Emergent BioSolutions Inc
For the period ended Jun 30, 2024. Filed Aug 7, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 7, 2024
EBS$6.06+3.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-02.
0001367644-24-000063
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0001367644-24-000147
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 162 previous paragraphs and 222 current paragraphs.
112 unchanged; 36 reworded; 66 added; 11 removed; 3 previous and 8 current paragraphs rearranged.
Tables are not compared: 8 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (66)
Current report
Sale of Travel Health Business
Current report
On May 15, 2023, the Company completed the sale of its Commercial Products segment's travel health business, including rights to Vivotif®, the licensed typhoid vaccine; Vaxchora®, the licensed cholera vaccine; the development-stage chikungunya vaccine candidate CHIKV VLP; the Company’s manufacturing site in Bern, Switzerland; and certain of its development facilities in San Diego, California.
Current report
Sale of Baltimore-Camden Facility
Current report
On June 20, 2024, Cangene bioPharma LLC, a subsidiary of the Company, entered into the Asset Purchase Agreement with Bora, under which the Company will sell its drug product facility in Baltimore-Camden for a total value of approximately $30.0 million. Approximately 350 of the Company’s employees are expected to join Bora as part of the transaction.
Current report
The transaction is expected to close in the third quarter of 2024, subject to the satisfaction or waiver of customary closing conditions.
Current report
As a result of the Asset Purchase Agreement, the assets and liabilities of our Baltimore-Camden facility are classified as held for sale. The Company has recognized a pre-tax loss of $40.0 million during the quarter, including transaction costs of $3.9 million, in “Gain (loss) on sale of business and assets held for sale” within non-operating activities.
Current report
Confidential arbitration settlement with Janssen
Current report
On July 3, 2024, the Company, its wholly owned subsidiary, Emergent Manufacturing Operations Baltimore, LLC (“EMOB”), and Janssen executed the Settlement Agreement to resolve all claims among the Parties arising from the Janssen Agreement. The Settlement Agreement also resolves the Parties’ related and previously disclosed arbitration.
Current report
Pursuant to the terms of the Settlement Agreement, Janssen paid the Company $50.0 million on July 31, 2024. In addition, the Settlement Agreement contains broad releases of the parties, their affiliates and subsidiaries, representatives, officers, directors and shareholders, including releases of all claims related to the manufacture of the Product by EMOB, the Janssen Agreement, or any agreement or understanding between the parties concerning the Product, and the matters at issue in the arbitration. The Company concluded this is a recognized subsequent event.
Current report
Development milestone payments for CHIKV VLP
Current report
On July 18, 2024, Bavarian Nordic announced that the European Medicines Agency has validated the marketing authorization application for CHIKV VLP, which was submitted in June 2024. This approval triggered a milestone payment under the Purchase and Sale Agreement to the Company in the amount of $10.0 million, which is expected to be received in the third quarter of 2024.
Current report
2024 Sale of RSDL® to SERB Pharmaceuticals
Current report
On July 31, 2024, the Company entered into the RSDL® Agreement with SERB, pursuant to which, among other things, the Company sold its worldwide rights to RSDL®to SERB. The RSDL® Transaction also included the sale of all the outstanding capital stock of Emergent Protective Products USA Inc. (“EPPU”), a wholly owned subsidiary of the Company, which leases a manufacturing facility in Hattiesburg, Mississippi, as well as certain assets related to RSDL®, including intellectual property rights, contract rights, inventory and marketing authorizations. In addition, the employees of EPPU are expected to join SERB in connection with the RSDL®Transaction.
Current report
Pursuant to the RSDL®Transaction, SERB will assume certain government contracts related to RSDL® decontamination lotion, including the Company’s existing contract to supply RSDL® to the U.S. Department of Defense, through a new contract award to the Canadian Commercial Corporation.
Current report
The RSDL® Agreement provided for a cash purchase price of $75.0 million at the closing of the RSDL® Transaction, which is subject to customary adjustments based on inventory value at closing. In addition, SERB will pay the Company a $5.0 million payment upon achievement of a milestone relating to sourcing of a certain component of RSDL® decontamination lotion. The RSDL® Transaction closed on July 31, 2024. The Company and SERB made customary representations, warranties, and covenants in the RSDL® Agreement. In addition, the Company agreed, for a period of three years following the closing of the RSDL® Transaction, not to make, import, export, use, sell or otherwise dispose of, any product that is intended to remove or neutralize chemical warfare agents from the skin, including any product that contains the same chemical components as RSDL®, or to engage in a similar competing business.
Current report
At the closing of the RSDL® Transaction, the Company and SERB also entered into a transition services agreement to ensure the orderly transition of RSDL® decontamination lotion and the related assets to SERB, and a supply agreement pursuant to which the Company’s Winnipeg facility will continue to manufacture and supply bulk lotion to SERB under a long-term supply agreement. The Company and SERB will also enter into a reverse supply agreement shortly after the closing of the RSDL® Transaction pursuant to which SERB will supply to the Company finished RSDL® for the purposes of the Company performing certain transitional distribution services.
Current report
2024 Triggering Events
Current report
2024 Impairment of long-lived assets
Current report
During the preparation of our financial statements for the three months ended June 30, 2024, due to the decision to close the Company’s Baltimore-Bayview Drug Substance manufacturing facility and Rockville, Maryland Drug Product facility, the Company determined there were sufficient indicators of impairment for the Bayview and Rockville asset groups within the Bioservices reporting unit. As a result, the Company performed recoverability tests on those asset groups and concluded that the Bayview and Rockville asset groups were not recoverable as the undiscounted expected cash flows did not exceed their carrying values.
Current report
Asset groups are written down only to the extent that their carrying value is higher than their respective fair value. The Company, with the assistance of a third-party valuation firm, applied valuation methods to estimate the fair values for each of the assets within the different asset classes. An orderly liquidation value was applied to estimate the fair value of the personal property assets and market and cost based approaches were applied to estimate the fair value of the real property assets, each representing Level 3 non-recurring fair value measurements. Based on these analyses, the Company allocated and recognized a non-cash impairment charge of $27.2 million during the three months ended June 30, 2024.
Current report
Total revenues decreased $83.2 million, or 25%, to $254.7 million for the three months ended June 30, 2024. The decrease was due to decreases in MCM Products revenue of $100.9 million and Commercial Products revenue of $17.9 million, partially offset by an increase in Services revenue of $35.6 million.
Current report
SG&A expenses decreased $5.5 million, or 6%, to $85.9 million for the three months ended June 30, 2024. The decrease was primarily due to lower employee related expenses and compensation as a result of restructuring initiatives during 2023, coupled with a decrease in marketing expense. The decrease was partially offset by higher legal services fees for disputes and other corporate initiatives, as well as higher restructuring costs. SG&A expenses as a percentage of total revenue increased 7 percentage points to 34% for the three months ended June 30, 2024.
Current report
Amortization of intangible assets increased $0.2 million, or 1%, to $16.3 million for the three months ended June 30, 2024. The increase was primarily due to an increase in amortization expense for the intangible asset related to Ebanga TM, which was the result of the contingent consideration payment made to Ridgeback in the third quarter of 2023.
Current report
Impairment of Long-Lived Assets
Current report
Impairment of long-lived assets decreased $279.5 million, or 91%, to $27.2 million for the three months ended June 30, 2024. The decrease was due to a $27.2 million non-cash impairment charge in the second quarter of 2024 related to our Bayview and Rockville asset groups within the Bioservices reporting unit, compared to a $306.7 million non-cash impairment charge recorded in the second quarter of 2023 related to our Camden, Bayview and Rockville asset groups within the Bioservices reporting unit.
Current report
Gain (loss) on sale of business and assets held for sale
Current report
Gain (loss) on sale of business and assets held for sale was a loss of $40.0 million for the three months ended June 30, 2024 compared to a gain of $74.9 million for the three months ended June 30, 2023. The loss on sale of business and assets held for sale is related to the held for sale treatment of the Company’s drug product facility in Baltimore-Camden, which the Company agreed to sell to Bora. The gain on sale of business and assets held for sale in the prior year is attributable to the sale of our travel health business to Bavarian Nordic during the second quarter of 2023.
Current report
Income tax provision (benefit)
Current report
Income tax provision increased $2.1 million, or 19%, to $13.3 million for the three months ended June 30, 2024. The increase was primarily due to an increase in taxable income in the Company’s profitable jurisdictions.
Current report
Revenues and gross margin
Current report
Unallocated corporate operating expenses
Current report
R&D Expenses
Current report
R&D expenses decreased $18.9 million, or 28%, to $47.8 million for the six months ended June 30, 2024. The decrease was primarily due to the sale of our development program for CHIKV VLP to Bavarian Nordic in the second quarter of 2023 and reduction in related overhead costs driven by the headcount reductions. The decrease was also driven by a reduction in spend for certain funded projects, excluding Ebanga TM. The decrease was partially offset by write-offs related to program terminations during the period, an increase in the allocation of R&D overhead costs, an increase in severance costs and an increase in funded R&D related to Ebanga TM.
Current report
SG&A Expenses
Current report
Amortization of Intangible Assets
Current report
Impairment of Long-Lived Assets
Current report
Impairment of long-lived assets decreased $279.5 million, or 91%, to $27.2 million for the six months ended June 30, 2024. The decrease was due to a $27.2 million non-cash impairment charge in the second quarter of 2024 related to our Bayview and Rockville asset groups within the Bioservices reporting unit, compared to a $306.7 million non-cash impairment charge recorded in the second quarter of 2023 related to our Camden, Bayview and Rockville asset groups within the Bioservices reporting unit.
Current report
Interest expense
Current report
Interest expense increased $1.4 million, or 3%, to $47.9 million for the six months ended June 30, 2024. The increase was primarily due to interest expense related to the termination of our interest rate swap hedging agreements and one-time debt service costs attributable to the negotiation of the Forbearance Agreement and Sixth Amendment (the “Forbearance Agreement and Amendment”) and the Seventh Amendment to the Amended and Restated Credit Agreement, partially offset by lower interest costs related to our syndicated borrowings.
Current report
Gain (loss) on sale of business and assets held for sale
Showing the first 40 of 66 passages. Open the source sections for the rest.
Removed paragraphs (11)
Previous report
•Vaxchora® (Cholera Vaccine, Live, Oral), the first vaccine approved by the FDA for the prevention of cholera, which we sold to Bavarian Nordic as part of our travel health business; and
Previous report
•Vivotif® (Typhoid Vaccine Live Oral Ty21a), a live attenuated vaccine for oral administration for the prevention of typhoid fever, which we sold to Bavarian Nordic as part of our travel health business.
Previous report
The Company estimates that it will incur approximately $18.0 million to $21.0 million in charges in connection with the May 2024 Plan, which it expects to incur primarily in the second quarter of fiscal 2024. These charges consist primarily of cash charges related to severance, transition services, and estimated benefits cost.
Previous report
The estimates of the charges and expenditures that the Company expects to incur in connection with the May 2024 Plan, and the timing thereof, are subject to a number of assumptions, including local law requirements in various jurisdictions, and actual amounts may differ materially from estimates. In addition, the Company may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur, including in connection with the implementation of the May 2024 Plan.
Previous report
Income tax provision
Previous report
Income tax provision decreased $22.5 million to $3.1 million for the three months ended March 31, 2024. The decrease was primarily due to a change in jurisdictional mix of income and losses.
Previous report
Cost of MCM product sales increased $6.8 million, or 12%, to $62.2 million for the three months ended March 31, 2024. The increase was primarily due to higher sales of BAT®, VIGIV, BioThrax® and CYFENDUS®, partially offset by a decrease in shutdown costs.
Previous report
Bioservices revenues increased $5.7 million, or 45%, to $18.3 million for the three months ended March 31, 2024. The increase was driven by an increase in production at the Company's Camden facility, partially offset by decreases in production at the Company’s Canton and Winnipeg facilities.
Previous report
Cost of services decreased $21.4 million, or 41%, to $30.3 million for the three months ended March 31, 2024. The decrease was primarily due to a reduction in overhead costs at the Company’s Camden and Bayview facilities, coupled with no production activities at the Company’s Canton facility. The decrease in costs at the Camden facility was partially offset by increases in production activity following the remediation of matters related to the FDA’s warning letter regarding the Camden facility, which was closed out in October 2023.
Previous report
Services gross margin increased $25.5 million, or 68%, to $(11.8) million for the three months ended March 31, 2024. Services gross margin percentage increased 195 percentage points to (64)% for the three months ended March 31, 2024. The increase was primarily due to a reduction in overhead costs at the Company’s Camden and Bayview facilities, coupled with an increase in production at our Camden facility due to the remediation of matters related to the FDA’s warning letter referenced above. Services segment adjusted gross margin excludes the impacts of restructuring costs of $(0.2) million.
Previous report
Net cash used in operating activities for the three months ended March 31, 2024 decreased $121.4 million as compared with the three months ended March 31, 2023. The decrease in net cash used in operating activities was primarily due to an increase in revenues during the period, partially offset by negative working capital changes of $97.5 million, driven by cash collection not keeping pace with the increase in revenues and a decrease in accrued compensation balances.
Reworded paragraphs (36)
Previous wording
We are currently focused on the following four PHT categories: chemical, biological, radiological, nuclear and explosives (“CBRNE”); emerging infectious diseases (“EID”); public health crises; and acute, emergency and community care. We have a product portfolio of 12 products that contribute a substantial portion of our revenue and are sold to government and commercial customers. Additionally, we have a development pipeline consisting of a diversified mix of both pre-clinical and clinical stage product candidates. Finally, we have a fully integrated portfolio of CDMO services which cover development services, drug substance manufacturing and drug product manufacturing and packaging.
Current wording
We are currently focused on the following four PHT categories: chemical, biological, radiological, nuclear and explosives (“CBRNE”); emerging infectious diseases (“EID”); public health crises; and acute, emergency and community care. As of June 30, 2024, we have a product portfolio of 11 products that contribute a substantial portion of our revenue and are sold to government and commercial customers. Additionally, we have a development pipeline consisting of a diversified mix of both pre-clinical and clinical stage product candidates. Finally, we have a fully integrated portfolio of CDMO services which cover development services, drug substance manufacturing and drug product manufacturing and packaging.
Previous wording
•RSDL® (Reactive Skin Decontamination Lotion Kit), the only medical device cleared by the FDA that is intended to remove or neutralize chemical warfare agents from the skin, including: tabun, sarin, soman, cyclohexyl sarin, VR, VX, mustard gas and T-2 toxin; and
Current wording
•RSDL® (Reactive Skin Decontamination Lotion Kit), the only medical device cleared by the FDA that is intended to remove or neutralize chemical warfare agents from the skin, including: tabun, sarin, soman, cyclohexyl sarin, VR, VX, mustard gas and T-2 toxin. On July 31, 2024, the Company entered into the Stock and Asset Purchase Agreement (“RSDL® Agreement”) with SERB Pharmaceuticals, through its wholly owned subsidiary BTG International Inc. (collectively, “SERB”), pursuant to which, among other things, the Company sold its worldwide rights to RSDL®, to SERB (the “RSDL® Transaction”). See Note 18, Subsequent events for more information about the RSDL® Transaction; and
Previous wording
•Trobigard® atropine sulfate, obidoxime chloride auto-injector, a combination drug-device auto-injector procured product candidate that contains atropine sulfate and obidoxime chloride. Trobigard® was approved in Belgium in 2021 but has not been approved by the FDA. Trobigard® is procured by certain authorized government buyers under special circumstances for potential use as a nerve agent countermeasure outside of the U.S. On April 2, 2024, Emergent submitted its revocation of the Market Authorization for the Trobigard Auto-Injector to the Belgium Federal Agency for Medicines and Health Products (“FAMHP”).
Current wording
•Trobigard® atropine sulfate, obidoxime chloride auto-injector, a combination drug-device auto-injector procured product candidate that contains atropine sulfate and obidoxime chloride. On April 2, 2024, the Belgium Federal Agency for Medicines and Health Products (“FAMHP”) acknowledged and confirmed Emergent’s request to revoke the Market Authorization for the Trobigard Auto-Injector.
Previous wording
Our services revenue consists of distinct but interrelated Bioservices: drug substance manufacturing; drug product manufacturing (also referred to as “fill/finish” services) and packaging; development services including technology transfer, process and analytical development services; and, when necessary, suite reservation obligations. These services, which we refer to as “molecule-to-market” offerings, employ diverse technology platforms (mammalian, microbial, viral and plasma) across a network of eight geographically distinct development and manufacturing sites operated by us for our internal products and pipeline candidates and third-party Bioservices. We service both clinical-stage and commercial-stage projects for a variety of third-party customers, including government agencies, innovative pharmaceutical companies, and non-government organizations. In August 2023, we initiated an organizational restructuring plan (the “August 2023 Plan”) which included actions to reduce investment in and de-emphasize focus on our Bioservices business.
Current wording
Our services revenue consists of distinct but interrelated Bioservices: drug substance manufacturing; drug product manufacturing (also referred to as “fill/finish” services) and packaging; development services including technology transfer, process and analytical development services; and, when necessary, suite reservation obligations. These services, which we refer to as “molecule-to-market” offerings, employ diverse technology platforms (mammalian, microbial, viral and plasma) across a network of seven geographically distinct development and manufacturing sites operated by us for our internal products and pipeline candidates and third-party Bioservices. We service both clinical-stage and commercial-stage projects for a variety of third-party customers, including government agencies, innovative pharmaceutical companies, and non-government organizations. In August 2023, we initiated an organizational restructuring plan (the “August 2023 Plan”) which included actions to reduce investment in and de-emphasize focus on our Bioservices business. In May 2024, the Company initiated an organizational restructuring plan (the “May 2024 Plan”) announcing the closure of the Company’s Baltimore-Bayview Drug Substance manufacturing facility and Rockville, Maryland Drug Product facility. Additionally, on June 20, 2024 the Company announced entry into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Bora Pharmaceuticals Injectibles Inc., a subsidiary of Bora Pharmaceuticals Co., Ltd. (“Bora”), under which the Company will sell its drug product facility in Baltimore-Camden (the “Camden Transaction”).
Previous wording
In August 2023, the Company initiated the August 2023 Plan intended to strengthen its core business and financial position by reducing investment in and de-emphasizing focus on its CDMO services business for future growth. As part of the August 2023 Plan, the Company reduced its workforce by approximately 400 employees. The charges related to the August 2023 Plan consist primarily of employee transition, severance payment and employee benefit charges. The cumulative amount of restructuring charge related to the August 2023 Plan since inception is $19.5 million. All activities related to the August 2023 Plan were substantially completed during the third quarter of 2023. Restructuring costs are recognized as an operating expense within the Condensed Consolidated Statement of Operations and are classified based on the Company's classification policy for each category of operating expense.
Current wording
In August 2023, the Company initiated the August 2023 Plan intended to strengthen its core business and financial position by reducing investment in and de-emphasizing focus on its CDMO services business for future growth. As part of the August 2023 Plan, the Company reduced its workforce by approximately 400 employees. The charges related to the August 2023 Plan consist primarily of employee transition, severance payment and employee benefit charges. The cumulative amount of restructuring charge related to the August 2023 Plan since inception is $19.4 million. All activities related to the August 2023 Plan were substantially completed during the third quarter of 2023. Restructuring costs are recognized as an operating expense within the Condensed Consolidated Statement of Operations and are classified based on the Company's classification policy for each category of operating expense.
Previous wording
On April 2, 2024, Emergent submitted its revocation of the Market Authorization for the Trobigard Auto-Injector to the Belgium FAMHP. The FAHMP subsequently acknowledged and confirmed the revocation date as being April 2, 2024.
Current wording
On April 2, 2024, Emergent submitted its revocation of the Market Authorization for the Trobigard Auto-Injector to the Belgium FAMHP. The FAMHP subsequently acknowledged and confirmed the revocation date as being April 2, 2024.
Previous wording
On May 1, 2024, the Company announced an organizational restructuring plan (the “May 2024 Plan”). These strategic actions will lead to a reduction of the Company’s current workforce by approximately 300 employees across all areas of the Company and the elimination of approximately 85 positions that are currently vacant, as well as the closure of the Company’s Baltimore-Bayview Drug Substance manufacturing facility and Rockville, Maryland Drug Product facility. Decisions regarding the elimination of positions and the closure of manufacturing facilities are subject to local law and consultation requirements in certain countries, as well as the Company’s business needs.
Current wording
In May 2024, the Company initiated the May 2024 Plan. These strategic actions will lead to a reduction of the Company’s current workforce by approximately 300 employees across all areas of the Company and the elimination of approximately 85 positions that are currently vacant, as well as the closure of the Company’s Baltimore-Bayview Drug Substance manufacturing facility and Rockville, Maryland Drug Product facility. Decisions regarding the elimination of positions and the closure of manufacturing facilities are subject to local law and consultation requirements in certain countries, as well as the Company’s business needs. The cumulative amount of restructuring charge related to the May 2024 Plan since inception is $17.2 million. All activities related to the May 2024 Plan were substantially completed during the second quarter of 2024. Restructuring costs are recognized as an operating expense within the Condensed Consolidated Statement of Operations and are classified based on the Company's classification policy for each category of operating expense.
Previous wording
Total segment gross margin increased $142.9 million to $147.8 million for the three months ended March 31, 2024. Total segment gross margin percentage increased 48 percentage points to 51% for the three months ended March 31, 2024. The increase in total segment gross margin was due to increases in MCM Products gross margin of $111.4 million, Services gross margin of $25.5 million, and Commercial Products gross margin of $6.0 million. Total segment gross margin and total segment gross margin percentage exclude Contracts and grants revenues because the related costs are R&D expenses.
Current wording
Total segment gross margin decreased $188.7 million, or 134%, to $(48.0) million for the three months ended June 30, 2024. Total segment gross margin percentage decreased 61 percentage points to (19)% for the three months ended June 30, 2024. The decrease in total segment gross margin was due to decreases in Services gross margin of $120.3 million, MCM Products gross margin of $51.5 million and Commercial Products gross margin of $16.9 million. Total segment gross margin and total segment gross margin percentage exclude Contracts and grants revenues because the related costs are R&D expenses.
Previous wording
R&D expenses decreased $25.6 million, or 63%, to $15.1 million for the three months ended March 31, 2024. The decrease was primarily due to the sale of our development program for CHIKV VLP to Bavarian Nordic and reduction in related overhead costs, as well as a reduction in overhead costs driven by the headcount reductions as a result of restructuring. The decrease was partially offset by an increase in expense related to development activities for Ebanga TM.
Current wording
R&D expenses increased $6.7 million, or 26%, to $32.7 million for the three months ended June 30, 2024. The increase was primarily due to write-offs related to program terminations during the period and an increase in R&D overhead and severance costs. The increase was partially offset by the sale of our development program for CHIKV VLP to Bavarian Nordic and reduction in related overhead costs driven by the headcount reductions and an overall decrease in spend for funded projects.
Previous wording
Interest expense increased $6.4 million, or 36%, to $24.3 million for the three months ended March 31, 2024. The increase was primarily due to an increase in amortization of debt service costs related to fees incurred in connection with the Third and Fourth Amendments to Amended and Restated Credit Agreement, Waiver and First Amendment to Amended and Restated Collateral Agreement (the “Credit Agreement Amendments") and the Forbearance Agreement and Amendment, partially offset by lower interest costs on the Company’s syndicated borrowings as a result of principal payments during 2023.
Current wording
Interest expense decreased $5.0 million, or 17%, to $23.6 million for the three months ended June 30, 2024. The decrease was primarily due to lower interest costs related to our syndicated borrowings and debt service costs attributable to the negotiation of the Fourth Amendment to Amended and Restated Credit Agreement, Waiver and First Amendment to Amended and Restated Collateral Agreement (the “Credit Agreement Amendment") in the second quarter of 2023, partially offset by higher interest expense related to the termination of our interest rate swap hedging agreements.
Previous wording
Total revenues increased $136.1 million, or 83%, to $300.4 million for the three months ended March 31, 2024. The increase was due to increases in MCM Products revenue and Commercial Products revenue of $118.2 million and $12.3 million, respectively, coupled with increases in Services revenue of $4.1 million and Contracts and grants revenue of $1.5 million.
Current wording
Total revenues increased $52.9 million, or 11%, to $555.1 million for the six months ended June 30, 2024. The increase was due to increases in Services revenue of $39.7 million, MCM Products revenue of $17.3 million and Contracts and grants revenue of $1.5 million, partially offset by a decrease in Commercial Products revenue of $5.6 million.
Previous wording
SG&A expenses decreased $16.6 million, or 16%, to $84.7 million for the three months ended March 31, 2024. The decrease was primarily due to decreases in compensation and other employee costs as a result of the restructuring initiatives that began during the first quarter of 2023 and a reduction in professional services fees related to general corporate initiatives in the prior year, including organizational transformation consulting fees. These decreases were partially offset by an increase in marketing expenses related to the launch of OTC NARCAN® and higher legal services fees. SG&A expenses as a percentage of total revenue decreased 33 percentage points to 28% for the three months ended March 31, 2024.
Current wording
SG&A expenses decreased $22.1 million, or 11%, to $170.6 million for the six months ended June 30, 2024. The decrease was primarily due to lower employee related expenses and compensation as a result of restructuring initiatives during 2023 and lower professional services fees related to corporate initiatives, including organizational transformation consulting fees. These decreases were partially offset by higher legal services fees for disputes and strategic corporate initiatives, as well as higher restructuring costs. SG&A expenses as a percentage of total revenue decreased 7 percentage points to 31% for the six months ended June 30, 2024.
Previous wording
Amortization of intangible assets decreased $0.8 million, or 5%, to $16.2 million for the three months ended March 31, 2024. The decrease was primarily due to a decrease in amortization expense resulting from the intangibles sold as part of our travel health business to Bavarian Nordic in the second quarter of 2023.
Current wording
Amortization of intangible assets decreased $0.6 million, or 2%, to $32.5 million for the six months ended June 30, 2024. The decrease was primarily due to a decrease in amortization expense resulting from the intangibles sold with our travel health business to Bavarian Nordic, partially offset by an increase in amortization expense for the intangible asset related to Ebanga TM, which was the result of the contingent consideration payment made to Ridgeback in the third quarter of 2023.
Previous wording
Other, net went from $4.9 million in income to $3.4 million in expense for the three months ended March 31, 2024. The change of $8.3 million, or 169%, is primarily attributable to lower interest income due to lower balances in our money market accounts, coupled with a write-off of an equity method investment.
Current wording
Other, net went from $1.3 million in income to $6.1 million in expense for the six months ended June 30, 2024. The change of $7.4 million was primarily attributable to lower interest income, due to lower balances in our money market accounts and a write-off of an equity method investment.
Previous wording
Other commercial products sales decreased $5.8 million, or 100%, to no sales for the three months ended March 31, 2024. The Company sold Vivotif® and Vaxchora®to Bavarian Nordic as part of our travel health business during the second quarter of 2023.
Current wording
Other Commercial Products sales decreased $4.0 million, or 100%, to no sales for the three months ended June 30, 2024. During the second quarter of 2023, the Company sold Vivotif® and Vaxchora® to Bavarian Nordic as part of our travel health business.
Previous wording
Commercial Products gross margin increased $6.0 million, or 10%, to $66.4 million for the three months ended March 31, 2024. Commercial Products gross margin percentage decreased 1 percentage point to 56% for the three months ended March 31, 2024. The decrease was largely due to the higher sales of OTC NARCAN® and lower branded NARCAN®sales. Commercial Products segment adjusted gross margin is consistent with gross margin.
Current wording
Commercial Products gross margin decreased $16.9 million, or 20%, to $66.6 million for the three months ended June 30, 2024. Commercial Products gross margin percentage decreased 5 percentage points to 56% for the three months ended June 30, 2024. The decrease was largely due to an unfavorable price and volume mix in 2024 for NARCAN® products, partially offset by the sale of the products associated with our travel health business to Bavarian Nordic. Commercial Products segment adjusted gross margin is consistent with gross margin.
Previous wording
NARCAN® sales increased $18.1 million, or 18%, to $118.5 million for the three months ended March 31, 2024. The increase was primarily driven by higher branded NARCAN®sales to U.S. public interest channels and sales of OTC NARCAN®, partially offset by lower Canadian retail sales of branded NARCAN®.
Current wording
NARCAN® sales increased $4.2 million, or 2%, to $238.5 million for the six months ended June 30, 2024. The increase was primarily driven by higher NARCAN®sales to U.S. public interest channels and higher sales of OTC NARCAN®, partially offset by lower Canadian retail sales.
Previous wording
Cost of Commercial Product sales increased $6.3 million, or 14%, to $52.1 million for the three months ended March 31, 2024. The increase was primarily due to higher sales of OTC NARCAN®, which launched during the third quarter of 2023, partially offset by lower Canadian retail sales of branded NARCAN®.
Current wording
Cost of Commercial Product Sales and Gross Margin
Previous wording
Anthrax MCM sales increased $34.0 million, or 155%, to $55.9 million for the three months ended March 31, 2024. The increase reflects the impact of timing of sales related to CYFENDUS®and BioThrax®. Anthrax vaccine product sales are primarily made under annual purchase options exercised by the USG. Fluctuations in revenues result from the timing of the exercise of annual purchase options, the timing of USG purchases, the availability of governmental funding and Company delivery of orders that follow.
Current wording
Anthrax MCM sales increased $17.6 million, or 83%, to $38.7 million for the three months ended June 30, 2024. The increase reflects the impact of timing of sales related to CYFENDUS®and BioThrax®, partially offset by a decrease in Anthrasil® sales, due to timing. Anthrax vaccine product sales are primarily made under annual purchase options exercised by the USG. Fluctuations in revenues result from the timing of the exercise of annual purchase options, the timing of USG purchases, the availability of governmental funding and the Company’s delivery of orders that follow.
Previous wording
Smallpox MCM sales increased $43.0 million to $50.2 million for the three months ended March 31, 2024. The increase was primarily due to higher VIGIV and ACAM2000® sales due to timing. Fluctuations in revenues from Smallpox MCM result from the timing of the exercise of annual purchase options in the existing procurement contracts, the timing of USG purchases, the availability of governmental funding and Company delivery of orders that follow.
Current wording
Smallpox MCM sales decreased $105.9 million, or 86%, to $17.9 million for the three months ended June 30, 2024. The decrease was primarily due to timing of USG purchases of ACAM2000®and VIGIV. Fluctuations in revenues from Smallpox MCM result from the timing of the exercise of annual purchase options in the existing procurement contracts, the timing of USG purchases, the availability of governmental funding and Company delivery of orders that follow.
Previous wording
Other Products sales increased $41.2 million to $49.3 million for the three months ended March 31, 2024. The increase was primarily due to higher BAT and RSDL® product sales due to timing.
Current wording
Other Products sales decreased $12.6 million, or 65%, to $6.8 million for the three months ended June 30, 2024. The decrease was due to lower BAT® and RSDL® product sales, due to timing of deliveries.
Previous wording
MCM Product gross margin increased $111.4 million to $93.2 million for the three months ended March 31, 2024. MCM Product gross margin percentage increased 109 percentage points to 60% for the three months ended March 31, 2024. The increase in gross margin percentage was primarily due to a favorable sales mix which was weighted more heavily towards higher margin products and a decrease in shutdown costs compared to the prior quarter. MCM Product segment adjusted gross margin excludes the impacts of non-cash items related to changes in the fair value of contingent consideration of $0.5 million and restructuring costs of $(0.1) million.
Current wording
MCM Product gross margin decreased $51.5 million, or 61%, to $32.3 million for the three months ended June 30, 2024. MCM Product gross margin percentage was consistent at 51% for the three months ended June 30, 2024. MCM Products segment adjusted gross margin excludes the impacts of non-cash items related to restructuring costs of $2.7 million and the changes in the fair value of contingent consideration of $0.1 million.
Previous wording
Bioservices lease revenues decreased $1.6 million, or 89%, to $0.2 million for the three months ended March 31, 2024. The decrease was related to the completion of a lease for a Bioservices customer at our Canton facility.
Current wording
Bioservices lease revenues decreased $2.5 million, or 93%, to $0.2 million for the three months ended June 30, 2024. The decrease was related to the completion of a lease for a Bioservices customer at our Canton facility.
Previous wording
Contracts and grants revenue increased $1.5 million, or 23%, to $8.0 million for the three months ended March 31, 2024. The increase was due to development work in connection with Ebanga TM, partially offset by the close out of other development initiatives.
Current wording
Contracts and grants revenue increased $1.5 million, or 11%, to $14.6 million for the six months ended June 30, 2024. The increase was related to work under the Ebanga TMprogram, partially offset by the wind-down of our other funded development initiatives.
Previous wording
We have historically financed our operating and capital expenditures through existing cash and cash equivalents, cash from operations, development contracts and grant funding and borrowings under our Revolving Credit Facility, our Term Loan Facility, and other lines of credit we have established from time to time. We also obtain financing from the sale of our common stock upon exercise of stock options and participation in an at-the-market equity offering program that we entered into on May 17, 2023 (the "ATM Program"). As of March 31, 2024, we had unrestricted cash and cash equivalents of $78.5 million and remaining capacity under our Revolving Credit Facility of $0.3 million.
Current wording
We have historically financed our operating and capital expenditures through existing cash and cash equivalents, cash from operations, development contracts and grant funding and borrowings under our Revolving Credit Facility, our Term Loan Facility, and other lines of credit we have established from time to time. We also obtain financing from the sale of our common stock upon exercise of stock options and participation in an at-the-market equity offering program that we entered into on May 17, 2023 (the "ATM Program"), which we are currently ineligible to use. As of June 30, 2024, we had unrestricted cash and cash equivalents of $69.7 million and remaining capacity under our Revolving Credit Facility of $41.8 million.
Previous wording
As of March 31, 2024, there was $264.2 million outstanding on the Company’s senior revolving credit facility (“Revolving Credit Facility”) and $194.2 million on the senior term loan facility (“Term Loan Facility” and together with the Revolving Credit Facility, the “Senior Secured Credit Facilities”) that mature in May 2025 and the Senior Credit Facilities were subject to a forbearance agreement as described below, with respect to the Company’s noncompliance with certain operational and financial covenants. As of March 31, 2024, the Company had $78.5 million in cash and cash equivalents. As a result of these factors, 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. The evaluation considered the potential mitigating effects of management’s plans that have not been fully implemented. Management has evaluated the mitigating effects 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. Management's plans include (A) further amending the Senior Secured Credit Facilities, and (B) improving operating performance, reducing working capital and the potential of the sale of assets to pay down the Senior Secured Credit Facilities before they become due. As neither plan is in the complete control of management, neither is probable of occurring. In this regard, management may not be able to further amend the Senior Secured Facilities or find a buyer for the assets it is willing to divest and may not be able to close on any asset sale for which management is able to reach an agreement with a buyer. As a result, the Company may be unable to meet its obligations as they become due. In addition, any asset sales that are completed could have potential negative impacts on the Company's future operating cash flows and profitability.
Current wording
As of June 30, 2024, there was $222.7 million outstanding on the Company’s senior revolving credit facility (“Revolving Credit Facility”) and $190.3 million on the senior term loan facility (“Term Loan Facility” and together with the Revolving Credit Facility, the “Senior Secured Credit Facilities”) that mature in May 2025 and the Senior Credit Facilities are subject to the Forbearance Agreement and Amendment as described below, with respect to the Company’s noncompliance with certain operational and financial covenants. As of June 30, 2024, the Company had $69.7 million in cash and cash equivalents. As a result of these factors, 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. The evaluation considered the potential mitigating effects of management’s plans that have not been fully implemented. Management has evaluated the mitigating effects 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. Management's plans include (A) further amending the Senior Secured Credit Facilities, and (B) improving operating performance, reducing working capital and the potential of the sale of assets to pay down the Senior Secured Credit Facilities before they become due. As neither plan is in the complete control of management, neither is probable of occurring. In this regard, management may not be able to further amend the Senior Secured Credit Facilities or find a buyer for the assets it is willing to divest and may not be able to close on any asset sale for which management is able to reach an agreement with a buyer. As a result, the Company may be unable to meet its obligations as they become due. In addition, any asset sales that are completed could have potential negative impacts on the Company's future operating cash flows and profitability.
Previous wording
Secured Credit Facilities. As of March 31, 2024, the Company was not in compliance with the minimum consolidated EBITDA covenant under the Senior Secured Credit Facilities and did not expect to satisfy a covenant requiring it to raise not less than $75.0 million through issuance of equity and/or unsecured indebtedness by April 30, 2024. In addition, the Company was required to deliver audited annual financial statements without a “going concern” explanatory paragraph with respect to its financial statements for the year ended December 31, 2023, which was not achieved. However, on February 29, 2024, the requisite lenders agreed to enter into a Forbearance Agreement and Sixth Amendment to Amended and Restated Credit Agreement (the “Forbearance Agreement and Amendment”) with the Company, which included a limited waiver of certain events of default, including those that resulted from (a) any violation of the financial covenants set forth in the Senior Secured Credit Facilities with respect to the fiscal quarter ending December 31, 2023 and the fiscal quarter ending March 31, 2024 and (b) the going concern explanatory paragraph contained in the audited financial statements for the year ended December 31, 2023. This forbearance period (the “Forbearance Period”) expired on April 30, 2024.
Current wording
The Senior Secured Credit Facilities mature in May 2025, and provide for (1) revolving credit commitments, (2) a term loan, and (3) the issuance of commercial letters of credit. As of March 31, 2024, the Company was not in compliance with the minimum consolidated EBITDA covenant under the Senior Secured Credit Facilities and did not satisfy a covenant requiring it to raise not less than $75.0 million through issuance of equity and/or unsecured indebtedness by April 30, 2024. In addition, the Company was required to deliver audited annual financial statements without a “going concern” explanatory paragraph with respect to its financial statements for the year ended December 31, 2023, which was not achieved. However, on February 29, 2024, the requisite lenders agreed to enter into the Forbearance Agreement and Amendment with the Company, which included a limited waiver of certain events of default, including those that resulted from (a) any violation of the financial covenants set forth in the Senior Secured Credit Facilities with respect to the fiscal quarter ending December 31, 2023 and the fiscal quarter ending March 31, 2024 and (b) the going concern explanatory paragraph contained in the audited financial statements for the year ended December 31, 2023. This forbearance period (the “Forbearance Period”) expired on April 30, 2024.
Previous wording
On April 29, 2024, the requisite lenders agreed to enter into a Consent, Waiver and Seventh Amendment to the Amended and Restated Credit Agreement (the “Seventh Amendment”) with the Company. The Seventh Amendment, among other things: (a) reduces available commitments under the Revolving Credit Facility to $270.0 million through July 30, 2024, to $225.0 million from July 31, 2024 through October 30, 2024, and to $200.0 million on October 31, 2024 and thereafter; (b) amends the interest rate benchmark in the definition of Applicable Margin from (i) 5.00% per annum to 7.00% per annum with respect to Base Rate Loans and (ii) 6.50% per annum to 8.50% per annum with respect to SOFR Loans, RFR Loans and Eurocurrency Rate Loans; and (c) requires the Company to raise equity or unsecured indebtedness of at least $85.0 million by July 31, 2024 (or such later date on or before September 29, 2024 as agreed to by the Administrative Agent), provided that such requirement will be reduced by the aggregate net cash proceeds received from certain dispositions that are applied to reduce amounts outstanding under the Revolving Credit Facility. There is no guarantee the Company will be able to meet the capital raise requirement by the stated deadline.
Current wording
On April 29, 2024, the requisite lenders agreed to enter into a Consent, Waiver and Seventh Amendment to the Amended and Restated Credit Agreement (the “Seventh Amendment”) with the Company. The Seventh Amendment, among other things: (a) reduces available commitments under the Revolving Credit Facility to $240.0 million through July 30, 2024, to $210.0 million from July 31, 2024 through September 29, 2024, to $205.0 million from September 30, 2024 through October 30, 2024, to $180.0 million from October 31, 2024 through November 29, 2024, and to $170.0 million from November 30, 2024 and thereafter (in each case subject to potential limited additional borrowings from a specified reserve with the consent of the lenders); (b) amends the interest rate benchmark in the definition of Applicable Margin from (i) 5.00% per annum to 7.00% per annum with respect to Base Rate Loans and (ii) 6.50% per annum to 8.50% per annum with respect to SOFR Loans, RFR Loans and Eurocurrency Rate Loans; and (c) requires the Company to raise equity or unsecured indebtedness of at least $85.0 million by July 31, 2024 (or such later date on or before September 29, 2024 as agreed to by the Administrative Agent), provided that such requirement will be reduced by the aggregate net cash proceeds received from certain dispositions that are applied to reduce amounts outstanding under the Revolving Credit Facility. The Company expects to apply the proceeds from the Camden Transaction and the RSDL® Transaction to reduce borrowings under the Revolving Credit Facility in order to satisfy the capital raise requirement, the deadline for which was recently extended to September 29, 2024. There is no guarantee the Company will be able to meet the capital raise requirement by this deadline.
Previous wording
Under the Seventh Amendment, the Company is also subject to (a) a monthly minimum consolidated EBITDA covenant through May 15, 2025 and a monthly maximum capital expenditures covenant through March 31, 2025, (b) a minimum liquidity requirement, and (c) additional financial statement reporting and business plan forecast obligations. In connection with the entry into the Seventh Amendment, the Company paid an amendment fee of an aggregate amount equal to 0.5% of the total credit exposure as of the Seventh Amendment effective date and will be required to pay an additional amendment fee of 1.0% of total credit exposure at December 1, 2024 and each month thereafter. The Senior Secured Credit Facilities and the Company’s other debt facilities are described in more detail below in Note 9, “Debt.”
Current wording
Under the Seventh Amendment, the Company is also subject to (a) a monthly minimum consolidated EBITDA covenant through May 15, 2025 and a monthly maximum capital expenditures covenant through March 31, 2025, (b) a minimum liquidity requirement, and (c) additional financial statement reporting and business plan forecast obligations. In connection with the entry into the Seventh Amendment, the Company paid an amendment fee of an aggregate amount equal to 0.5% of the total credit exposure as of the Seventh Amendment effective date and will be required to pay an additional amendment fee of 1.0% of total credit exposure at December 1, 2024 and each month thereafter. The Senior Secured Credit Facilities and the Company’s other debt facilities are described in more detail below in Note 10, “Debt.” As of the date of these financial statements, the Company is in compliance with the terms of the Senior Secured Credit Facilities.
Previous wording
If we default under the Senior Secured Credit Facilities, the lenders would have the right to accelerate the repayment of borrowings under the Senior Secured Credit Facilities, which would result in a cross-default of the Company’s obligations under the 3.875% Senior Unsecured Notes due 2028 (the “Senior Unsecured Notes”). If the Company would be unable to obtain additional waivers or forbearance of such covenants or defaults, to successfully renegotiate the terms of the Senior Secured Credit Facilities, or to cure the potential covenant breach or default, and the lenders enforced one or more of their rights upon default and/or the default resulted in a cross-default under the Senior Unsecured Notes, the Company would be unable to meet its obligations under those agreements and would likely be forced into insolvency proceedings.
Current wording
If we default under the Senior Secured Credit Facilities, the lenders would have the right to accelerate the repayment of borrowings under the Senior Secured Credit Facilities, which would result in a cross-default of the Company’s obligations under the 3.875% Senior Unsecured Notes due 2028 (the “Senior Unsecured Notes”). If the Company were unable to obtain additional waivers or forbearance of such covenants or defaults, to successfully renegotiate the terms of the Senior Secured Credit Facilities, or to cure the potential covenant breach or default, and the lenders enforced one or more of their rights upon default and/or the default resulted in a cross-default under the Senior Unsecured Notes, the Company would be unable to meet its obligations under those agreements and would likely be forced into insolvency proceedings.
Previous wording
Based on the facts and circumstances described above, there can be no assurance that the Company would be able to comply with its debt covenants in the future. As a result, the Company continues to evaluate a number of factors related to its ability to continue as a going concern, including its ability to comply with the terms and operating and financial covenants required by the Senior Secured Credit Facilities, its ability to satisfy the capital raise requirement, other market conditions, economic conditions, particularly in the pharmaceutical and biotechnology industry, and disruptions or volatility caused by factors such as regional conflicts, inflation, and supply chain disruptions. The Company has engaged legal and financial advisors to assist with a comprehensive review of alternatives to enhance its capital structure, which may include taking steps to cure any potential defaults or seeking forbearance, waivers, further cost reductions, asset sales, restructurings or other alternatives to avoid an event of default.
Current wording
Based on the facts and circumstances described above, there can be no assurance that the Company would be able to comply with its debt covenants in the future. As a result, the Company continues to evaluate a number of factors related to its ability to continue as a going concern, including its ability to comply with the terms and operating and financial covenants required by the Senior Secured Credit Facilities, its ability to satisfy the capital raise requirement required by the Senior Secured Credit Facilities, other market conditions, economic conditions, particularly in the pharmaceutical and biotechnology industry, and disruptions or volatility caused by factors such as regional conflicts, inflation, and supply chain disruptions. The Company has engaged legal and financial advisors to assist with a comprehensive review of alternatives to enhance its capital structure, which may include taking steps to cure any potential defaults or seeking forbearance, waivers, further cost reductions, asset sales, restructurings or other alternatives to avoid an event of default.
Previous wording
There were no sales of the Company’s common stock under the ATM Program during the three months ended March 31, 2024. As a result of the delayed filing of certain of the Company’s periodic reports with the SEC in 2023, the Company is not currently eligible to sell any shares under the ATM Program until the Company have timely filed certain periodic reports required under the Securities Exchange Act of 1934 for 12 consecutive months. Between the entry into the ATM Program and March 31, 2024, we sold 1.1 million shares of the Company’s common stock under the ATM Program for gross proceeds of $9.1 million, representing an average price of $8.22 per share. As of March 31, 2024, $140.9 million aggregate gross sales price of shares of the Company’s common stock remains available for issuance under the ATM Program. The Company intends to use proceeds obtained from the sale of shares under the ATM Program for general corporate purposes.
Current wording
The Company may, from time to time, sell up to $150.0 million aggregate gross sales price of shares of its common stock through Evercore Group L.L.C. and RBC Capital Markets, LLC, as sales agents, under the ATM Program that we entered into on May 17, 2023. There were no sales of the Company’s common stock under the ATM Program during the three months ended June 30, 2024. The Company’s Registration Statement on Form S-3 expires on August 9, 2024 and the Company is not eligible to file a new Registration Statement on Form S-3 until 2025 due to the delayed filing of the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2023. The Company will not be eligible to sell any shares under the ATM Program until a new Registration Statement is filed and becomes effective. During the second quarter of 2023, we sold 1.1 million shares of our common stock under the ATM Program for gross proceeds of $9.1 million, representing an average price of $8.22 per share. As of June 30, 2024, $140.9 million aggregate gross sales price of shares of the Company’s common stock remains available for issuance under the ATM Program. The Company intends to use proceeds obtained from the sale of shares under the ATM Program for general corporate purposes.
Previous wording
The following table provides information regarding our cash flows for the three months ended March 31, 2024 and 2023:
Current wording
The following table provides information regarding our cash flows for the six months ended June 30, 2024 and 2023:
Previous wording
Net cash used in investing activities for the three months ended March 31, 2024 decreased $4.3 million as compared with the three months ended March 31, 2023. The decrease in net cash used in investing activities was attributable due to a $4.3 million reduction in purchases of property, plant and equipment.
Current wording
Net cash used in investing activities for the six months ended June 30, 2024 increased $258.0 million as compared with the six months ended June 30, 2023. The increase in net cash used in investing activities was attributable to $270.2 million in proceeds from the sale of our travel health business in 2023, partially offset by a reduction in purchases of property, plant and equipment.
Previous wording
Net cash provided by financing activities for the three months ended March 31, 2024 increased $51.2 million as compared with the three months ended March 31, 2023. The increase in net cash provided by financing activities was primarily due to an increase in proceeds of $50.0 million under our Revolving Credit Facility, a reduction of $4.5 million in principal payments on our Term Loan Facility and a $1.7 million reduction in taxes paid for share-based comp activity, partially offset by increased principal payments of $5.0 million on our Revolving Credit Facility.
Current wording
Net cash used in financing activities for the six months ended June 30, 2024 decreased $487.2 million as compared with the six months ended June 30, 2023. The decrease in net cash used in financing activities was primarily due to a reduction of principal payments of $286.3 million on our Revolving Credit Facility and $148.9 million on our Term Loan Facility, partially offset by an increase in proceeds of $65.0 million under our Revolving Credit Facility in the current period and proceeds of $8.2 million from the sale of stock under the ATM Program in the prior period.
Previous wording
As of March 31, 2024, the Company has $909.2 million of fixed and variable rate debt with varying maturities. See Note 9, “Debt” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1, of this Form 10-Q for further discussion.
Current wording
As of June 30, 2024, the Company has $863.8 million of fixed and variable rate debt with varying maturities. See Note 10, “Debt” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1, of this Form 10-Q for further discussion.
Rearranged current paragraphs (8)
Current report — wording carried from elsewhere
Other, net went from $3.6 million in expense to $2.7 million in expense for the three months ended June 30, 2024. The change of $0.9 million was primarily attributable to lower interest income, due to lower balances in our money market accounts.
Current report — wording carried from elsewhere
Total segment gross margin decreased $45.8 million, or 31%, to $99.8 million for the six months ended June 30, 2024. Total segment gross margin percentage decreased 11 percentage points to 18% for the six months ended June 30, 2024. The decrease in total segment gross margin was due to decreases in Services gross margin of $94.8 million and Commercial Products gross margin of $10.9 million, partially offset by an increase in MCM Products gross margin of $59.9 million. Total segment gross margin and Total segment gross margin percentage exclude Contracts and grants revenues because the related costs are R&D expenses.
Current report — wording carried from elsewhere
See "Segment Results" for an expanded discussion of revenues and gross margin.
Current report — wording carried from elsewhere
Other Commercial Products sales decreased $9.8 million, or 100%, to no sales for the six months ended June 30, 2024. During the second quarter of 2023, we sold Vivotif® and Vaxchora® to Bavarian Nordic as part of our travel health business.
Current report — wording carried from elsewhere
Anthrax MCM sales increased $51.6 million, or 120%, to $94.6 million for the six months ended June 30, 2024. The increase was due to the impact of timing of sales related to CYFENDUS®and BioThrax®, partially offset by a decrease in Anthrasil® sales, due to timing. Anthrax vaccine product sales are primarily made under annual purchase options exercised by the USG. Fluctuations in revenues result from the timing of the exercise of annual purchase options, the timing of USG purchases, the availability of governmental funding and the Company’s delivery of orders that follow.
Current report — wording carried from elsewhere
Cost of MCM Product Sales and Gross Margin
Current report — wording carried from elsewhere
Bioservices lease revenues decreased $4.1 million, or 91%, to $0.4 million for the six months ended June 30, 2024. The decrease was related to the completion of a lease for a Bioservices customer at our Canton facility.
Current report — wording carried from elsewhere
Cost of Services and Gross Margin
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Other Commercial Products (Sold to Bavarian Nordic as part of our travel health business in May 2023)
Previous report — wording carried elsewhere
The Senior Secured Credit Facilities mature in May 2025, and provide for (1) revolving credit commitments, (2) a term loan, and (3) the issuance of commercial letters of credit. As of March 31, 2024, the Company had $458.4 million outstanding under the Senior
Previous report — wording carried elsewhere
The Company may, from time to time, sell up to $150.0 million aggregate gross sales price of shares of its common stock through Evercore Group L.L.C. and RBC Capital Markets, LLC, as sales agents, under the ATM Program that we entered into on May 17,