Emergent BioSolutions Inc.

and many more. reflecting the benefit of product mix and disciplined operational execution. Moving to slide 16, the notable year-to-date revenue elements show the same dynamics we saw in the quarter. MCM revenue was the primary driver of the year-over-year increase supported by the timing of product deliveries, accelerated contract awards, and meaningful international sales. Commercial revenue continues to reflect Narcan's strong leadership position while year-to-date performance has been pressured by a more competitive naloxone market. Overall, the first half reflects strong MCM performance, offsetting pressure in the commercial portfolio. On slide 17, we highlight continued stability in our financial metrics. We ended the second quarter with $140 million of cash and $190 million of total liquidity. While cash declined versus the prior year period, the business continued to generate significant operating cash flow while also absorbing the $50 million Imbanga investment milestone payment during the quarter. In addition, we've already received $145 million of cash through July from the $190 million accounts receivable balance at June 30, which further improves our operating cash flow and liquidity. Gross debt was $590 million as of June 30, 2026, compared with $700 million in the prior year. Net debt was $450 million, and our net leverage ratio remained stable year-over-year at 1.9 times trailing 12-month adjusted EBITDA. On slide 18, turning to capital allocation, our priorities remain focused on strengthening the business and creating long-term shareholder value. We completed the April 2026 term loan refinancing, establishing a new $150 million term loan with maturity extended to 2031, reduced interest rates, and enhanced operating and financial flexibility. In addition, our board authorized a new $75 million debt repurchase program, and as previously mentioned, we have a $50 million share repurchase program through March 2027. During the second quarter, we repurchased 1.1 million shares for approximately $9 million, bringing year-to-date repurchases to 1.9 million shares for $18 million. As of quarter end, $37.5 million remained available under the Authorized Share Repurchase Program. We continue to balance debt reduction, disciplined share repurchases, and investments in international MCM growth, internal R&D, including the Mbonga Program, and business development opportunities. Turning to slide 19, we have updated our revenue and profitability guidance. were revising full-year 2026 total revenue guidance to a range of $645 million to $675 million, compared with our prior range of $720 to $760 million. The revision primarily reflects lower expected commercial revenue in the second half of the year, driven by increased competitive pressure in Narcan, as well as continued pricing and volume pressure across the naloxone market. For MCM, we continue to expect contributions from U.S. government procurement and international sales, with the first half benefit from accelerated deliveries already reflected in our year-to-date results. We are also revising our profitability outlook to reflect updated revenue expectations, the anticipated impact of restructuring actions, and the Narcan non-cash impairment charge. Our GAAP net loss guidance is now expected to be within a range of negative $245 million to negative $225 million, which includes the effect of non-cash items and restructuring related expenses. Adjusted net income guidance is now expected to be $10 million to $30 million. We're revising adjusted EBITDA guidance to $130 to $150 million compared with our prior range of $155 to $175 million. At the midpoint, the adjusted EBITDA reduction is substantially less than the revenue reduction because the lower revenue outlook is partially offset in 26 by the impact of the cost savings initiative announced today, along with continued operating expense discipline. We're also revising adjusted gross margin guidance to 42% to 44%, reflecting the expected mixed impact from lower commercial revenue. For the third quarter, we expect total revenue to be between $110 and $130 million. Q3 outlook reflects an anticipated step down following the accelerated MCM deliveries in the first half, as well as continued commercial pressure from the evolving Naloxone marketplace. Even with the lower revenue outlook, we remain focused on cash generation, disciplined capital management and execution of our cost savings program to support profitability and liquidity through the balance of 2026. In summary, Q2 was a strong quarter for Emergent and capped a solid first half of the year. We exceeded the high end of our Q2 revenue guidance, delivered adjusted EBITDA of $97 million with a 41% margin and generated strong operating cash flow. We ended the quarter with $140 million of cash, which increased significantly in early Q3 through accounts receivable collections. And during the quarter, we continued to execute our capital management priorities. Following the April 2026 term loan refinancing, we've enhanced financial flexibility through extended maturities, lower interest expense and improved covenant flexibility. will continue to demonstrate financial discipline as we sustain our current business, pursue growth opportunities, and create shareholder value over time. And with that, I'd like to turn the call back over to Joe to discuss our business outlook and growth catalysts before we go into Q&A. Joe?

Thank you, Rich. Turning to slide 21, I'd like to provide context around our business outlook and the catalysts we believe can enable growth in 2026 and beyond. Our growth outlook is focused on four principal areas. expanding international MCM orders and opportunities. Second, launching additional line extensions for the Naloxone business, including the Narcan nasal spray carrying case, including in the multi-package configurations. Third, driving organic growth through internal R&D programs, including Tebexa, Ibonga, and Raxibacumab. And fourth, accelerating growth through selective external business development opportunities that are value-decretive. Additionally, as I previously mentioned, we are unifying R&D and business development into the growth organization, which we believe will help us make faster, more informed portfolio decisions and allocate capital with greater discipline. Turning to slide 22, our near-term pipeline and current asset strategy is focused on maximizing the value of programs where emergence has differentiated experience, clear mission alignment, and the potential to support sustainable growth. The important note here is that our pipeline is about focusing our resources on assets and programs where Emergent can lead, where capabilities matter, and where we can continue to help protect and save lives against public health threats. Now moving to our summary on slide 23. While Emergent is continuing to execute on its multi-year transformation plan, we are taking decisive action now to address Narcan business realities, prepare the company for 2027 and beyond, and remain focused on our mission to protect and save lives. We are restructuring our business operation to improve overall cost structure, drive efficiencies and align resourcing to the current needs of the organization. Our MCM business continues to support the U.S. in international preparedness and our Naloxone business continues to deliver on an emergent mission to protect and save lives. We remain committed to patient safety, quality and compliance across the enterprise are pursuing growth initiatives in creating long-term value for shareholders. With that, I look forward to your question. Operator, if we can please open the line for questions.

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Raghu of H&C, Wainwright & Co. Your line is now open.

Thanks very much for taking our questions. Firstly, with respect to the Narcan situation, I was wondering if you could provide us with some additional granularity on any potential initiatives that you think are likely to be particularly effective in A, flowing the pace at which Narcan sales might erode, and B, potentially leverage the brand recognition that you have in order to position the franchise more effectively as the key line of defense against next-gen fentanyl analogs, which, as I understand, are significantly more addictive and more likely to be fatal than fentanyl itself. Secondly, I was wondering if you could just give us some more insight into your strategic thinking behind the reorientation of the company away from what sounds like basic R&D and how you anticipate redeploying those resources, particularly with potentially a greater focus going forward on strategic in licensing and asset acquisition. Lastly, I was wondering if you could give us a sense of, given the fact, I think you said this multiple times in your prepared remarks, that we are increasingly living in a more and more dangerous world, whether you are seeing any emergent trends in MCM contract procurement demands outside of the United States. Thank you.

Sure. A lot of good questions there. I'll take them one at a time, make sure I answer all of them. On the Narcan initiatives, yes, absolutely, we're looking to things to continue to keep the share we have today and potentially grow that share. We're looking at, obviously, number one, the brand Narcan itself is important. We have that brand name when you are looking at the opportunities that face the marketplace. Having the brand name Narcan is very important. We've had a chance to talk to consumers about that. They obviously recognize the importance of the Narcan brand name. Number two, of the market leader. We are continuing to bring out new innovation. That new innovation we bring out includes things like the carrying case that's perfect for those students or college students that clip it onto their backpack as an example. We are also looking at multi-packs where we're putting additional Narcan together to make it easier for the high user first responders to have high volume users have the Narcan available in packs beyond just the two and many more. Thank you very much. Having said that, though we recognize with additional competition, we expect there will be some additional price pressures on the product, and that's why we made some of the decisions we talked about today. But we clearly believe Narcan will continue to be the gold standard here, and we are prepared for that, but we want to make sure we are looking at Realistically, what we think the numbers and what the issues are for Narcan from a pricing pressure point of view with the knowledge that we have two new competitors coming into the space. On the second question, on the R&D side, I'd say, Ron, the answer to that is that we are looking at R&D still being pivotally important to us. We're continuing to still invest behind products like Tembexa, products like Ibanga, products like Raxibacumab. We're continuing to look, as I mentioned in my comments, what can we do in Africa to do the MOSA trials to get some additional data on Tembexa and its benefits in MPOC. So we're going to continue to invest in R&D, to be clear. We think, however, by putting the decisions into one group where we bring the external and many more. All the efforts we need on the R&D side to ensure we're going to have the appropriate decision making and just we think we can make faster, better decisions by putting together this one, let's call it a chief growth officer for the company to help us to make those decisions quickly and focused on all the right return on investment metrics and trying to continue to advance our mission. on the question of the increasingly dangerous world. The answer to that is, are we seeing things? Absolutely correctly, we are. We're hearing from governments around the world what some of the issues are. Some of you may have seen recent articles going back into June where some of the AI CEO leadership are specifically writing letters of concern that AI could be utilized by bad actors to create new pathogens, pathogens that could be Very, very chaotic and cause additional problems. We intend, as we put out a release today, to collaborate with the AI leadership to make sure that we are going to be front and center there on helping governments around the world to prepare for the potential activities that could happen through AI that could expedite bad actors creating pathogens that are problematic. We are absolutely as a leader in this area of medical countermeasures preparedness. We want to be up front and center coordinating all the activities based on our experience. So those are the things that we think are important. We're going to continue to move forward and make progress with those because it is an increasingly dangerous world out there. Operator, next question.

Thank you. One moment for our next question. Our next question comes from the line of Jessica Fye of JP Morgan. Your line is now open.

Hey guys, good afternoon. Thanks for taking our questions. First, just on the kind of financial picture, it seems like other revenue was a key driver of year-over-year revenue growth in the first half. Can you outline just what's in there and how sustainable that is? And then for Narcan, can you elaborate on what you're seeing in the naloxone market a little more specifically and talk about what your latest price and volume expectations are for Narcan for the rest of this year and longer term. And then lastly, sorry, third question, as it relates to the revenue guidance update, should we take that as entirely Narcan related Was there any, say, upside from other business lines that's being more than offset by the Narcan headwinds? Just want to kind of better understand what's below the surface there.

Thank you. Hi, Jess. Thanks for the question. On the other revenue, the biggest driver there is our BAT product, our Botulism Antitoxin, and we had a significant delivery that occurred in the third quarter that really drove that year-over-year increase.

The question of Nalaxone and where we are with the market and pricing. So what's happening out there in the market? The market's still a strong market in terms of what we're seeing in terms of, unfortunately, 45,000 people still dying because of opioid overdoses. So we still think the market need is there. We still are preparing to be out there with our units with Narcan out there. Having said that, though, we have seen competitive price pressures We think the correlation of the new entrants and people preparing for new entrants to make sure that they can hold on to their share is, as with other generic companies, when they come in to compete with the brand, they will look at price as an option to try to get some incremental share. We just want to make sure that we are prepared. is up versus the first quarter. So we are seeing, we did see it grow over the first quarter. However, as we thought about the remainder of this year and going into next year, we wanted to be prepared knowing what we've seen with other markets when additional generic players show up into the market. So that was the logic and how we thought about it for the rest of this year and into next year. But we do expect to see additional price erosion, to be clear, We think the market's going to be, you know, should be flat, maybe in terms of total Naloxone units should be relatively flat, somewhere around that area. And we will obviously continue to look to maintain a leadership position in terms of market share for our Narcan business. And the last question you asked was about the guidance, Rich, you want to add to that?

Thank you. Yeah, the biggest driver of the change in our guidance is, in fact, that commercial segment or the view on naloxone revenue for the year. As we had previously guided for medical countermeasures, we thought it would be flat to slightly down on the year. Our view really hasn't changed for that segment. But for the factors that Joe highlighted just now and earlier on the call, We do see lower overall commercial revenue driven by naloxone for the balance of the year and for the full year.

Thank you for the question, Jessica. Operator, any additional questions?

Thank you. One moment for our final question.

Our next question comes from the line of Alex Kelsey of Wells Fargo.

Your line is now open.

Hey guys, appreciate taking the questions. I'll layer mine in sequential order as well. Just on the July comment about AR, was that through a securitization program or was that just collecting AR in normal course? And then regardless of the mechanism, you know, pro forma, all else equal, am I correct to think that cache, you know, pro forma is closer to, you know, the 140 plus 145, so 285? That's number two. And then number three, the comment on the $75 million debt repurchase authorization. Am I safe to assume that that would be targeted at the senior unsecured notes, or is there any reason that you would look to address the new term loan before the bonds?

Thanks, Alex. Appreciate the questions. The collection of the $145 million is all from accounts receivable related to deliveries that occurred in the second quarter and that were in the balance as of the end of the second quarter. It is not related to a securitization or any other kind of financing facility. It's just pure working capital accounts receivable collection. As far as the impact on cash flow, Yes, that certainly flows through to the cash balance. Obviously, there's some expenses as we come through the month, but safe to assume that a very meaningful portion of that flowed through to our cash balance as of the end of July. And then finally, the $75 million authorization is specifically to repurchase the senior unsecured notes, and so there'll be a little more detail on that in the 10-Q when we file that.

All right, and if I'm still in line, with regard to the 40 million cost savings, any sense of timing as to when we should expect that to be realized and annualized in the numbers?

Sure, we're going to start now. As I mentioned on the call, in terms of that realization, obviously the full run rate of that would be in a full year of 2027, but we're starting now. We'll pick up some in 2026, but the full run rate of a $40 million would be in 2027 and beyond.

Great. Thank you very much.

Robert, any other questions? That was the final question. So this concludes the question and answer session. I would now like to turn it back over to Joseph Papa for closing remarks.

Thank you, everyone, for joining us today. Please note an archived version of today's webcast as well as a PDF version of the slides used during today's call will be available later today and accessible through our investors landing page on the company website. Thank you again for joining us. We look forward to speaking to you all in the near future. Thank you, everyone. Goodbye.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.