10-Q 1 ebs-20220930.htm 10-Q ebs-20220930
000136764412/31false2022Q3http://fasb.org/us-gaap/2022#OtherAssetsNoncurrenthttp://fasb.org/us-gaap/2022#OtherAssetsNoncurrenthttp://fasb.org/us-gaap/2022#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2022#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2022#OtherLiabilitiesNoncurrenthttp://fasb.org/us-gaap/2022#OtherLiabilitiesNoncurrent12P3MP1YP1YP1Y33.3333.3333.3333.3333.3333.3300013676442022-01-012022-09-3000013676442022-11-01xbrli:shares00013676442022-09-30iso4217:USD00013676442021-12-31iso4217:USDxbrli:shares0001367644us-gaap:ProductMember2022-07-012022-09-300001367644us-gaap:ProductMember2021-07-012021-09-300001367644us-gaap:ProductMember2022-01-012022-09-300001367644us-gaap:ProductMember2021-01-012021-09-300001367644us-gaap:ServiceMember2022-07-012022-09-300001367644us-gaap:ServiceMember2021-07-012021-09-300001367644us-gaap:ServiceMember2022-01-012022-09-300001367644us-gaap:ServiceMember2021-01-012021-09-300001367644ebs:ContractDevelopmentAndManufacturingLeasesMember2022-07-012022-09-300001367644ebs:ContractDevelopmentAndManufacturingLeasesMember2021-07-012021-09-300001367644ebs:ContractDevelopmentAndManufacturingLeasesMember2022-01-012022-09-300001367644ebs:ContractDevelopmentAndManufacturingLeasesMember2021-01-012021-09-300001367644ebs:ContractDevelopmentAndManufacturingMember2022-07-012022-09-300001367644ebs:ContractDevelopmentAndManufacturingMember2021-07-012021-09-300001367644ebs:ContractDevelopmentAndManufacturingMember2022-01-012022-09-300001367644ebs:ContractDevelopmentAndManufacturingMember2021-01-012021-09-300001367644ebs:ContractsAndGrantsMember2022-07-012022-09-300001367644ebs:ContractsAndGrantsMember2021-07-012021-09-300001367644ebs:ContractsAndGrantsMember2022-01-012022-09-300001367644ebs:ContractsAndGrantsMember2021-01-012021-09-3000013676442022-07-012022-09-3000013676442021-07-012021-09-3000013676442021-01-012021-09-3000013676442020-12-3100013676442021-09-300001367644us-gaap:CommonStockMember2021-12-310001367644us-gaap:TreasuryStockCommonMember2021-12-310001367644us-gaap:AdditionalPaidInCapitalMember2021-12-310001367644us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001367644us-gaap:RetainedEarningsMember2021-12-310001367644us-gaap:CommonStockMember2022-01-012022-09-300001367644us-gaap:AdditionalPaidInCapitalMember2022-01-012022-09-300001367644us-gaap:RetainedEarningsMember2022-01-012022-09-300001367644us-gaap:TreasuryStockCommonMember2022-01-012022-09-300001367644us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-09-300001367644us-gaap:CommonStockMember2022-09-300001367644us-gaap:TreasuryStockCommonMember2022-09-300001367644us-gaap:AdditionalPaidInCapitalMember2022-09-300001367644us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300001367644us-gaap:RetainedEarningsMember2022-09-300001367644us-gaap:CommonStockMember2022-06-300001367644us-gaap:TreasuryStockCommonMember2022-06-300001367644us-gaap:AdditionalPaidInCapitalMember2022-06-300001367644us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300001367644us-gaap:RetainedEarningsMember2022-06-3000013676442022-06-300001367644us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300001367644us-gaap:RetainedEarningsMember2022-07-012022-09-300001367644us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300001367644us-gaap:CommonStockMember2020-12-310001367644us-gaap:TreasuryStockCommonMember2020-12-310001367644us-gaap:AdditionalPaidInCapitalMember2020-12-310001367644us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001367644us-gaap:RetainedEarningsMember2020-12-310001367644us-gaap:CommonStockMember2021-01-012021-09-300001367644us-gaap:AdditionalPaidInCapitalMember2021-01-012021-09-300001367644us-gaap:RetainedEarningsMember2021-01-012021-09-300001367644us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-09-300001367644us-gaap:CommonStockMember2021-09-300001367644us-gaap:TreasuryStockCommonMember2021-09-300001367644us-gaap:AdditionalPaidInCapitalMember2021-09-300001367644us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-300001367644us-gaap:RetainedEarningsMember2021-09-300001367644us-gaap:CommonStockMember2021-06-300001367644us-gaap:TreasuryStockCommonMember2021-06-300001367644us-gaap:AdditionalPaidInCapitalMember2021-06-300001367644us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300001367644us-gaap:RetainedEarningsMember2021-06-3000013676442021-06-300001367644us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300001367644us-gaap:RetainedEarningsMember2021-07-012021-09-300001367644us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-30ebs:categoryebs:productebs:productCandidateebs:businessLineebs:segment0001367644ebs:ChimerixAssetAcquisitionMember2022-07-012022-09-300001367644ebs:ChimerixAssetAcquisitionMemberebs:MilestonePaymentsMember2022-07-012022-09-300001367644ebs:RegulatoryMilestonesMemberebs:ChimerixAssetAcquisitionMember2022-07-012022-09-30xbrli:pureebs:treatmentCourse0001367644us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMember2022-09-300001367644us-gaap:NotesPayableOtherPayablesMember2022-09-300001367644ebs:ChimerixAssetAcquisitionMember2022-09-300001367644us-gaap:LandAndLandImprovementsMember2022-09-300001367644us-gaap:LandAndLandImprovementsMember2021-12-310001367644us-gaap:BuildingAndBuildingImprovementsMember2022-09-300001367644us-gaap:BuildingAndBuildingImprovementsMember2021-12-310001367644us-gaap:FurnitureAndFixturesMember2022-09-300001367644us-gaap:FurnitureAndFixturesMember2021-12-310001367644us-gaap:ComputerSoftwareIntangibleAssetMember2022-09-300001367644us-gaap:ComputerSoftwareIntangibleAssetMember2021-12-310001367644us-gaap:ConstructionInProgressMember2022-09-300001367644us-gaap:ConstructionInProgressMember2021-12-310001367644us-gaap:ServiceMemberebs:JansenPharmaceuticalsIncMember2022-01-012022-09-300001367644ebs:RockvilleManufacturingFacilityMember2022-09-300001367644ebs:RockvilleManufacturingFacilityMember2022-07-012022-09-300001367644srt:MinimumMemberus-gaap:ProductMember2022-01-012022-09-300001367644srt:MaximumMemberus-gaap:ProductMember2022-01-012022-09-300001367644us-gaap:ProductMember2022-09-300001367644us-gaap:ProductMember2021-12-310001367644ebs:ContractDevelopmentAndManufacturingMember2022-01-012022-09-300001367644ebs:ContractDevelopmentAndManufacturingMember2022-09-300001367644ebs:ContractDevelopmentAndManufacturingMember2021-12-310001367644us-gaap:MoneyMarketFundsMember2022-09-300001367644us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2022-09-300001367644us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Member2022-09-300001367644us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel3Member2022-09-300001367644us-gaap:MoneyMarketFundsMember2021-12-310001367644us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2021-12-310001367644us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Member2021-12-310001367644us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel3Member2021-12-310001367644us-gaap:BankTimeDepositsMember2022-09-300001367644us-gaap:FairValueInputsLevel1Memberus-gaap:BankTimeDepositsMember2022-09-300001367644us-gaap:BankTimeDepositsMemberus-gaap:FairValueInputsLevel2Member2022-09-300001367644us-gaap:FairValueInputsLevel3Memberus-gaap:BankTimeDepositsMember2022-09-300001367644us-gaap:BankTimeDepositsMember2021-12-310001367644us-gaap:FairValueInputsLevel1Memberus-gaap:BankTimeDepositsMember2021-12-310001367644us-gaap:BankTimeDepositsMemberus-gaap:FairValueInputsLevel2Member2021-12-310001367644us-gaap:FairValueInputsLevel3Memberus-gaap:BankTimeDepositsMember2021-12-310001367644us-gaap:FairValueInputsLevel1Member2022-09-300001367644us-gaap:FairValueInputsLevel2Member2022-09-300001367644us-gaap:FairValueInputsLevel3Member2022-09-300001367644us-gaap:FairValueInputsLevel1Member2021-12-310001367644us-gaap:FairValueInputsLevel2Member2021-12-310001367644us-gaap:FairValueInputsLevel3Member2021-12-310001367644us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-09-300001367644us-gaap:MeasurementInputDiscountRateMembersrt:MaximumMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:ValuationTechniqueDiscountedCashFlowMember2022-09-300001367644us-gaap:MeasurementInputDiscountRateMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Membersrt:WeightedAverageMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2022-09-300001367644us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Membersrt:MinimumMemberebs:MeasurementInputProbabilityofPaymentMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2022-09-300001367644srt:MaximumMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberebs:MeasurementInputProbabilityofPaymentMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2022-09-300001367644us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Membersrt:WeightedAverageMemberebs:MeasurementInputProbabilityofPaymentMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2022-09-300001367644us-gaap:SeniorNotesMemberebs:SeniorUnsecuredNotesDueAugust2028Member2022-09-300001367644us-gaap:SeniorNotesMemberebs:SeniorUnsecuredNotesDueAugust2028Member2021-12-310001367644us-gaap:InterestRateSwapMember2022-01-012022-09-300001367644us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2022-09-30ebs:instrument0001367644us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMemberus-gaap:OtherCurrentAssetsMember2022-09-300001367644us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMemberus-gaap:OtherCurrentAssetsMember2021-12-310001367644us-gaap:OtherCurrentLiabilitiesMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2022-09-300001367644us-gaap:OtherCurrentLiabilitiesMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2021-12-310001367644us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMemberus-gaap:OtherAssetsMember2022-09-300001367644us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMemberus-gaap:OtherAssetsMember2021-12-310001367644us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMemberus-gaap:OtherLiabilitiesMember2022-09-300001367644us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMemberus-gaap:OtherLiabilitiesMember2021-12-310001367644us-gaap:InterestRateSwapMember2021-01-012021-12-310001367644us-gaap:InterestExpenseMemberus-gaap:InterestRateSwapMemberus-gaap:CashFlowHedgingMember2022-01-012022-09-300001367644us-gaap:InterestExpenseMemberus-gaap:InterestRateSwapMemberus-gaap:CashFlowHedgingMember2021-01-012021-09-300001367644us-gaap:NotesPayableOtherPayablesMember2021-12-310001367644us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMember2021-12-310001367644ebs:OtherLongTermDebtFacilityMember2022-09-300001367644ebs:OtherLongTermDebtFacilityMember2021-12-310001367644us-gaap:OtherCurrentAssetsMember2022-09-300001367644us-gaap:OtherAssetsMember2022-09-300001367644us-gaap:SeniorNotesMemberebs:SeniorUnsecuredNotesDueAugust2028Member2020-08-070001367644us-gaap:DebtInstrumentRedemptionPeriodOneMemberebs:SeniorUnsecuredNotesDueAugust2028Member2020-08-072020-08-070001367644srt:MaximumMemberus-gaap:DebtInstrumentRedemptionPeriodOneMemberebs:SeniorUnsecuredNotesDueAugust2028Member2020-08-072020-08-070001367644srt:MaximumMemberus-gaap:DebtInstrumentRedemptionPeriodTwoMemberebs:SeniorUnsecuredNotesDueAugust2028Member2020-08-072020-08-070001367644us-gaap:RevolvingCreditFacilityMemberebs:AmendedCreditAgreementMember2020-08-070001367644ebs:AmendedCreditAgreementMemberebs:TermLoanFacilityMember2020-08-070001367644ebs:AmendedCreditAgreementMemberus-gaap:EurodollarMembersrt:MinimumMember2020-08-072020-08-070001367644srt:MaximumMemberebs:AmendedCreditAgreementMemberus-gaap:EurodollarMember2020-08-072020-08-070001367644ebs:AmendedCreditAgreementMemberus-gaap:FederalFundsEffectiveSwapRateMember2020-08-072020-08-070001367644ebs:AmendedCreditAgreementMemberus-gaap:EurodollarMember2020-08-072020-08-070001367644us-gaap:BaseRateMemberebs:AmendedCreditAgreementMembersrt:MinimumMember2020-08-072020-08-070001367644srt:MaximumMemberus-gaap:BaseRateMemberebs:AmendedCreditAgreementMember2020-08-072020-08-070001367644ebs:AmendedCreditAgreementMembersrt:MinimumMember2020-08-072020-08-070001367644srt:MaximumMemberebs:AmendedCreditAgreementMember2020-08-072020-08-070001367644ebs:AmendedCreditAgreementMemberebs:TermLoanFacilityMember2020-08-072020-08-0700013676442020-08-072020-08-070001367644country:USus-gaap:ProductMember2022-07-012022-09-300001367644us-gaap:NonUsMemberus-gaap:ProductMember2022-07-012022-09-300001367644country:USus-gaap:ProductMember2021-07-012021-09-300001367644us-gaap:NonUsMemberus-gaap:ProductMember2021-07-012021-09-300001367644us-gaap:ServiceMembercountry:US2022-07-012022-09-300001367644us-gaap:ServiceMemberus-gaap:NonUsMember2022-07-012022-09-300001367644us-gaap:ServiceMembercountry:US2021-07-012021-09-300001367644us-gaap:ServiceMemberus-gaap:NonUsMember2021-07-012021-09-300001367644country:USebs:ContractDevelopmentAndManufacturingLeasesMember2022-07-012022-09-300001367644us-gaap:NonUsMemberebs:ContractDevelopmentAndManufacturingLeasesMember2022-07-012022-09-300001367644country:USebs:ContractDevelopmentAndManufacturingLeasesMember2021-07-012021-09-300001367644us-gaap:NonUsMemberebs:ContractDevelopmentAndManufacturingLeasesMember2021-07-012021-09-300001367644country:USebs:ContractDevelopmentAndManufacturingMember2022-07-012022-09-300001367644us-gaap:NonUsMemberebs:ContractDevelopmentAndManufacturingMember2022-07-012022-09-300001367644country:USebs:ContractDevelopmentAndManufacturingMember2021-07-012021-09-300001367644us-gaap:NonUsMemberebs:ContractDevelopmentAndManufacturingMember2021-07-012021-09-300001367644country:USebs:ContractsAndGrantsMember2022-07-012022-09-300001367644us-gaap:NonUsMemberebs:ContractsAndGrantsMember2022-07-012022-09-300001367644country:USebs:ContractsAndGrantsMember2021-07-012021-09-300001367644us-gaap:NonUsMemberebs:ContractsAndGrantsMember2021-07-012021-09-300001367644country:US2022-07-012022-09-300001367644us-gaap:NonUsMember2022-07-012022-09-300001367644country:US2021-07-012021-09-300001367644us-gaap:NonUsMember2021-07-012021-09-300001367644country:USus-gaap:ProductMember2022-01-012022-09-300001367644us-gaap:NonUsMemberus-gaap:ProductMember2022-01-012022-09-300001367644country:USus-gaap:ProductMember2021-01-012021-09-300001367644us-gaap:NonUsMemberus-gaap:ProductMember2021-01-012021-09-300001367644us-gaap:ServiceMembercountry:US2022-01-012022-09-300001367644us-gaap:ServiceMemberus-gaap:NonUsMember2022-01-012022-09-300001367644us-gaap:ServiceMembercountry:US2021-01-012021-09-300001367644us-gaap:ServiceMemberus-gaap:NonUsMember2021-01-012021-09-300001367644country:USebs:ContractDevelopmentAndManufacturingLeasesMember2022-01-012022-09-300001367644us-gaap:NonUsMemberebs:ContractDevelopmentAndManufacturingLeasesMember2022-01-012022-09-300001367644country:USebs:ContractDevelopmentAndManufacturingLeasesMember2021-01-012021-09-300001367644us-gaap:NonUsMemberebs:ContractDevelopmentAndManufacturingLeasesMember2021-01-012021-09-300001367644country:USebs:ContractDevelopmentAndManufacturingMember2022-01-012022-09-300001367644us-gaap:NonUsMemberebs:ContractDevelopmentAndManufacturingMember2022-01-012022-09-300001367644country:USebs:ContractDevelopmentAndManufacturingMember2021-01-012021-09-300001367644us-gaap:NonUsMemberebs:ContractDevelopmentAndManufacturingMember2021-01-012021-09-300001367644country:USebs:ContractsAndGrantsMember2022-01-012022-09-300001367644us-gaap:NonUsMemberebs:ContractsAndGrantsMember2022-01-012022-09-300001367644country:USebs:ContractsAndGrantsMember2021-01-012021-09-300001367644us-gaap:NonUsMemberebs:ContractsAndGrantsMember2021-01-012021-09-300001367644country:US2022-01-012022-09-300001367644us-gaap:NonUsMember2022-01-012022-09-300001367644country:US2021-01-012021-09-300001367644us-gaap:NonUsMember2021-01-012021-09-300001367644ebs:JansenPharmaceuticalsIncMember2022-09-300001367644ebs:BARDAMember2020-12-310001367644ebs:ReservationOfManufacturingCapacityMemberebs:BARDAMember2020-12-310001367644ebs:AcceleratedExpansionOfFillFinishCapacityMemberebs:BARDAMember2020-12-310001367644ebs:BARDAMember2021-10-310001367644us-gaap:NonUsMember2022-09-300001367644ebs:ContractDevelopmentAndManufacturingLeasesMember2022-10-012022-09-300001367644ebs:ContractDevelopmentAndManufacturingLeasesMember2023-01-012022-09-300001367644ebs:ContractDevelopmentAndManufacturingLeasesMember2024-01-012022-09-300001367644ebs:ContractDevelopmentAndManufacturingLeasesMember2025-01-012022-09-300001367644ebs:ContractDevelopmentAndManufacturingLeasesMember2026-01-012022-09-3000013676442022-10-012022-09-300001367644srt:ScenarioForecastMember2022-01-012022-12-3100013676442021-01-012021-12-3100013676442021-11-110001367644us-gaap:TreasuryStockCommonMember2021-11-112022-09-300001367644us-gaap:TreasuryStockCommonMember2022-07-012022-09-300001367644us-gaap:EmployeeStockOptionMember2022-01-012022-09-300001367644us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001367644us-gaap:ProductMemberus-gaap:CostOfSalesMember2022-07-012022-09-300001367644us-gaap:ProductMemberus-gaap:CostOfSalesMember2021-07-012021-09-300001367644us-gaap:ProductMemberus-gaap:CostOfSalesMember2022-01-012022-09-300001367644us-gaap:ProductMemberus-gaap:CostOfSalesMember2021-01-012021-09-300001367644us-gaap:ServiceMemberus-gaap:CostOfSalesMember2022-07-012022-09-300001367644us-gaap:ServiceMemberus-gaap:CostOfSalesMember2021-07-012021-09-300001367644us-gaap:ServiceMemberus-gaap:CostOfSalesMember2022-01-012022-09-300001367644us-gaap:ServiceMemberus-gaap:CostOfSalesMember2021-01-012021-09-300001367644us-gaap:ResearchAndDevelopmentExpenseMember2022-07-012022-09-300001367644us-gaap:ResearchAndDevelopmentExpenseMember2021-07-012021-09-300001367644us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-09-300001367644us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-09-300001367644us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-07-012022-09-300001367644us-gaap:SellingGeneralAndAdministrativeExpensesMember2021-07-012021-09-300001367644us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-01-012022-09-300001367644us-gaap:SellingGeneralAndAdministrativeExpensesMember2021-01-012021-09-300001367644us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2021-12-310001367644us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-12-310001367644us-gaap:AccumulatedTranslationAdjustmentMember2021-12-310001367644us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-01-012022-09-300001367644us-gaap:AccumulatedTranslationAdjustmentMember2022-01-012022-09-300001367644us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2022-01-012022-09-300001367644us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2022-09-300001367644us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-09-300001367644us-gaap:AccumulatedTranslationAdjustmentMember2022-09-300001367644us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2022-06-300001367644us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-06-300001367644us-gaap:AccumulatedTranslationAdjustmentMember2022-06-300001367644us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-07-012022-09-300001367644us-gaap:AccumulatedTranslationAdjustmentMember2022-07-012022-09-300001367644us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2022-07-012022-09-300001367644us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2020-12-310001367644us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-12-310001367644us-gaap:AccumulatedTranslationAdjustmentMember2020-12-310001367644us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-01-012021-09-300001367644us-gaap:AccumulatedTranslationAdjustmentMember2021-01-012021-09-300001367644us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2021-09-300001367644us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2021-01-012021-09-300001367644us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-09-300001367644us-gaap:AccumulatedTranslationAdjustmentMember2021-09-300001367644us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2021-06-300001367644us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-06-300001367644us-gaap:AccumulatedTranslationAdjustmentMember2021-06-300001367644us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-07-012021-09-300001367644us-gaap:AccumulatedTranslationAdjustmentMember2021-07-012021-09-300001367644us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2021-07-012021-09-300001367644us-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2022-01-012022-09-300001367644us-gaap:ShareBasedCompensationAwardTrancheOneMemberus-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001367644us-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2022-01-012022-09-300001367644us-gaap:ShareBasedCompensationAwardTrancheTwoMemberus-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001367644us-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedCompensationAwardTrancheThreeMember2022-01-012022-09-300001367644us-gaap:ShareBasedCompensationAwardTrancheThreeMemberus-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001367644ebs:ProductsSegmentMember2022-07-012022-09-300001367644ebs:ServicesSegmentMember2022-07-012022-09-300001367644us-gaap:MaterialReconcilingItemsMember2022-07-012022-09-300001367644ebs:ProductsSegmentMember2021-07-012021-09-300001367644ebs:ServicesSegmentMember2021-07-012021-09-300001367644us-gaap:MaterialReconcilingItemsMember2021-07-012021-09-300001367644ebs:ContractsAndGrantsMemberus-gaap:MaterialReconcilingItemsMember2022-07-012022-09-300001367644ebs:ContractsAndGrantsMemberus-gaap:MaterialReconcilingItemsMember2021-07-012021-09-300001367644ebs:ProductsSegmentMemberus-gaap:ProductMember2022-07-012022-09-300001367644ebs:ProductsSegmentMemberus-gaap:ProductMember2021-07-012021-09-300001367644us-gaap:ServiceMemberebs:ServicesSegmentMember2022-07-012022-09-300001367644us-gaap:ServiceMemberebs:ServicesSegmentMember2021-07-012021-09-300001367644ebs:ProductsSegmentMember2022-01-012022-09-300001367644ebs:ServicesSegmentMember2022-01-012022-09-300001367644us-gaap:MaterialReconcilingItemsMember2022-01-012022-09-300001367644ebs:ProductsSegmentMember2021-01-012021-09-300001367644ebs:ServicesSegmentMember2021-01-012021-09-300001367644us-gaap:MaterialReconcilingItemsMember2021-01-012021-09-300001367644ebs:ContractsAndGrantsMemberus-gaap:MaterialReconcilingItemsMember2022-01-012022-09-300001367644ebs:ContractsAndGrantsMemberus-gaap:MaterialReconcilingItemsMember2021-01-012021-09-300001367644ebs:ProductsSegmentMemberus-gaap:ProductMember2022-01-012022-09-300001367644ebs:ProductsSegmentMemberus-gaap:ProductMember2021-01-012021-09-300001367644us-gaap:ServiceMemberebs:ServicesSegmentMember2022-01-012022-09-300001367644us-gaap:ServiceMemberebs:ServicesSegmentMember2021-01-012021-09-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-33137
ebs-20220930_g1.jpg
EMERGENT BIOSOLUTIONS INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware14-1902018
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
 
400 Professional Drive Suite 400
Gaithersburg, Maryland20879
(Address and zip code of Principal Executive Offices)
(240) 631-3200
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, Par Value $0.001 per shareEBSNew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer Smaller reporting company

Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of November 1, 2022 the registrant had 49,888,218 shares of common stock outstanding.
1


Emergent BioSolutions Inc.
Form 10-Q
TABLE OF CONTENTS
Page
 
 
 
 
 
 
 
2

EMERGENT BIOSOLUTIONS INC.
PART I. FINANCIAL INFORMATION
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q and the documents we incorporate by reference include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, including statements regarding the future performance of Emergent BioSolutions Inc. or our business strategy, future operations, future financial position, future revenues and earnings, projected costs, prospects, plans and objectives of management and the ongoing impact of the COVID-19 pandemic, are forward-looking statements. We generally identify forward-looking statements by using words like "anticipate," "believe," "continue," "estimate," "expect," "forecast," "intend," "may," "plan," should," "will," and similar expressions or variations thereof, or the negative thereof, but these terms are not the exclusive means of identifying such statements. Forward-looking statements are based on our current intentions, beliefs and expectations regarding future events. We cannot guarantee that any forward-looking statement will be accurate. You should realize that if underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results could differ materially from our expectations. You are, therefore, cautioned not to place undue reliance on any forward-looking statement. Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by law and the rules of the Securities and exchange Commission (the "SEC"), we do not undertake to update any forward-looking statement to reflect new information, events or circumstances.
There are a number of important factors that could cause our actual results to differ materially from those indicated by such forward-looking statements, including, among others:
the availability of U.S. Government ("USG") funding for contracts related to procurement of our medical countermeasures, including AV7909 (Anthrax vaccine adsorbed (AVA), adjuvanted), BioThrax® (Anthrax Vaccine Adsorbed) and ACAM2000®, (Smallpox (Vaccinia) Vaccine, Live), among others, as well as contracts related to development of medical countermeasures;
our ability to meet our commitments to quality and compliance in all of our manufacturing operations;
the impact of the generic marketplace on NARCAN® (naloxone HCI) Nasal Spray and future NARCAN sales;
our ability to perform under our contracts with the USG, including the timing of and specifications relating to deliveries;
our ability to provide contract development and manufacturing ("CDMO") services for the development and/or manufacture of product and/or product candidates of our customers at required levels and on required timelines;
our ability to obtain and maintain regulatory approvals for our product candidates and the timing of any such approvals;
the ability of our contractors and suppliers to maintain compliance with current good manufacturing practices and other regulatory obligations;
our ability to negotiate additional USG procurement or follow-on contracts for our Public Health Threat ("PHT") products that have expired or will be expiring;
our ability to negotiate new CDMO contracts and the negotiation of further commitments related to the collaboration and deployment of capacity toward future commercial manufacturing under our existing CDMO contracts;
our ability to collect reimbursement for raw materials and payment of services fees from Janssen Pharmaceuticals, Inc. or other CDMO customers;
the outcomes associated with pending shareholder litigation and government investigations;
our ability to comply with the operating and financial covenants required by our senior secured credit facilities (Senior Secured Credit Facilities) and our 3.875% Senior Unsecured Notes due 2028;
the procurement of products by USG entities under regulatory exemptions prior to approval by the U.S. Food and Drug Administration ("FDA") and corresponding procurement by government entities outside of the United States under regulatory exemptions prior to approval by the corresponding regulatory authorities in the applicable country;
the extent of any ongoing impact of the COVID-19 pandemic on our supply chains and potential future impact thereof on our markets, operations and employees as well as those of our customers and suppliers;
3

EMERGENT BIOSOLUTIONS INC.
the impact on our revenues from and duration of declines in sales of our vaccine products that target travelers due to the reduction of international travel caused by the COVID-19 pandemic;
our ability to identify and acquire companies, businesses, products or product candidates that satisfy our selection criteria, contribute to our overall business strategy, and align with our underlying assumptions that formed the basis of acquisition;
our ability to commercialize, market and manufacture new product candidates successfully; and
the accuracy of our estimates regarding future revenues, expenses, capital requirements and needs for additional financing.
The foregoing sets forth many, but not all, of the factors that could cause actual results to differ from our expectations in any forward-looking statement. When evaluating our forward-looking statements, you should consider this cautionary statement along with the risk factors identified elsewhere in this document, including in the sections entitled "Risk Factor Summary", "Risk Factors", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosures about Market Risk", as well as the risks identified in our other reports filed with the SEC. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor can it assess the impact of any such factor on the business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.
NOTE REGARDING COMPANY REFERENCES
References in this report to “Emergent,” the “Company,” “we,” “us,” and “our” refer to Emergent BioSolutions Inc. and its consolidated subsidiaries.
NOTE REGARDING TRADE NAMES
Emergent®, BioThrax®, BaciThrax®, RSDL®, BAT®, Trobigard®, Anthrasil®, CNJ-016®, ACAM2000®, Vivotif®, Vaxchora®, NARCAN®, Ebanga™, TEMBEXA® and any and all Emergent BioSolutions Inc. brands, products, services and feature names, logos and slogans are trademarks or registered trademarks of Emergent BioSolutions Inc. or its subsidiaries in the United States or other countries. All other brands, products, services and feature names or trademarks are the property of their respective owners.

4


ITEM 1. FINANCIAL STATEMENTS
Emergent BioSolutions Inc.
Condensed Consolidated Balance Sheets
(in millions, except per share amounts)
 September 30, 2022December 31, 2021
(unaudited)
ASSETS 
Current assets:  
Cash and cash equivalents$240.9 $576.1 
Restricted cash0.1 0.2 
Accounts receivable, net191.3 274.7 
Inventories, net546.3 350.8 
Prepaid expenses and other current assets139.9 70.3 
Total current assets1,118.5 1,272.1 
Property, plant and equipment, net806.7 800.1 
Intangible assets, net722.7 604.6 
Goodwill224.9 224.9 
Other assets35.7 57.3 
Total assets$2,908.5 $2,959.0 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$103.8 $128.9 
Accrued expenses 35.9 51.7 
Accrued compensation82.5 88.7 
Debt, current portion21.2 31.6 
Other current liabilities25.0 72.9 
Total current liabilities268.4 373.8 
Debt, net of current portion1,032.1 809.4 
Deferred tax liability113.8 94.9 
Other liabilities44.9 61.9 
Total liabilities1,459.2 1,340.0 
Stockholders' equity:
Preferred stock, $0.001 par value; 15.0 shares authorized, no shares issued or outstanding
  
Common stock, $0.001 par value; 200.0 shares authorized, 55.5 and 55.1 shares issued; 49.9 and 51.3 shares outstanding, respectively
0.1 0.1 
Treasury stock, at cost, 5.6 and 3.8 common shares, respectively
(227.7)(152.2)
Additional paid-in capital860.1 829.4 
Accumulated other comprehensive loss, net(5.2)(16.1)
Retained earnings822.0 957.8 
Total stockholders' equity1,449.3 1,619.0 
Total liabilities and stockholders' equity$2,908.5 $2,959.0 
See accompanying notes.
5


Emergent BioSolutions Inc.
Condensed Consolidated Statements of Operations
(unaudited, in millions, except per share amounts)
 
Three Months Ended September 30,Nine Months Ended September 30,
 
2022202120222021
Revenues:  
Product sales, net$186.2 $270.5 $660.5 $589.6 
CDMO:
Services36.2 112.6 90.7 283.7 
Leases0.2 (71.0)4.7 132.6 
Total CDMO36.4 41.6 95.4 416.3 
Contracts and grants17.4 16.9 34.3 63.6 
Total revenues240.0 329.0 790.2 1,069.5 
Operating expenses:
Cost of product sales85.5 103.2 256.8 237.0 
Cost of CDMO63.1 114.3 217.5 307.6 
Research and development39.2 49.6 135.4 151.0 
Selling, general and administrative80.2 82.1 246.1 254.2 
Amortization of intangible assets14.0 14.5 42.0 44.5 
Total operating expenses282.0 363.7 897.8 994.3 
Income (loss) from operations(42.0)(34.7)(107.6)75.2 
Other income (expense):
Interest expense(8.5)(8.4)(24.5)(25.5)
Other, net(13.4)(2.4)(18.4)(2.8)
Total other income (expense), net(21.9)(10.8)(42.9)(28.3)
Income (loss) before income taxes(63.9)(45.5)(150.5)46.9 
Income tax benefit (provision)(11.8)12.8 14.7 (5.3)
Net income (loss)$(75.7)$(32.7)$(135.8)$41.6 
Net income (loss) per common share
Basic$(1.52)$(0.61)$(2.71)$0.78 
Diluted$(1.52)$(0.61)$(2.71)$0.77 
Shares used in computing net loss per common share
Basic49.9 53.7 50.2 53.6 
Diluted49.9 53.7 50.2 54.3 
`
See accompanying notes.
6


Emergent BioSolutions Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(unaudited, in millions)
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Net income (loss)$(75.7)$(32.7)$(135.8)$41.6 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment(1.3)0.3 (0.4)(1.4)
Unrealized gains (losses) on hedging activities2.2 (1.0)11.3 3.6 
Total other comprehensive income (loss), net of tax0.9 (0.7)10.9 2.2 
Comprehensive income (loss), net of tax$(74.8)$(33.4)$(124.9)$43.8 
See accompanying notes.
7

Emergent BioSolutions Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited, in millions)

 
Nine Months Ended September 30,
20222021
Cash flows used in operating activities:
Net income (loss)$(135.8)$41.6 
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Share-based compensation expense33.4 32.3 
Depreciation and amortization107.7 94.6 
Adjustment for prior period lease receivables (Note 10) 86.1 
Change in fair value of contingent consideration, net2.4 2.6 
Amortization of deferred financing costs3.1 3.1 
Deferred income taxes23.0 0.6 
Other13.0 5.1 
Changes in operating assets and liabilities:
Accounts receivable76.2 (114.7)
Inventories(112.2)(58.0)
Prepaid expenses and other assets(29.2)(54.8)
Accounts payable(9.0)3.5 
Accrued expenses and other liabilities(98.0)(19.3)
Accrued compensation(5.7)(11.1)
Contract liabilities4.2 (19.5)
Net cash used in operating activities:(126.9)(7.9)
Cash flows used in investing activities:
Purchases of property, plant and equipment(92.2)(178.3)
Asset acquisitions(243.7) 
Net cash used in investing activities:(335.9)(178.3)
Cash flows provided by (used in) financing activities:
Proceeds from revolving credit facility238.0  
Purchases of treasury stock(81.9) 
Principal payments on term loan facility(25.3)(16.9)
Principal payments on convertible senior notes (10.6)
Proceeds from share-based compensation activity3.0 12.5 
Taxes paid for share-based compensation activity(5.7)(13.5)
Contingent consideration payments (2.5)
Net cash provided by (used in) financing activities:128.1 (31.0)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(0.6)(0.3)
Net change in cash, cash equivalents and restricted cash(335.3)(217.5)
Cash, cash equivalents and restricted cash at beginning of period576.3 621.5 
Cash, cash equivalents and restricted cash at end of period$241.0 $404.0 
Supplemental disclosure of cash flow information:
Cash paid during the period for interest$26.7 $27.3 
Cash paid during the period for income taxes$23.9 $57.6 
Supplemental information on non-cash investing and financing activities:
Purchases of property, plant and equipment unpaid at period end$10.0 $20.6 
Reconciliation of cash and cash equivalents and restricted cash at September 30, 2022 and December 31, 2021:
Cash and cash equivalents$240.9 $576.1 
Restricted cash0.1 0.2 
Total$241.0 $576.3 
See accompanying notes.
8


Emergent BioSolutions Inc.
Condensed Consolidated Statements of Changes in Stockholders' Equity
(unaudited, in millions)
 
$0.001 Par Value
Common Stock
Treasury Stock
Additional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Stockholders' Equity
SharesAmountSharesAmount
Balance at December 31, 202155.1 $0.1 (3.8)$(152.2)$829.4 $(16.1)$957.8 $1,619.0 
Share-based compensation activity0.4 — — — 30.7 — — 30.7 
Net loss— — — — — — (135.8)(135.8)
Repurchases of stock— — (1.8)(75.5)— — — (75.5)
Other comprehensive income, net of tax— — — — — 10.9 — 10.9 
Balance at September 30, 202255.5 $0.1 (5.6)$(227.7)$860.1 $(5.2)$822.0 $1,449.3 
Balance at June 30, 202255.5 $0.1 (5.6)$(227.7)$849.2 $(6.1)$897.7 $1,513.2 
Share-based compensation activity— — — — 10.9 — — 10.9 
Net loss— — — — — — (75.7)(75.7)
Repurchases of stock— — — — — — —  
Other comprehensive income, net of tax— — — — — 0.9 — 0.9 
Balance at September 30, 202255.5 $0.1 (5.6)$(227.7)$860.1 $(5.2)$822.0 $1,449.3 
Balance at December 31, 202054.3 $0.1 (1.2)$(39.6)$784.9 $(25.3)$726.9 $1,447.0 
Share-based compensation activity0.6 — — — 31.9 — — 31.9 
Net income— — — — — — 41.6 41.6 
Other comprehensive income, net of tax— — — — — 2.2 — 2.2 
Balance at September 30, 202154.9 $0.1 (1.2)$(39.6)$816.8 $(23.1)$768.5 $1,522.7 
Balance at June 30, 202154.9 $0.1 (1.2)$(39.6)$804.4 $(22.4)$801.2 $1,543.7 
Share-based compensation activity— — — — 12.4 — — 12.4 
Net loss— — — — — — (32.7)(32.7)
Other comprehensive loss, net of tax— — — — — (0.7)— (0.7)
Balance at September 30, 202154.9 $0.1 (1.2)$(39.6)$816.8 $(23.1)$768.5 $1,522.7 
See accompanying notes.
9

EMERGENT BIOSOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in millions, except share and per share amounts)

1.Business
Overview
Emergent BioSolutions Inc. (“Emergent,” the “Company,” “we,” “us,” and “our”) is a global life sciences company focused on providing innovative preparedness and response solutions addressing accidental, deliberate, and naturally occurring Public Health Threats (PHTs). The Company's solutions include a product portfolio, a product development portfolio, and a contract development and manufacturing (CDMO) services portfolio.
The Company is focused on the following five distinct PHT categories: chemical, biological, radiological, nuclear and explosives (CBRNE); emerging infectious diseases (EID); travel health; emerging health crises; and acute/emergency care. The Company has a product portfolio of thirteen products (vaccines, therapeutics and drug-device combination products). The revenue generated by the products comprises a substantial portion of the Company's revenue. The Company also has one product candidate that is procured under special circumstances by the U.S. government (USG), although it is not approved by the U.S. Food and Drug Administration (FDA). The Company structures the business with a focus on markets and customers. As such, the key components of the business structure include the following three business lines: Government - Medical Countermeasures (MCM) Products, Commercial Products, and CDMO Services. The Company operates as two operating segments: 1) a products segment (Products) consisting of the Government - MCM and Commercial business lines and 2) a services segment (Services) focused on CDMO (Note 14, "Segment information").
The Company's products and services include:
Government - MCM Products
AV7909®, is a procured product candidate being developed as a next generation anthrax vaccine for post-exposure prophylaxis of disease resulting from suspected or confirmed Bacillus anthracis exposure. The USG has largely switched from procuring BioThrax to AV7909 for the Strategic National Stockpile (SNS) prior to its approval by the FDA;
BioThrax®, the only vaccine licensed by the FDA, for the general use prophylaxis and post-exposure prophylaxis of anthrax disease;
ACAM2000®, the only single-dose smallpox vaccine licensed by the FDA for active immunization against smallpox disease for persons determined to be at high risk for smallpox infection;
BAT®, the only heptavalent antitoxin licensed by the FDA and Health Canada for the treatment of botulism;
CNJ-016®, also referred to as VIGIV, the only polyclonal antibody therapeutic licensed by the FDA and Health Canada to address certain complications from smallpox vaccination;
Raxibacumab injection, a fully human monoclonal antibody therapeutic licensed by the FDA for the treatment and prophylaxis of inhalational anthrax;
Anthrasil®, the only polyclonal antibody therapeutic licensed by the FDA and Health Canada for the treatment of inhalational anthrax;
RSDL®, the only medical device cleared by the FDA to remove or neutralize the following chemical warfare agents from the skin: tabun, sarin, soman, cyclohexyl sarin, VR, VX, mustard gas and T-2 toxin; and
Trobigard® atropine sulfate, obidoxime chloride AUTO-INJECTOR, is a combination drug-device auto-injector procured product candidate that contains atropine sulfate and obidoxime chloride. It has not been approved by the FDA, but it is procured by certain authorized government buyers under special circumstances for potential use as a nerve agent countermeasure.
TEMBEXA®, an oral antiviral formulated as 100 mg tablets and 10 mg/mL oral suspension dosed once weekly for two weeks. It has been approved by the FDA for the treatment of human smallpox disease caused by variola virus in adult and pediatric patients, including neonates.
10

EMERGENT BIOSOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in millions, except share and per share amounts)
Ebanga™ (ansuvimab-zykl, formerly referred to as mAb114) is a monoclonal antibody with antiviral activity provided through a single IV infusion for the treatment of Ebola. Under the terms of a collaboration with Ridgeback Biotherapeutics, Emergent will be responsible for the manufacturing, sale, and distribution of Ebanga™ in the United States and Canada, and Ridgeback Biotherapeutics will serve as the global access partner for Ebanga™.
Commercial Products
NARCAN® (naloxone HCl) Nasal Spray, the first needle-free formulation of naloxone approved by the FDA and Health Canada, for the emergency treatment of known or suspected opioid overdose as manifested by respiratory and/or central nervous system depression;
Vaxchora® (Cholera Vaccine, Live, Oral), the only single-dose oral vaccine licensed by the FDA and the European Medicines Agency (EMA) for the prevention of cholera; and
Vivotif® (Typhoid Vaccine Live Oral Ty21a), the only oral vaccine licensed by the FDA for the prevention of typhoid fever.
Services - Contract Development and Manufacturing
The Company's services line focused on CDMO offerings covers development services, drug substance manufacturing, drug product manufacturing, and when necessary, suite reservations, which depending on facts and circumstances could be considered a lease. These services are provided to customers spanning the pharmaceutical and biotechnology industries as well as the USG and non-governmental organizations. The Company's technology platforms include mammalian, microbial, viral, plasma and advanced therapies utilizing the Company's core capabilities for manufacturing to third parties on a clinical and commercial (small and large) scale. Additional services include fill/finish formulation and analytical development services for injectable and other sterile products, inclusive of process design, technical transfer, manufacturing validations, aseptic filling, lyophilization, final packaging and stability studies, as well as manufacturing of vial and pre-filled syringe formats on multiple platforms.
Asset Acquisition
During the three months ended September 30, 2022, the Company acquired from Chimerix ("the Seller") the exclusive worldwide rights to brincidofovir, including TEMBEXA® and related assets (the “Transaction”). TEMBEXA is a medical countermeasure for smallpox approved by the FDA in June 2021. Under the terms of the Asset Purchase Agreement (the "Purchase Agreement"), the Company paid $238.0 million upon closing of the Transaction, and is subject to potential milestone payments of up to $124.0 million contingent on the potential exercise by the U.S. government of procurement options. The closing payment and the milestone payments were based on the actual procurement value of the procurement contract (the "BARDA Contract") with the Biomedical Advanced Research and Development Authority (“BARDA”). Each milestone payment is associated with the exercise of future BARDA procurement options of TEMBEXA following the BARDA Contract base period. The Seller is also eligible to receive up to $12.5 million in regulatory milestones associated with the SymBio Pharmaceuticals Ltd. brincidofovir licensing arrangements assumed by the Company in the Transaction. The milestone payments will be recorded when the associated procurement options have been exercised and/or the regulatory milestones have been met and the consideration is paid or becomes payable.
The Seller may also earn a 20% royalty on future gross profit of TEMBEXA in the United States associated with volumes above 1.7 million treatment courses of therapy during the exclusivity period of TEMBEXA. Outside of the United States, the Purchase Agreement also allows the Seller to earn a 15% royalty on all gross profit associated with TEMBEXA sales during the exclusivity period of TEMBEXA on a market-to-market basis. Refer to Note 6, "Intangible assets" for additional information around the impacts of this asset acquisition on the current period results.
11

EMERGENT BIOSOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in millions, except share and per share amounts)
2.    Basis of presentation and principles of consolidation
Basis of presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of Emergent and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements included herein have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X issued by the SEC. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC.
All adjustments contained in the accompanying unaudited condensed consolidated financial statements are of a normal recurring nature and are necessary to present fairly the financial position of the Company as of September 30, 2022. Interim results are not necessarily indicative of results that may be expected for any other interim period or for an entire year.

Going Concern
As of September 30, 2022, there is $238.0 million outstanding on the revolver loan and $371.3 million on the term loan that matures in October 2023, which is within one year of the date that the consolidated financial statements are issued for the quarter ended September 30, 2022. The Company determined that there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. This evaluation considered the potential mitigating effect of management’s plans that have not been fully implemented. Management may evaluate the mitigating effect of its plans to determine if it is probable that (1) the plans will be effectively implemented within one year after the date the financial statements are issued, and (2) when implemented, the plans will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern. The Company's plan to alleviate the substantial doubt includes amending its existing revolver loan and term loan that are due October 2023.
While the Company is in the process of and expects to replace the current credit facility before it matures, management cannot make the assumption that it is probable that the Company will be able to obtain such debt refinancing on commercially reasonable terms or at all until the new credit facility is in place. The Company is currently working with its lenders and expects to refinance the credit facility with revised terms and conditions. The extent to which the Company will be able to affect such refinancing, replacement or maturity extension on terms that are favorable or at all is dependent on a number of uncertain factors, including then-prevailing credit and other market conditions, economic conditions, particularly in the pharmaceutical and biotechnology industry, disruptions or volatility caused by factors such as COVID-19, regional conflicts, inflation, and supply chain disruptions. In addition, rising interest rates could limit our ability to refinance our existing credit facility when it matures or cause us to pay higher interest rates upon refinancing.
As the replacement of the Company’s current debt facility is conditional upon the execution of agreements with new or existing third parties, which are considered outside of the Company’s control, until such time as they are completed, the refinancing cannot be considered to be probable to occur as of the date of this report. The Condensed Consolidated Financial Statements have been prepared assuming the Company will continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Significant accounting policies
During the nine months ended September 30, 2022, there have been no significant changes to the Company's summary of significant accounting policies contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC that have materially impacted the presentation of the Company's financial statements. During the nine months ended September 30, 2022, the Company revised the reporting that the chief operating decision maker ("the CODM") reviews in order to assess Company performance. The CODM manages the business with a focus on two reportable segments: 1) Products segment consisting of the Government - MCM and
12

EMERGENT BIOSOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in millions, except share and per share amounts)
Commercial business lines and 2) Services segment focused on CDMO. This change is further outlined in Note 14, "Segment information".
Fair value measurements
Separate disclosure is required for assets and liabilities measured at fair value on a recurring basis from those measured at fair value on a non-recurring basis. The Company has cash held in money market accounts (level 1) and time deposits (level 2), contingent purchase consideration (level 3) and interest rate swaps arrangements (level 2) that are measured at fair value on a recurring basis (Note 7, "Fair value measurements" and Note 8, "Derivative instruments and hedging activities").
On a non-recurring basis, the Company measures its long-lived assets as part of impairment evaluations using fair value measurements. Goodwill is allocated to the Company's reporting units, which are one level below its operating segments. The Company evaluates goodwill and other indefinite-lived intangible assets for impairment annually as of October 1 and earlier if an event or other circumstance indicates that the carrying value of the asset may not be recoverable. If the Company believes that as a result of its qualitative assessment it is more likely than not that the fair value of a reporting unit or other indefinite-lived intangible asset is greater than its carrying amount, the quantitative impairment test is not required. If however it is determined that it is not more likely than not that the fair value of a reporting unit or other indefinite-lived intangible asset is greater than its carrying amount, a quantitative test is required. Long-lived assets such as intangible assets and property, plant and equipment are not required to be tested for impairment annually. Instead, long-lived assets are tested for impairment whenever circumstances indicate that the carrying amount of the asset may not be recoverable, such as when there is an adverse change in the market relating to those related assets. The impairment test first requires a comparison of undiscounted future cash flows to the carrying value of the asset. Determining the need for a detailed impairment analysis requires the exercise of judgment about several business factors, including the timing of expected future cash flows and assumptions about the economic environment.
As of September 30, 2022 and December 31, 2021, the Company had no other significant assets or liabilities that were measured at fair value.
Recently issued accounting standards
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) that the Company adopts as of the pronouncement's specified effective date. Unless otherwise discussed below, the Company does not believe that the adoption of recently issued standards have or may have a material impact on the consolidated financial statements or disclosures.
Recently Adopted
ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting
In March 2020, the FASB issued Topic 848, which was further amended in January 2021. Topic 848 provides relief for impacted areas as it relates to impending reference rate reform. It contains optional expedients and exceptions to debt arrangements, contracts, hedging relationships, and other areas or transactions that are impacted by reference rate reform. This guidance is effective upon issuance for all entities and elections of certain optional expedients are required to apply the provisions of the guidance. As of September 30, 2022, the Company adopted this ASU with no material impact to our consolidated financial statements.
13

EMERGENT BIOSOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in millions, except share and per share amounts)
3.    Inventories, net
Inventories, net consisted of the following:
September 30, 2022December 31, 2021
Raw materials and supplies$277.4 $217.5 
Work-in-process138.3 95.8 
Finished goods130.6 37.5 
Total inventories, net (1)
$546.3 $350.8 
(1) During the three months ended September 30, 2022, the Company acquired certain assets through an asset acquisition, the Transaction, and the related inventories of $84.8 million were included in our inventories balances as of September 30, 2022.
Inventories, net is stated at the lower of cost or net realizable value. For additional information related to the termination of the manufacturing services agreement (the “Agreement”) with Janssen Pharmaceuticals, Inc. (“Janssen”) and associated evaluation of inventory as of September 30, 2022, refer to Note 10, "Revenue recognition."
4.    Property, plant and equipment, net
Property, plant and equipment, net consisted of the following:
September 30, 2022December 31, 2021
Land and improvements$53.5 $52.1 
Buildings, building improvements and leasehold improvements321.9 269.7 
Furniture and equipment551.2 513.5 
Software65.3 60.7 
Construction-in-progress181.0 223.2 
Property, plant and equipment, gross$1,172.9 $1,119.2 
Less: Accumulated depreciation & amortization(366.2)(319.1)
Total property, plant and equipment, net$806.7 $800.1 
As of September 30, 2022 and December 31, 2021, construction-in-progress primarily included costs incurred related to construction to advance the Company's CDMO capabilities.
Property, plant and equipment, net is stated at cost, less accumulated depreciation and amortization. During the nine months ended September 30, 2022, the Company recorded accelerated depreciation of $12.7 million reflecting a shortening of the useful life of certain property, plant and equipment which were to be used in the manufacturing process to fulfill the manufacturing services agreement with Janssen. For additional information related to the termination of the Agreement, refer to Note 10, "Revenue recognition".
14

EMERGENT BIOSOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in millions, except share and per share amounts)
5.    Leases
The Company is the lessee for operating leases for offices, research and development facilities and manufacturing facilities. The Company determines if an arrangement is a lease at inception. Operating leases are included in right-of-use (ROU) assets and liabilities. For a discussion of lessor activities, see Note 10, "Revenue recognition".
The components of lease expense were as follows: 
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Operating lease cost:
Amortization of right-of-use assets$1.4 $1.4 $4.2 $4.2 
Interest on lease liabilities0.3 0.3 0.8 1.0 
Total operating lease cost$1.7 $1.7 $5.0 $5.2 
Operating lease costs are reflected as components of cost of product sales, cost of contract development and manufacturing, research and development expense and selling, general and administrative expense.
Supplemental balance sheet information related to lessee activities is as follows:
(In millions, except lease term and discount rate)Balance Sheet LocationSeptember 30, 2022December 31, 2021
Operating lease right-of-use assetsOther assets$20.5$28.3
Operating lease liabilities, current portionOther current liabilities5.75.8
Operating lease liabilitiesOther liabilities15.824.2
Total operating lease liabilities$21.5$30.0
Operating leases:
Weighted average remaining lease term (years)5.97.0
Weighted average discount rate4.0 %4.1 %
During the three months ended September 30, 2022, the Company exercised the option to purchase our Rockville manufacturing facility. As a result, the Company removed the related operating lease right-of-use asset and operating lease liability of $3.5 million and $3.4 million, respectively. The purchased assets have been properly included in "Property, plant and equipment, net" on our condensed consolidated balance sheet as of September 30, 2022.
15

EMERGENT BIOSOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in millions, except share and per share amounts)
6.    Intangible assets
The Company's intangible assets consist of products acquired via business combinations or asset acquisitions. The following table summarizes the Company's Intangible assets, net:
September 30, 2022December 31, 2021
Asset TypeEstimated LifeCostAccumulated AmortizationNetCostAccumulated AmortizationNet
Products (1)
8-22 years
$958.1 $235.4 $722.7 $798.0 $193.5 $604.5 
CDMO8 years5.5 5.5  5.5 5.4 0.1 
   Total intangible assets$963.6 $240.9 $722.7 $803.5 $198.9 $604.6 
(1) During the three months ended September 30, 2022, we acquired certain assets through asset acquisitions, and the related intangible assets were assigned to the "Products" asset type, of which $154.7 million was related to the Transaction.
Amortization expense associated with the Company's intangible assets was recorded as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Amortization Expense$14.0 $14.5 $42.0 $44.5 
As of September 30, 2022, the weighted average amortization period remaining for intangible assets was 11.4 years.
The table below summarizes the changes in the carrying amount of the Company's goodwill balance:
Goodwill, December 31, 2021
$224.9 
Foreign currency translation adjustments 
Goodwill, September 30, 2022
$224.9 
The carrying amount of goodwill included accumulated impairments of $41.7 million as of September 30, 2022 and December 31, 2021, respectively.
The Company has $224.9 million of total goodwill which is composed of our Products and Services segments. There is the risk of future impairments in our reporting units as any further deterioration in their performance compared to forecast, changes in order volumes or delivery schedules for major customers, as well as any changes in economic forecasts and expected recovery in the biopharmaceutical industry, may require the Company to complete additional impairment tests in future quarters and could result in the reporting unit’s fair value falling below carrying value in subsequent quarters. In the event the Company experiences factors that it believes indicate a decline in fair value, including negative changes to long-term growth rates or if discount rates increase, we may be required to record impairments of goodwill and other identified intangible assets. Further, if the composition of the Company’s reporting unit’s assets and liabilities were to change and result in an increase in the reporting unit’s carrying value, it could lead to additional impairment testing and further impairment losses.
16

EMERGENT BIOSOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in millions, except share and per share amounts)
7.    Fair value measurements
The table below presents information about the Company's assets and liabilities that are regularly measured and carried at fair value and indicates the level within the fair value hierarchy of the valuation techniques the Company utilized to determine fair value:
September 30, 2022
December 31, 2021
TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3
Assets:
Money market accounts$25.3 $25.3 $ $ $152.4 $152.4 $ $ 
Time deposits50.4  50.4  200.0  200.0  
Derivative instruments        
Total$75.7 $25.3 $50.4 $ $352.4 $152.4 $200.0 $ 
Liabilities:
Contingent consideration$7.8 $ $ $7.8 $37.2 $ $ $37.2 
Derivative instruments    6.1  6.1  
Total$7.8 $ $ $7.8 $43.3 $ $6.1 $37.2 
Contingent consideration
Contingent consideration liabilities associated with business combinations are measured at fair value. These liabilities represent an obligation of the Company to transfer additional assets to the selling shareholders and owners if future events occur or conditions are met. These liabilities associated with business combinations are measured at fair value at inception and at each subsequent reporting date. The changes in the fair value are primarily due to the expected amount and timing of future net sales, which are inputs that have no observable market. Any changes in fair value for the contingent consideration liabilities related to the Company’s products are classified in the Company's statement of operations as cost of product sales.
The table below is a reconciliation of the beginning and ending balance of the Company's contingent consideration liability:
 Liability for Contingent Consideration
Balance at December 31, 2021$37.2 
Change in fair value2.4 
Settlements(31.8)
Balance at September 30, 2022$7.8 
As of September 30, 2022 and December 31, 2021, the current portion of the contingent consideration liability was $3.5 million and $32.7 million, respectively, and was included in other current liabilities on the condensed consolidated balance sheets. The non-current portion of the contingent consideration liability is included in other liabilities on the condensed consolidated balance sheets.
17

EMERGENT BIOSOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in millions, except share and per share amounts)
The recurring Level 3 fair value measurements for the Company's contingent consideration liability include the following significant unobservable inputs:
Contingent Consideration Liability
Fair Value as of September 30, 2022
Valuation TechniqueUnobservable InputRangeWeighted Average
Revenue milestone and royalty based7.8Discounted cash flowDiscount rate
10.1%
10.1%
Probability of payment
25% - 50%
40.0%
Projected year of payment2022 - 20282024
Derivative instruments
Refer to Note 8, "Derivative instruments and hedging activities" for more information about the Company's derivative instruments.
Non-variable rate debt
As of September 30, 2022 and December 31, 2021, the fair value of the Company's 3.875% Senior Unsecured Notes was $299.9 million and $433.3 million, respectively. The fair value was determined through market sources, which are level 2 inputs and directly observable. The carrying amounts of the Company’s other long-term variable interest rate debt arrangements approximate their fair values (see Note 9, "Debt").
8.    Derivative instruments and hedging activities
Risk management objective of using derivatives
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company has entered into interest rate swaps to manage exposures that arise from payments of variable interest rate debt associated with the Company's senior secured credit agreements.
If current fair values of designated interest rate swaps remained static over the next twelve months, the Company would reclassify $9.0 million of net deferred gains from accumulated other comprehensive loss into the condensed consolidated statement of operations over the next twelve-month period. All outstanding cash flow hedges mature in October 2023.
As of September 30, 2022, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:
(in millions, except number of instruments)Number of InstrumentsNotional
Interest rate swaps7$350.0 
18

EMERGENT BIOSOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in millions, except share and per share amounts)
The table below presents the fair value of the Company’s derivative financial instruments designated as hedges as well as their classification on the balance sheets:
Asset DerivativesLiability Derivatives
 
September 30, 2022December 31, 2021September 30, 2022December 31, 2021
Balance Sheet LocationFair ValueBalance Sheet LocationFair ValueBalance Sheet LocationFair ValueBalance Sheet LocationFair Value
Interest Rate SwapsOther Current Assets$8.9 Other Current Assets$ Other Current Liabilities $ Other Current Liabilities$4.5 
Other Assets$0.4 Other Assets$ Other Liabilities$ Other Liabilities$1.6 
The valuation of the interest rate swaps is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each interest rate swap. This analysis reflects the contractual terms of the interest rate swaps, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash payments (or receipts) and the discounted expected variable cash receipts (or payments). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. We incorporate credit valuation adjustments in the fair value measurements to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk. These credit valuation adjustments were not significant inputs for the fair value calculations for the periods presented. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as the posting of collateral, thresholds, mutual puts and guarantees. The valuation of interest rate swaps fall into Level 2 in the fair value hierarchy.
The table below presents the effect of cash flow hedge accounting on accumulated other comprehensive loss.
Cumulative Amount of Gain/(Loss) Recognized in OCI on DerivativesLocation of Loss Reclassified fromAmount of Loss Reclassified from Accumulated OCL into Income (Loss)
September 30,December 31,Accumulated OCL into Income (Loss)Nine Months Ended September 30,
2022202120222021
Interest Rate Swaps$9.3 $(6.1)Interest expense$(1.9)$(4.3)
9.    Debt
The components of debt were as follows: