Joe? Thank you, Frank. Hello, everyone.

Thank you for joining us to discuss Emergent's second quarter 2026 financial results. This is Joe Papa, President and CEO of Emergent, and I'm joined today by Rich Lindahl, our Chief Financial Officer. This afternoon, I will share updates on our multi-year transformation, our strong second quarter business performance, and our continued work to protect and save lives. Following my remarks, Rich will detail our quarter two 2026 financial results and provide our updated 2026 guidance. I'll close the call with a discussion of our 2026 business outlook and the catalyst we believe will enable growth as we continue to execute on our turnaround priorities. We will open up the call for Q&A. I'll now begin on Slide five. For more than 25 years, Emergent has responded to complex and urgent public health threats with preparedness solutions and active response capabilities.

Today, we believe Emergent is the leader in biodefense preparedness and naloxone, serving patients, customers, and government partners around the world. Our mission remains clear: To protect and save lives. That mission guides how we prioritize patient safety, quality, and compliance, and how we invest in the capabilities that matter most for our future. Our multi-year transformation plan continues to guide our business. We remain focused on improving operating performance, advancing strategic transformation for long-term growth and profitability, identifying growth opportunities aligned with our internal capabilities, and continuing to strengthen the balance sheet. As an example, through a great team effort, we achieved strong second quarter results significantly ahead of consensus and exceeded our own internal expectations. We also experienced some changes in the naloxone market at the end of the second quarter. On Slide seven, let me address the naloxone business directly.

Since the NARCAN launch in 2016 and the OTC FDA approval of NARCAN in 2023, Emergent has maintained its leadership position and adapt to the evolving market landscape. Recently, we saw two new nasal naloxone entrants, including a new four-milligram over-the-counter approval on June 16th of 2026 and a 10-milligram prescription agent that will launch in August of 2026, and more aggressive pricing across the naloxone segment. These are changes and signals we must proactively address. That said, opioid overdose deaths remain unacceptably high, with 45,000 lives lost annually in the U.S., and our work as a trusted brand leader remains critical for communities across the U.S. and Canada. As market dynamics change, we need to proactively get ahead of these issues.

Progressing to Slide eight, as we navigate through our turnaround and broader transformation and also address the naloxone business market dynamics, we are taking action to align our resources with current business realities and prepare Emergent for 2027 and beyond. Beginning today, we are implementing several restructuring actions intended to improve our overall cost structure, keep Emergent efficient and nimble, and align resourcing to the current needs of the organization. Our restructuring efforts are expected to yield annualized savings of approximately $40 million. These actions include a reduction of workforce of approximately 90 positions, the closure of two wet laboratories in Maryland, the sale of an unutilized office building for $6.4 million, and exiting a central warehouse lease. We've integrated growth under one team leader and established a group where scientific discovery, portfolio strategy, clinical development, commercial insight, and external innovation will all be harmonized.

The bottom line, we are taking the steps now that are needed to ensure the future of Emergent as a strong and prosperous throughout our transformation journey. Before handing it over to Rich for a more detailed financial review, I'd like to highlight our strong second quarter performance on slide 10. Quarter two revenue was $234 million, significantly seeing the high end of our guidance range coming in ahead of our internal expectations. Year-to-date revenue was $390 million, reflecting strong execution and acceleration of our MCM deliveries in Q2 through our ongoing collaborative partnerships with the U.S. government. We delivered Q2 adjusted EBITDA of $97 million with a 41% margin, and year-to-date adjusted EBITDA was $132 million with a 34% margin. These results demonstrate the excellent focus and execution of our teams that have brought to the business.

Finally, as we continue to focus on pursuing targeted business development, we are also responding to public health threats like Ebola by initiating our pan-Ebola therapeutic program. We are also advanced important regulatory activities during the quarter, including the receipt of Saudi FDA approval for the ACAM2000 and Singapore Health Sciences Authority approval to expand ACAM2000 include the Mpox indication. The Mpox study in Africa or MOSA, is also evaluating TEMBEXA and has over 100 patients enrolled, and the study sponsor, PANTHER, with Africa CDC and other partners are opening additional sites. Turning to slide 11, our MCM business remains core to Emergent's mission and is a key growth driver. We continue to support the U.S. government and allied government partners with critical products and capabilities that help prepare for, respond to, and recover from serious public health threats.

Today, we announced that we are seeking to collaborate with AI leaders and partners to address the potential risk of bioterrorism and improve biodefense response preparedness. In Q2, MCM revenue was $168 million, the highest second quarter revenue since 2020. We received multiple U.S. government contract awards and international product orders, including a contract modification of $52.7 million for ACAM2000 and a $64.5 million contract modification for botulism antitoxin. Year-to-date, we have secured over 10 contract awards. International momentum is also building, and we continue to see the realities of our world becoming increasingly dangerous with Ebola virus is on the rise in Africa. International MCM sales represented approximately 20% of our total first half 2026 MCM revenues, reflecting continuing engagement with the U.S. and allied governments and the importance of biodefense preparedness in an increasingly dangerous world. 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 catalyst.