Emergent BioSolutions Inc.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and accompanying notes and other financial information included elsewhere in this Annual Report on Form 10-K (the “Annual Report”). Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report includes information with respect to our plans and strategy for our business and financing, as well as forward-looking statements that involve risks and uncertainties. You should carefully review the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in this Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Current wording

The following discussion and analysis of our financial condition and results of operations for each of the two years in the period ended December 31,2025 should be read in conjunction with our consolidated financial statements and accompanying notes and other financial information included elsewhere in this Annual Report on Form 10-K (this “Annual Report”). For a similar discussion and analysis of our results for the year ended December 31, 2024 compared to our results for the year ended December 31, 2023, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report for the year ended December 31, 2024, filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”) on March 3, 2025. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report includes information with respect to our plans and strategy for our business and financing, as well as forward-looking statements that involve risks and uncertainties. You should carefully review the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in this Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Previous wording

We are currently focused on the following four PHT categories: chemical, biological, radiological, nuclear and explosives (“CBRNE”); emerging infectious diseases (“EID”); emerging health crises; and acute, emergency and community care. We have a product portfolio of 10 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”); emerging health crises; and acute, emergency and community care. We have a product portfolio of 11 products, 10 of which are owned by the Company, 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

The Company structures the business with a focus on markets and customers. As such, the key components of the business structure include the following four product and service categories: Anthrax - Medical Countermeasures (“MCM”) Products, NARCAN®, Smallpox - MCM products and Emergent Bioservices (CDMO) services (“Bioservices”). In the fourth quarter of 2023, we realigned our reportable operating segments to reflect recent changes in our internal operating and reporting process. The revised reporting structure reflects the internal reporting and review process used by our Chief Operating Decision Maker, for making decisions and assessing performance, and is consistent with how we currently manage the business. We now manage our business with a focus on three reportable segments: (1) a Commercial Product segment consisting of our NARCAN®; (2) a MCM Products segment consisting of the Anthrax - MCM, Smallpox - MCM and Other Products and (3) a Services segment consisting of our Bioservices portfolio.

Current wording

The Company structures the business with a focus on markets and customers. As such, the key components of the business structure include the following four product and service categories: Anthrax - Medical Countermeasures (“MCM”) products, Naloxone Commercial products, Smallpox - MCM products and Emergent Bioservices (CDMO) services (“Bioservices”).

Previous wording

•BioThrax® (Anthrax Vaccine Adsorbed), the only vaccine licensed by the United States Food and Drug Administration (“FDA”) for the general use prophylaxis and post-exposure prophylaxis of anthrax disease;

Current wording

•BioThrax® (Anthrax Vaccine Adsorbed), the only vaccine licensed by the FDA for the general use prophylaxis and post-exposure prophylaxis of anthrax disease;

Previous wording

•CYFENDUS® (Anthrax vaccine adsorbed (AVA), adjuvanted), previously known as AV7909, which was recently approved by the FDA for post-exposure prophylaxis of disease following suspected or confirmed exposure to Bacillus anthracis in persons 18 through 65 years of age when administered in conjunction with recommended antibacterial drugs. CYFENDUS® is procured by certain authorized government buyers for their use; and

Current wording

•CYFENDUS® (Anthrax vaccine adsorbed (AVA), adjuvanted), which was approved by the FDA in July 2023 for post-exposure prophylaxis of disease following suspected or confirmed exposure to Bacillus anthracis in persons 18 through 65 years of age when administered in conjunction with recommended antibacterial drugs. CYFENDUS® is procured by certain authorized government buyers for their use; and

Previous wording

•Ebanga™ (ansuvimab-zykl), 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 (“Ridgeback”), Emergent will be responsible for the manufacturing, sale, and distribution of Ebanga™ in the U.S. and Canada, and Ridgeback will serve as the global access partner for Ebanga™; and

Current wording

•Ebanga™ (ansuvimab-zykl), 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 (“Ridgeback”), Emergent will be responsible for the manufacturing, sale, and distribution of Ebanga™ in the U.S. and Canada, and Ridgeback will serve as the global access partner for Ebanga™.

Previous wording

On July 31, 2024, the Company, through its wholly owned subsidiary Emergent BioSolutions Canada Inc., 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 to SERB 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 joined SERB in connection with the RSDL®Transaction.

Current wording

In July 2024, the Company entered into the Stock and Asset Purchase Agreement (the “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 4, “Divestitures” in the Notes to Consolidated Financial Statements in Part II, Item 8, of this Form 10-K for more information on the sale of RSDL®.

Previous wording

In May 2024, the Company initiated the May 2024 Plan. These strategic actions led to a reduction of the Company’s workforce by approximately 300 employees across all areas of the Company and the elimination of approximately 85 positions that were 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 were 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 $19.8 million. All activities related to the May 2024 Plan were substantially completed during the third quarter of 2024. Restructuring costs are recognized as an operating expense within the Consolidated Statement of Operations and are classified based on the Company's classification policy for each category of operating expense.

Current wording

In May 2024, the Company initiated an organizational restructuring plan (the “May 2024 Plan”). These strategic actions led to a reduction of the Company’s workforce by approximately 300 employees across all areas of the Company and the elimination of approximately 85 positions that were 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 were 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 $18.5 million. All activities related to the May 2024 Plan were substantially completed during the third quarter of 2024. Restructuring costs (benefits) are recognized as an operating expense within the Consolidated Statement of Operations and are classified based on the Company's classification policy for each category of operating expense.

Previous wording

On July 18, 2024, Bavarian Nordic announced that the European Medicines Agency had validated the marketing authorization application for CHIKV VLP, which was submitted in June 2024. This approval triggered a milestone payment receivable under the Purchase and Sale Agreement to the Company in the amount of $10.0 million.

Current wording

In July 2024, Bavarian Nordic announced that the European Medicines Agency had validated the marketing authorization application for CHIKV VLP, which was submitted in June 2024. This approval triggered a milestone payment receivable under the Purchase and Sale Agreement to the Company in the amount of $10.0 million.

Previous wording

On August 13, 2024, Bavarian Nordic announced that the FDA had accepted and granted priority review for the Biologics License Application for CHIKV VLP, which triggered a milestone payment receivable under the Purchase and Sale Agreement to the Company in the amount of $20.0 million.

Current wording

In August 2024, Bavarian Nordic announced that the FDA has accepted and granted priority review for the Biologics License Application for CHIKV VLP, which triggered a milestone payment receivable under the Purchase and Sale Agreement to the Company in the amount of $20.0 million.

Previous wording

On February 14, 2025, Bavarian Nordic announced that the FDA approved CHIKV VLP under the Priority Review, which triggered a development milestone payment receivable under the Purchase and Sale Agreement to the Company in the amount of $30.0 million, which is expected to be received in the first half of 2025.

Current wording

In February 2025, Bavarian Nordic announced that the FDA approved CHIKV VLP under the Priority Review, which triggered a $30.0 million development milestone payment to the Company. In addition, in February 2025 Bavarian Nordic also announced that the European Commission approved CHIKV VLP, which triggered a $20.0 million development milestone payment to the Company.

Previous wording

In August 2024, the Company initiated the August 2024 Plan at the Company’s Lansing facility, which reduced the Company’s workforce by approximately 70 employees, as well as eliminated several open positions. The Company also implemented non-labor optimization efforts, such as reducing the Company’s external and vendor spend. The cumulative amount of restructuring charges related to the August 2024 Plan since inception is $3.3 million. All activities related to the August 2024 Plan were substantially completed during the fourth quarter of 2024. Restructuring costs are recognized as an operating expense within the Consolidated Statement of Operations and are classified based on the Company’s classification policy for each category of operating expense.

Current wording

In August 2024, the Company initiated an organizational restructuring plan (the “August 2024 Plan”) at the Company’s Lansing facility, which reduced the Company’s workforce by approximately 70 employees, as well as eliminated several open positions. The Company also implemented non-labor optimization efforts, such as reducing the Company’s external and vendor spend. The cumulative amount of restructuring charges related to the August 2024 Plan since inception is $2.5 million. All activities related to the August 2024 Plan were substantially completed during the fourth quarter of 2024. Restructuring costs (benefits) are recognized as an operating expense within the Consolidated Statement of Operations and are classified based on the Company's classification policy for each category of operating expense.

Previous wording

On September 12, 2024, the Company and the lead plaintiffs in stockholder litigation against the Company entered into an agreement in principle to settle the claims against the Company and each of the Company’s current and former officers and directors. On October 4, 2024, the Court granted preliminary approval of the proposed settlement, ordered notice to the settlement class and scheduled a fairness hearing for February 27, 2025. On February 6, 2025, the lead plaintiffs filed a Motion for Final Approval of Class Action Settlement, Certification of the Settlement Class and Approval of Plan of Allocation and Motion for Award of Attorneys' Fees, Reimbursement of Expenses and Compensatory Awards for lead plaintiffs. Under the proposed settlement, the claims against the Company and its officers and directors will be dismissed with prejudice and released in exchange for a payment from the Company of $40.0 million, $30.0 million of which was paid from insurance proceeds, and was funded in the fourth quarter of 2024. At the scheduled fairness hearing on February 27, 2025, the Court granted final approval of the settlement. The Company recorded the settlement and insurance recoverable amounts as pre-tax operating expense and income, respectively, within “Selling, general and administrative” expenses on the Consolidated Statement of Operations for the year ended December 31, 2024.

Current wording

In September 2024, the Company and the lead plaintiffs in stockholder litigation against the Company entered into an agreement in principle to settle the claims against the Company and each of the Company’s current and former officers and directors. In October 2024, the Court granted preliminary approval of the proposed settlement, ordered notice to the settlement class and the court granted final approval of the settlement in February 2025. Under the settlement, the claims against the Company and its officers and directors were dismissed with prejudice and released in exchange for a payment from the Company of $40.0 million, $30.0 million of which was paid from insurance proceeds, and was funded in the fourth quarter of 2024. The Company recorded the settlement and insurance recoverable amounts as pre-tax operating expense and income, respectively, within “Selling, general and administrative” expenses on the Consolidated Statement of Operations for the year ended December 31, 2024.

Previous wording

We generate Commercial Product revenues through sale of NARCAN® Nasal Spray, which is sold commercially over-the-counter at retail pharmacies and digital commerce websites as well as through physician-directed or standing order prescriptions at retail pharmacies, health departments, local law enforcement agencies, community-based organizations, substance abuse centers and other federal agencies. In addition, we previously generated Commercial product revenues through sale of the Company's travel health products, which we sold to Bavarian Nordic in May 2023. We generate MCM Product revenues from the sale of our marketed products and procured product candidates. The U.S. government (“USG”) is the largest purchaser of our Government - MCM products and primarily purchases our products for the Strategic National Stockpile, a national repository of medical countermeasures including critical antibiotics, vaccines, chemical antidotes, antitoxins, and other critical medical supplies. The USG primarily purchases our products under long-term, firm fixed-price procurement contracts, generally with annual options.

Current wording

We generate Commercial Product revenues through the sale of Naloxone products, primarily NARCAN® Nasal Spray, which is sold commercially over-the-counter at retail pharmacies and digital commerce websites as well as through physician-directed or standing order prescriptions at retail pharmacies, health departments, local law enforcement agencies, community-based organizations, substance abuse centers and other federal agencies, as well as KLOXXADO®Nasal Spray, which is currently being integrated into our distribution network, NARCANDirect®. We generate MCM Product revenues from the sale of our marketed products and procured product candidates. The U.S. government (“USG”) is the largest purchaser of our Government - MCM products and primarily purchases our products for the Strategic National Stockpile, a national repository of medical countermeasures including critical antibiotics, vaccines, chemical antidotes, antitoxins, and other critical medical supplies. The USG primarily purchases our products under long-term, firm fixed-price procurement contracts, generally with annual options.

Previous wording

Commercial and MCM Products - The primary expenses that we incur to deliver our NARCAN® and MCM products consist of fixed and variable costs. We determine the cost of product sales for products sold during a reporting period based on the average manufacturing cost per unit in the period those units were manufactured. Fixed manufacturing costs include facilities, utilities and amortization of intangible assets. Variable manufacturing costs primarily consist of costs for materials and personnel-related expenses for direct and indirect manufacturing support staff, contract manufacturing operations, sales-based royalties, shipping and logistics. In addition to the fixed and variable manufacturing costs described above, the cost of product sales depends on utilization of available manufacturing capacity. For our commercial sales, other associated expenses include sales-based royalties, shipping, and logistics.

Current wording

Commercial and MCM Products - The primary expenses that we incur to deliver our Naloxone and MCM products consist of fixed and variable costs. We determine the cost of product sales for products sold during a reporting period based on the average manufacturing cost per unit in the period those units were manufactured. Fixed manufacturing costs include facilities, utilities and amortization of intangible assets. Variable manufacturing costs primarily consist of costs for materials and personnel-related expenses for direct and indirect manufacturing support staff, contract manufacturing operations, sales-based royalties, shipping and logistics. In addition to the fixed and variable manufacturing costs described above, the cost of product sales depends on utilization of available manufacturing capacity. For our commercial sales, other associated expenses include sales-based royalties, shipping, and logistics.

Previous wording

Changes in tax laws, rulings, policies, or related legal and regulatory interpretations occur frequently and may have significant favorable or adverse impacts on our effective tax rate. In 2021, the Organization for Economic Cooperation and Development released model rules for a 15% global minimum tax applied to cross-border profits of certain large multinational corporations, known as Pillar Two. Pillar Two has now been enacted by approximately 36 countries, including Ireland. This minimum tax is treated as a period cost beginning in 2024 and its impact is included on the Company's financial results of operations for the current period. The Company is monitoring legislative developments, as well as additional guidance from countries that have enacted legislation. We anticipate further legislative activity and administrative guidance in 2025.

Current wording

Changes in tax laws, rulings, policies, or related legal and regulatory interpretations occur frequently and may have significant favorable or adverse impacts on our effective tax rate. In 2021, the Organization for Economic Cooperation and Development released model rules for a 15% global minimum tax applied to cross-border profits of certain large multinational corporations, known as Pillar Two. Pillar Two has now been enacted by approximately 60 countries, including Ireland. This minimum tax is treated as a period cost beginning in 2024 and its impact is included in the Company's financial results of operations for the current period. The Company is monitoring legislative developments, as well as additional guidance from countries that have enacted legislation.

Previous wording

Management believes that the assumptions and estimates related to the provision for income taxes are critical to the Company’s results of operations.

Current wording

Management believes that the assumptions and estimates related to the provision for income taxes are material to the Company’s results of operations.

Previous wording

Total revenues decreased $5.7 million, or 1%, to $1.0 billion in 2024. The decrease was due to a decrease in Commercial Products revenue of $98.4 million, partially offset by increases in MCM Products revenue of $62.6 million, Bioservices revenue of $26.4 million and Contracts and grants revenue of $3.7 million.

Current wording

Total revenues decreased $300.7 million, or 29%, to $742.9 million in 2025. The decrease was due to lower Commercial Products revenue of $172.8 million, Services revenue of $82.5 million, and MCM Products revenue of $53.1 million, partially offset by an increase in Contracts and grants revenue of $7.7 million.

Previous wording

Total segment gross margin increased $15.2 million, or 6%, to $267.2 million in 2024. Total segment gross margin percentage increased 2 percentage points to 26%. The increase was primarily due to an increase in the MCM Products segment gross margin of $148.5 million, partially offset by decreases in the Commercial Products segment gross margin and Bioservices segment gross margin of $73.2 million and $60.1 million, respectively. Total segment gross margin and gross margin percentage excludes contracts and grants revenues because the related costs are R&D expenses.

Current wording

Gross margin increased $46.7 million, or 17%, to $313.9 million in 2025. Gross margin percentage increased 19 percentage points to 45%. The increase was primarily due to improvements in Services gross margin of $160.5 million and in MCM Products gross margin of $3.2 million, partially offset by a decrease in Commercial Products gross margin of $117.0 million. Gross margin and gross margin percentage excludes Contracts and grants revenues because the related costs are R&D expenses.

Previous wording

See “Segment Results” for an expanded discussion of revenues and gross profit.

Current wording

See “Reportable Segment Results” for an expanded discussion of revenues and gross profit.

Previous wording

Impairment of long-lived assets decreased $279.5 million, or 91%, to $27.2 million in 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 with 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 wording

Impairment of long-lived assets decreased $15.0 million, or 55%, to $12.2 million in 2025. The decrease was due to the one time $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, partially offset by a $12.2 million impairment charge associated with the Maryland warehouse disposal group write-down during 2025.

Previous wording

Interest expense decreased $16.9 million, or 19%, to $71.0 million in 2024. The decrease was primarily due to a decrease in interest expense related to our syndicated borrowings and a decrease in amortization of debt service costs, partially offset by higher interest expense related to our Term Loan Agreement and the termination of our interest rate swap hedging agreements in 2023.

Current wording

Interest expense decreased $11.7 million, or 16%, to $59.3 million in 2025. The decrease was primarily due to lower interest costs related to our prior syndicated borrowings, partially offset by higher interest expense related to our Term Loan Agreement, and an increase in amortization of debt service costs.

Previous wording

Gain on sale of business decreased $49.9 million, or 67%, to $24.3 million in 2024. The gain on sale of business in the current year is related to the sale of RSDL® to SERB, partially offset by a loss the sale of the Company’s drug product facility in Baltimore-Camden to Bora. The gain on sale of business in the prior year is attributable to the sale of our travel health business to Bavarian Nordic during the second quarter of 2023.

Current wording

Gain on sale of business decreased $24.3 million, or 100%, due to no sale of business occurring during the year ended December 31, 2025. The gain on sale of business in the prior year was related to the sale of RSDL® to SERB, partially offset by a loss on the sale of the Company’s drug product facility in Baltimore-Camden to Bora.

Previous wording

Income tax provision of $29.3 million for the year ended December 31, 2023 increased $18.4 million to a provision of $47.7 million for the year ended December 31, 2024. The effective tax rate was (33)% for the year ended December 31, 2024 as compared to (4)% in 2023. The effective annual tax rate decreased largely due to jurisdictional mix of income and losses, GILTI, and other permanent items.

Current wording

Income tax provision of $47.7 million for the year ended December 31, 2024 decreased $17.5 million to a provision of $30.2 million for the year ended December 31, 2025. The effective tax rate was 36% for the year ended December 31, 2025 as compared to (33)% in 2024. The effective annual tax rate differs from the prior year largely due to jurisdictional mix of income and losses, GILTI, and other permanent items.

Previous wording

Commercial Product segment gross margin decreased $73.2 million, or 29%, to $175.2 million in 2024. Commercial Product segment gross margin percentage decreased 6 percentage points to 44% in 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 Product segment adjusted gross margin excludes the impact of intangible asset amortization of $37.8 million.

Current wording

Commercial Products gross margin decreased $117.0 million, or 67%, to $58.2 million in 2025. Commercial Products gross margin percentage decreased 18 percentage points to 26% in 2025. The decrease was primarily due to an unfavorable price and volume mix of OTC NARCAN® and lower Canadian sales of branded NARCAN®, partially offset by an increase in KLOXXADO® sales. Commercial Products segment adjusted gross margin in the current year excludes the impact of intangible asset amortization of $37.8 million and restructuring costs of $0.2 million.

Previous wording

Anthrax MCM sales decreased $49.1 million, or 26%, to $138.5 million in 2024. The decrease was due to the impact of timing of sales related to CYFENDUS®and lower sales of Anthrasil®, coupled with a decrease in BioThrax® 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 wording

Anthrax MCM sales decreased $24.2 million, or 17%, to $114.3 million in 2025. The decrease was due to lower volumes of CYFENDUS® sales to the USG and international customers, primarily due to the impact of timing, partially offset by increases in ANTHRASIL® sales to the Canadian government and BioThrax®sales to foreign governments. Anthrax MCM 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.

Previous wording

Smallpox MCM sales increased $109.9 million, or 66%, to $277.3 million in 2024. The increase was due to higher ACAM2000®sales to non-U.S. customers and higher VIGIV CNJ-016® sales, primarily related to USG, partially offset by lower USG purchases of ACAM2000®, due to timing. Fluctuations in revenues result from the timing of the exercise of annual purchase options in 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 $11.2 million, or 4%, to $266.1 million in 2025. The decrease was primarily due to lower ACAM2000®sales volumes to both U.S. and non-U.S. customers, partially offset by increases in sales of TEMBEXA® that did not occur in the prior year, and CNJ-016® (VIGIV). Fluctuations in revenues from Smallpox MCM products result from the timing of the exercise of annual purchase options in existing procurement contracts, the timing of USG purchases, the availability of governmental funding and Company delivery of orders that follow.

Previous wording

MCM Products segment gross margin increased $148.5 million, or 130%, to $263.1 million in 2024. MCM Products segment gross margin percentage increased 26 percentage points to 52% in 2024. In addition to the MCM Product sales and Cost of MCM Product sales items as discussed above, the increase was largely due to overall higher sales volumes with a favorable product mix weighted more heavily to higher margin products, coupled with a realization of previously adjusted inventory values. MCM Product segment adjusted gross margin excludes the impacts of intangible asset amortization of $27.3 million, restructuring costs of $7.2 million, inventory step-up provision of $6.2 million and the changes in the fair value of financial instruments of $0.6 million.

Current wording

MCM Products gross margin increased $3.2 million, or 1%, to $266.3 million in 2025. MCM Products gross margin percentage increased 6 percentage points to 58% in 2025. The increase in gross margin percentage was primarily due to a favorable product sales mix which was weighted more heavily towards higher margin products and a decrease in shut-down and severance costs and inventory reserves compared with the prior year period. MCM Product segment adjusted gross margin in the current year excludes the impacts of intangible asset amortization of $27.3 million, inventory step-up provision of $5.4 million, and restructuring benefits of $1.0 million.

Previous wording

Bioservices revenue increased $30.7 million, or 42%, to $103.5 million in 2024. The increase was primarily attributable to the $50.0 million arbitration settlement with Janssen related to the Settlement Agreement, coupled with an increase in production at the Camden facility prior to the sale of the facility to Bora. The increase was partially offset by reduced production activities at the Company’s Canton and Winnipeg facilities.

Current wording

Services revenues decreased $82.5 million, or 79%, to $22.4 million in 2025. The decrease was primarily attributable to the one time $50.0 million arbitration settlement with Janssen related to the 2022 termination of the Janssen Agreement (the “Settlement Agreement”), which was paid in 2024, coupled with lower revenue from the Company’s Camden facility in the current year, which was sold to Bora in the third quarter of 2024, partially offset by an increase in production at the Company's Winnipeg facility.

Previous wording

Contract and grants revenue increased $3.7 million, or 14%, to $30.0 million in 2024. The increase was related to work under the Ebanga TM program, partially offset by the wind-down of our other funded development initiatives.

Current wording

Contract and grants revenue increased $7.7 million, or 26%, to $37.7 million in 2025 compared with 2024. The increase was primarily related to work under the Ebanga TM program, 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 various credit agreements, including our Term Loan Agreement and other lines of credit we have established from time to time. We also occasionally obtain financing from the sale of our common stock upon exercise of stock options. As of December 31, 2024, we had unrestricted cash and cash equivalents of $99.5 million and available borrowing capacity of up to $100.0 million under the Revolving Credit Agreement.

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 various credit agreements, including our Term Loan Agreement and other lines of credit we have established from time to time. We also occasionally obtain financing from the sale of our common stock upon exercise of stock options. As of December 31, 2025, we had unrestricted cash and cash equivalents of $205.4 million and available borrowing capacity of up to $100.0 million under the Revolving Credit Agreement. As of December 31, 2025, the Company believes that its sources of liquidity, including debt and cash flows from operating activities, are adequate to fund its operations for at least the next twelve months from the issuance of these consolidated financial statements.

Previous wording

Net cash provided by investing activities decreased $87.1 million in 2024. The decrease in net cash provided by investing activities was primarily due to the proceeds received from the sale of the travel health business during the second quarter of 2023 of $270.2 million, partially offset by proceeds received in 2024 related to the RSDL® Transaction and the sale of the Baltimore-Camden facility of $110.2 million, milestone payments received in 2024 related to an asset divestiture of $30.0 million, and a lower capital expenditures of $28.7 million.

Current wording

Net cash provided by investing activities decreased $55.8 million in 2025 compared with 2024. The decrease in net cash provided by investing activities was primarily attributable to the significant cash inflows in 2024 related to the sale of RSDL® and the sale of the Baltimore-Camden facility. The decrease was partially offset by greater aggregate milestone payments received in connection with the sale of the Company’s travel health business to Bavarian Nordic in 2025, proceeds from the sale of property, plant and equipment, including the sale of our Baltimore-Bayview facility to Syngene, and a reduction in capital expenditures compared with the prior year.

Previous wording

As of December 31, 2024, the Company has $700.0 million of fixed and variable rate debt with varying maturities, with no payable amounts within 12 months (see Note 10, “Debt” in the Notes to Consolidated Financial Statements in Part II, Item 8. of this Form 10-K).

Current wording

As of December 31, 2025, the Company has $589.7 million of fixed and variable rate debt with varying maturities, with no payable amounts within 12 months (see Note 11, “Debt” in the Notes to Consolidated Financial Statements in Part II, Item 8. of this Form 10-K).

Previous wording

We expect to continue to fund our short-term and long-term anticipated operating expenses, capital expenditures and debt service requirements from the following sources:

Current wording

We expect to continue to fund our short-term and long-term anticipated operating expenses, capital expenditures and debt service requirements, any future debt repurchases and any future repurchases of our common stock from the following sources:

Previous wording

•the level, timing and cost of product sales and Bioservices;

Current wording

•the level, timing and cost of product sales and services sales;

Previous wording

If we raise funds by issuing equity securities, our stockholders may experience dilution. Public or bank debt financing, if available, may involve agreements that include covenants, like those contained in our Senior Unsecured Notes and our Senior Secured Credit Facilities, which could limit or restrict our ability to take specific actions, such as incurring additional debt, making capital expenditures, pursuing acquisition opportunities, buying back shares or declaring dividends. If we raise funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish valuable rights to our technologies or product candidates or grant licenses on terms that may not be favorable to us.

Current wording

If we raise funds by issuing equity securities, our stockholders may experience dilution. Public or bank debt financing, if available, may involve agreements that include covenants, like those contained in our Senior Unsecured Notes, our Term Loan Agreement and our Revolving Credit Agreement, which could limit or restrict our ability to take specific actions, such as incurring additional debt, making capital expenditures, pursuing acquisition opportunities, buying back shares or declaring dividends. If we raise funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish valuable rights to our technologies or product candidates or grant licenses on terms that may not be favorable to us.

Previous wording

Economic conditions, including market volatility and adverse impacts on financial markets, may make it more difficult to obtain financing on attractive terms, or at all. Any new debt funding, if available, may be on terms less favorable to us than our Senior Unsecured Notes or our Senior Secured Credit Facilities. If financing is unavailable or lost, our business, operating results, financial condition and cash flows would be adversely affected, and we could be forced to delay, reduce the scope of or eliminate many of our planned activities.

Current wording

Economic conditions, including market volatility and adverse impacts on financial markets, may make it more difficult to obtain financing on attractive terms, or at all. Any new debt funding, if available, may be on terms less favorable to us than our Senior Unsecured Notes, our Term Loan Agreement or our Revolving Credit Agreement. If financing is unavailable or lost, our business, operating results, financial condition and cash flows would be adversely affected, and we could be forced to delay, reduce the scope of or eliminate many of our planned activities.

Previous wording

Available room under the Revolving Loans as of December 31, 2024 and the revolver under the Prior Credit Agreement as of December 31, 2023 was:

Current wording

Available room under the commitments with respect to the Revolving Credit Agreement (the “Revolving Loans") as of December 31, 2025 and 2024 was:

Previous wording

As of December 31, 2024, the Company has contractual obligations related to lease arrangements and purchase commitments. The lease arrangements are for certain equipment and facilities. As of December 31, 2024, the Company had fixed lease payment obligations of $15.3 million, with $3.6 million due within 12 months. The Company has non-cancelable purchase commitments of $632.4 million, with an estimated $195.6 million being due within 12 months.

Current wording

As of December 31, 2025, the Company has contractual obligations related to lease arrangements and purchase commitments. The lease arrangements are for certain equipment and facilities. As of December 31, 2025, the Company had fixed lease payment obligations of $16.9 million, with $3.4 million due within 12 months. The Company has non-cancelable purchase commitments of $474.8 million, with an estimated $142.9 million being due within 12 months.

Previous wording

Management believes the Company’s critical accounting policies and estimates are those related to revenue recognition, contingent consideration, and income taxes.

Current wording

Management believes the Company’s critical accounting policies and estimates are those related to revenue recognition, long-lived assets and inventories, net.