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 unaudited condensed consolidated financial statements and accompanying notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”). For a similar discussion and analysis of our results for the three and six months ended June 30, 2025 compared to our results for the three and six months ended June 30, 2024, refer to Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Quarterly Report for the quarter ended June 30, 2025, filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”) on August 7, 2025. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q 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 should be read in conjunction with our unaudited condensed consolidated financial statements and accompanying notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”). For a similar discussion and analysis of our results for the three and nine months ended September 30, 2025 compared to our results for the three and nine months ended September 30, 2024 refer to Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Quarterly Report for the quarter ended September 30, 2025, filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”) on October 29, 2025. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q 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

•KLOXXADO®(naloxone HCl) Nasal Spray 8 mg is a prescription medicine. In January 2025, the Company announced an agreement with Hikma Pharmaceuticals Inc. (“Hikma”) in which the Company obtained exclusive commercial rights for product sales and marketing of Hikma’s KLOXXADO® (naloxone HCl) Nasal Spray, an 8 mg naloxone agent in the United States and Canada.

Current wording

•KLOXXADO®(naloxone HCl) Nasal Spray 8 mg is a prescription medicine. In January 2025, the Company announced an agreement with Hikma Pharmaceuticals USA Inc. (“Hikma”) in which the Company obtained exclusive commercial rights for product sales and marketing of Hikma’s KLOXXADO® (naloxone HCl) Nasal Spray, an 8 mg naloxone agent in the United States and Canada.

Previous wording

•BioThrax® (Anthrax Vaccine Adsorbed), the only vaccine licensed by the 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

In March 2025, the Company announced that its Board of Directors had authorized the repurchase of up to $50.0 million of the Company’s common stock (the “2025 Share Repurchase Program”) on or before March 27, 2026. In February 2026, the Company reauthorized the 2025 Share Repurchase Program for the repurchase of up to $50.0 million of the Company's common stock (the “Reauthorized Share Repurchase Program”) through March 31, 2027. During the three and six months ended June 30, 2026, the Company utilized $9.1 million and $18.2 million, including commissions and excise taxes, to repurchase 1.1 million and 1.9 million shares, respectively. The average price paid, excluding commissions and excise taxes, was $8.38 and $9.21 per share, respectively. As of June 30, 2026, the Company had $37.5 million available to repurchase shares under the Reauthorized Share Repurchase Program.

Current wording

In March 2025, the Company announced that its Board of Directors had authorized the repurchase of up to $50.0 million of the Company’s common stock (the “2025 Share Repurchase Program”) on or before March 27, 2026. In February 2026, the Company reauthorized the 2025 Share Repurchase Program for the repurchase of up to $50.0 million of the Company's common stock (the “Reauthorized Share Repurchase Program”) through March 31, 2027. During the three and nine months ended September 30, 2026, the Company utilized $0.2 million and $18.3 million, including commissions and excise taxes, to repurchase 0.0 million and 2.0 million shares, respectively. The average price paid, excluding commissions and excise taxes, was $8.44 and $9.20 per share, respectively. As of September 30, 2026, the Company had $37.3 million available to repurchase shares under the Reauthorized Share Repurchase Program.

Previous wording

In August 2026, the Board authorized the Company to use up to $75.0 million to repurchase Senior Unsecured Notes in open market purchases, privately negotiated transactions or otherwise. During the second half of 2025, the Company repurchased $10.3 million principal amount of its outstanding Senior Unsecured Notes under a debt repurchase program that was in effect from May 2025 to May 2026 under which the Company was authorized to repurchase up to $30.0 million in aggregate principal amount of its Senior Unsecured Notes. The Company did not have any principal repurchases during the three and six months ended June 30, 2026 and 2025 under its prior debt repurchase program.

Current wording

In August 2026, the Board authorized the Company to use up to $75.0 million to repurchase Senior Unsecured Notes in open market purchases, privately negotiated transactions or otherwise. During the second half of 2025, the Company repurchased $10.3 million principal amount of its outstanding Senior Unsecured Notes under a debt repurchase program that was in effect from May 2025 to May 2026 under which the Company was authorized to repurchase up to $30.0 million in aggregate principal amount of its Senior Unsecured Notes. During the three and nine months ended September 30, 2026, the Company repurchased $75.0 million principal amount of its outstanding Senior Unsecured Notes under its current debt repurchase program. The Company paid $68.1 million in cash, including fees and accrued interest, in connection with the repurchases and recognized a net gain on extinguishment of $6.7 million, which was included in "Gain (loss) on debt extinguishment" on the Condensed Consolidated Statement of Operations.

Previous wording

The Company estimated the fair value of the asset group using an income approach utilizing discounted projected future cash flows (level 3 fair value measurement). Significant assumptions in estimating the fair value included management’s estimates of future revenues, gross margins, operating expenses and a discount rate reflective of risks associated with the asset group. The Company recognized a non-cash impairment charge of $191.3 million during the three and six months ended June 30, 2026, which was attributed entirely to the NARCAN® finite-lived intangible asset. The impairment charge is included within “Impairment of long-lived assets” on the Condensed Consolidated Statements of Operations in Part I, Item 1 of this Form 10-Q. Following impairment, the NARCAN® intangible asset had a carrying amount of $81.9 million as of June 30, 2026.

Current wording

The Company estimated the fair value of the asset group using an income approach utilizing discounted projected future cash flows (level 3 fair value measurement). Significant assumptions in estimating the fair value included management’s estimates of future revenues, gross margins, operating expenses and a discount rate reflective of risks associated with the asset group. The Company recognized a non-cash impairment charge of $191.3 million during the second quarter of 2026, which was attributed entirely to the NARCAN® finite-lived intangible asset. The impairment charge is included within “Impairment of long-lived assets” on the Condensed Consolidated Statements of Operations in Part I, Item 1 of this Form 10-Q.

Previous wording

The Company accounts for Pillar Two taxes as an alternative minimum tax under ASC 740. Accordingly, the Company does not recognize or remeasure deferred tax assets or liabilities for the estimated future effects of Pillar Two taxes and recognizes incremental Pillar Two taxes as income tax expense in the period in which the tax is incurred. The impact of Pillar Two taxes was included in the Company’s income tax provision for the three and six months ending June 30, 2026. During the three months ended June 30, 2026, the Company filed its initial Irish Pillar Two return for the 2024 tax year and paid the related liability on June 30, 2026. The liability was accrued in 2024 and, accordingly, the payment did not have a material effect on the Company’s income tax expense for the three or six months ended June 30, 2026. The Company is monitoring legislative developments, as well as additional guidance from countries that have enacted legislation.

Current wording

The Company accounts for Pillar Two taxes as an alternative minimum tax under ASC 740. Accordingly, the Company does not recognize or remeasure deferred tax assets or liabilities for the estimated future effects of Pillar Two taxes and recognizes incremental Pillar Two taxes as income tax expense in the period in which the tax is incurred. The impact of Pillar Two taxes was included in the Company’s income tax provision for the nine months ended September 30, 2026. During the second quarter of 2026, the Company filed its initial Irish Pillar Two return for the 2024 tax year and paid the related liability on June 30, 2026. The liability was accrued in 2024 and, accordingly, the payment did not have a material effect on the Company’s income tax expense for the nine months ended September 30, 2026. The Company is monitoring legislative developments, as well as additional guidance from countries that have enacted legislation.

Previous wording

In July 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law in the United States. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. These impacts did not have a material effect on our tax rate for the three and six months ended June 30, 2026.

Current wording

In July 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law in the United States. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. These impacts did not have a material effect on our tax rate for the three and nine months ended September 30, 2026.

Previous wording

Long-lived assets such as finite lived intangible assets and property, plant and equipment are not required to be tested for impairment annually, instead they are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. These events or changes in circumstances may include a significant deterioration of operating results, changes in business plans or changes in anticipated future cash flows, changes in pricing or declines in expected sales volumes. During the three months ended June 30, 2026, we identified such indicators for the NARCAN® asset group, including downward revisions to projected operating results and future cash flows, which resulted in an impairment assessment.

Current wording

Long-lived assets such as finite lived intangible assets and property, plant and equipment are not required to be tested for impairment annually, instead they are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. These events or changes in circumstances may include a significant deterioration of operating results, changes in business plans or changes in anticipated future cash flows, changes in pricing or declines in expected sales volumes. During the second quarter of 2026, we identified such indicators for the NARCAN® asset group, including downward revisions to projected operating results and future cash flows, which resulted in an impairment assessment.

Previous wording

Total revenues increased $93.4 million, or 66%, to $234.3 million for the three months ended June 30, 2026. The increase was due to higher MCM Products revenue of $109.6 million, and Services revenue of $2.0 million, partially offset by a decrease in Commercial Products revenue of $15.1 million and Contracts and grants revenue of $3.1 million.

Current wording

Total revenues decreased $121.1 million, or 52%, to $110.0 million for the three months ended September 30, 2026. The decrease was due to lower MCM Products revenue of $83.1 million, Commercial Products revenue of $31.4 million, Contracts and grants revenue of $5.5 million, and Services revenue of $1.1 million.

Previous wording

Gross margin increased $65.3 million, or 138%, to $112.5 million for the three months ended June 30, 2026. Gross margin percentage increased 14 percentage points to 50% for the three months ended June 30, 2026. The increase in gross margin was due to improved MCM Products gross margin of $81.6 million, partially offset by decreases in Commercial Products and Services gross margin of $15.0 million and $1.3 million, respectively. Gross margin and gross margin percentage exclude Contracts and grants revenues because the related costs are R&D expenses.

Current wording

Gross margin decreased $104.8 million, or 87%, to $15.0 million for the three months ended September 30, 2026. Gross margin percentage decreased 40 percentage points to 14% for the three months ended September 30, 2026. The decrease in gross margin was due to lower MCM Products gross margin of $86.0 million, Commercial Products gross margin of $11.7 million and Services gross margin $7.1 million. Gross margin and gross margin percentage exclude Contracts and grants revenues as the related costs are unallocated corporate R&D expenses.

Previous wording

Interest expense decreased $4.7 million, or 32%, to $10.0 million for the three months ended June 30, 2026. The decrease was primarily driven by lower interest expense following the retirement of the Prior Term Loan balance in April 2026, partially offset by an increase in interest incurred on the new Term Loan Agreement and related delayed draw term loan commitment fees.

Current wording

Interest expense decreased $5.5 million, or 36%, to $9.7 million for the three months ended September 30, 2026. The decrease was primarily driven by lower interest expense following the retirement of the Prior Term Loan balance in April 2026 and lower amortization of debt issuance costs. Interest expense was further reduced by repurchases of Senior Unsecured Notes during the current quarter period, partially offset by an increase in interest incurred on the new Term Loan Agreement and delayed draw term loan.

Previous wording

Other, net decreased from $3.7 million in expense to $0.0 million in income for the three months ended June 30, 2026. The change of $3.7 million was driven by favorable warrant valuation adjustments and lower interest expense during the quarter.

Current wording

Other, net changed from $4.8 million in expense to $3.9 million in income for the three months ended September 30, 2026. The change of $8.7 million was driven by favorable warrant valuation adjustments and foreign currency movements, which were partially offset by costs incurred as part of the sale of the Company’s office property located in Gaithersburg, Maryland.

Previous wording

Income tax provision increased $18.7 million from a $4.8 million income tax benefit in the prior year to a $13.9 million income tax provision for the three months ended June 30, 2026. The increase was primarily due to a change in jurisdictional mix of income and losses.

Current wording

Income tax provision (benefit) decreased $10.1 million from a $6.4 million income tax provision in the prior year to a $3.7 million income tax benefit for the three months ended September 30, 2026. The decrease was primarily due to a change in jurisdictional mix of income and losses.

Previous wording

Total revenues increased $27.3 million, or 8%, to $390.4 million for the six months ended June 30, 2026. The increase was due to higher MCM Product revenue of $54.8 million, partially offset by a decrease in Commercial Products revenue of $17.5 million, Contracts and grants revenue of $9.8 million, and Services revenue of $0.2 million.

Current wording

Total revenues decreased $93.8 million, or 16%, to $500.4 million for the nine months ended September 30, 2026. The decrease was due to lower Commercial Products revenue of $48.9 million, MCM Product revenue of $28.3 million, Contracts and grants revenue of $15.3 million, and Services revenue of $1.3 million.

Previous wording

Gross margin increased $22.2 million, or 15%, to $173.7 million for the six months ended June 30, 2026. Gross margin percentage increased 1 percentage point to 46% for the six months ended June 30, 2026. The improved gross margin is driven by an increase of $40.0 million and $1.9 million in MCM Products and Services gross margin, respectively, partially offset by a decrease of $19.8 million in Commercial Products gross margin. Gross margin and gross margin percentage exclude Contracts and grants revenues because the related costs are R&D expenses.

Current wording

Gross margin decreased $82.6 million, or 30%, to $188.7 million for the nine months ended September 30, 2026. Gross margin percentage decreased 9 percentage points to 39% for the nine months ended September 30, 2026. The decrease in gross margin was due to lower MCM Products gross margin of $46.0 million, Commercial Products margin of $31.4 million and Services gross margin of $5.2 million. Gross margin and gross margin percentage exclude Contracts and grants revenues because the related costs are R&D expenses.

Previous wording

R&D expenses decreased $7.9 million, or 29%, to $19.7 million for the six months ended June 30, 2026. The decrease was primarily due to costs associated with the development work related to Ebanga®.

Current wording

R&D expenses decreased $12.0 million, or 29%, to $29.1 million for the nine months ended September 30, 2026. The decrease was primarily due to reduced development work related to Ebanga®as well as other unfunded R&D project spend.

Previous wording

SG&A expenses increased $0.9 million, or 2%, to $44.6 million for the three months ended June 30, 2026. The increase was primarily due to lower insurance reimbursement benefits recognized in the current year period compared with the prior year period, partially offset by lower compensation, marketing and administrative support expenses. SG&A expenses as a percentage of total revenues decreased 12 percentage points to 19% for the three months ended June 30, 2026.

Current wording

SG&A expenses increased $2.7 million, or 2%, to $137.7 million for the nine months ended September 30, 2026. The increase was primarily due to lower insurance reimbursement benefits recognized in the current year period compared with the prior year period. The increase also reflected severance costs associated with the August 2026 Plan in the current year. The increase was partially offset by lower marketing, compensation, and administrative support expenses. SG&A expenses as a percentage of total revenues increased 5 percentage points to 28% for the nine months ended September 30, 2026.

Previous wording

Impairment of long-lived assets was $191.3 million for the three months ended June 30, 2026 due to a non-cash impairment charge in the second quarter of 2026 related to our NARCAN® asset group within the Commercial reporting unit.

Current wording

Impairment of long-lived assets was $191.3 million for the nine months ended September 30, 2026 due to a non-cash impairment charge in the second quarter of 2026 related to our NARCAN® asset group within the Commercial reporting unit.

Previous wording

Interest expense decreased $8.4 million, or 29%, to $21.0 million for the six months ended June 30, 2026. The decrease was primarily due to lower average outstanding debt balances, resulting in reduced interest expense following the prepayment of the $100.0 million principal amount outstanding under the Prior Term Loan and retirement of the remaining outstanding balance in April 2026, along with repurchases of Senior Unsecured Notes in the prior year. Interest expense was further reduced by lower amortization of debt issuance costs, partially offset by the interest expense and commitment fees associated with the new Term Loan Agreement and delayed draw term loan.

Current wording

Interest expense decreased $13.9 million, or 31%, to $30.7 million for the nine months ended September 30, 2026. The decrease was primarily driven by lower interest expense following the retirement of the Prior Term Loan balance in April 2026 and lower amortization of debt issuance costs. Interest expense was further reduced by repurchases of Senior Unsecured Notes in the current year period, partially offset by interest incurred on the new Term Loan Agreement and delayed draw term loan.

Previous wording

Loss on assets held-for-sale was $10.7 million for the three months ended June 30, 2026. The loss on assets held-for-sale in the current period is related to the held-for-sale related remeasurement of the Company’s office property located in Gaithersburg, Maryland.

Current wording

Loss on assets held-for-sale decreased $12.2 million, or 100%, to $0.0 million for the nine months ended September 30, 2026. The loss on assets held-for-sale in the prior year period is related to the warehouse space in Maryland.

Previous wording

Other, net decreased from $66.0 million in income to $13.9 million in income for the six months ended June 30, 2026. The change of $52.1 million was primarily due to the absence of the $50.0 million Bavarian Nordic milestone payment recognized in the prior-year period. The increased expense was also driven by the absence of the gain on sale of the Bayview facility recognized in the prior-year period. These items were partially offset by TEMBEXA® milestone revenue earned in the current period and a favorable warrant valuation adjustment.

Current wording

Other, net decreased $54.1 million, or 88%, to $7.1 million for the nine months ended September 30, 2026. The change of $54.1 million was primarily due to the decrease in milestone payments, specifically the $50.0 million Bavarian Nordic milestone payments in the prior year, as well as the $11.4 million loss on the sale of the Company’s office property located in Gaithersburg, Maryland in the current period, combined with the gain on sale of the Bayview facility and the Bora TSA revenue recognized in the prior year period. These decreases were partially offset by favorable warrant valuation adjustments, and the TEMBEXA® milestone revenue earned in the current period.

Previous wording

Income tax provision increased $0.6 million, or 3%, to $20.5 million for the six months ended June 30, 2026. The increase was primarily due to a change in jurisdictional mix of income and losses.

Current wording

Income tax provision (benefit) decreased $9.5 million, or 36%, to $16.8 million for the nine months ended September 30, 2026. The decrease was primarily due to a change in jurisdictional mix of income and losses.

Previous wording

Naloxone sales decreased $15.1 million, or 22%, to $52.4 million for the three months ended June 30, 2026. The decrease was primarily attributable to lower sales of OTC NARCAN®, mostly driven by an unfavorable price-volume mix in U.S. public interest channels, partially mitigated by increases in Canadian sales of branded NARCAN®and KLOXXADO® sales.

Current wording

Naloxone sales decreased $31.4 million, or 42%, to $43.5 million for the three months ended September 30, 2026. The decrease was primarily attributable to lower sales of OTC NARCAN®, mostly driven by an unfavorable price-volume mix in U.S. public interest channels, partially mitigated by increases in Canadian sales of branded NARCAN®.

Previous wording

Cost of Commercial Products sales decreased $0.1 million to $36.3 million for the three months ended June 30, 2026. Despite decreases in U.S. sales volumes of OTC NARCAN® compared with the prior year period, cost of sales remained substantially flat due to increased costs and volumes associated with KLOXXADO®sales and Canadian sales of branded NARCAN®.

Current wording

Cost of Commercial Products sales decreased $13.1 million, or 31%, to $29.5 million for the three months ended September 30, 2026. The decrease was primarily due to declines in U.S. sales volumes of OTC NARCAN® compared with the prior year period, partially offset by an increase in Canadian sales volumes of branded NARCAN®.

Previous wording

Commercial Products gross margin decreased $19.7 million, or 60%, to $13.3 million for the six months ended June 30, 2026. Commercial Products gross margin percentage decreased 15 percentage points to 14% for the six months ended June 30, 2026. The decrease was largely due to an unfavorable price and volume mix of OTC NARCAN®across all U.S. sales channels and product mix due to the introduction of KLOXXADO®, partially offset by lower product costs related to the Canadian sales. Commercial Products segment adjusted gross margin in the current year period excludes the impact of intangible asset amortization of $18.9 million and the portion of stock-based compensation expense recorded as cost of sales of $0.1 million.

Current wording

Commercial Products gross margin decreased $11.7 million, or 51%, to $11.2 million for the three months ended September 30, 2026. Commercial Products gross margin percentage decreased 5 percentage points to 26% for the three months ended September 30, 2026. The decrease was largely due to an unfavorable price and volume mix of OTC NARCAN®across most U.S. sales channels, partially offset by reduced amortization expense as a result of the impairment charge taken on the NARCAN® asset group during the second quarter of 2026. Commercial Products segment adjusted gross margin in the current quarter period excludes the impact of intangible asset amortization of $2.8 million.

Previous wording

Naloxone sales decreased $17.5 million, or 16%, to $95.3 million for the six months ended June 30, 2026. The decrease was primarily attributable to lower sales of OTC NARCAN®, reflecting lower pricing across most channels and lower volumes in U.S. public interest channels, which represented the most significant driver of the decline, partially offset by increases in Canadian sales of branded NARCAN® and KLOXXADO® sales.

Current wording

Naloxone sales decreased $48.9 million, or 26%, to $138.8 million for the nine months ended September 30, 2026. The decrease was primarily attributable to lower sales of OTC NARCAN®, reflecting lower volumes in U.S. public interest channels, which represented the most significant driver of the decline, partially offset by increases in Canadian sales of branded NARCAN® sales.

Previous wording

Cost of Commercial Product sales increased $2.2 million, or 4%, to $63.1 million for the six months ended June 30, 2026. The increase was primarily due to higher KLOXXADO®sales and Canadian sales of branded NARCAN®, largely offset by lower sales volumes of OTC NARCAN® in the U.S.

Current wording

Cost of Commercial Product sales decreased $10.9 million, or 11%, to $92.6 million for the nine months ended September 30, 2026. The decrease was primarily due to lower sales volumes of OTC NARCAN® in the U.S., partially offset by higher Canadian sales volumes of branded NARCAN® and KLOXXADO®product costs.

Previous wording

Commercial Products gross margin decreased $15.0 million, or 69%, to $6.7 million for the three months ended June 30, 2026. Commercial Products gross margin percentage decreased 19 percentage points to 13% for the three months ended June 30, 2026. The decrease was largely due to an unfavorable price and volume mix of OTC NARCAN®across most U.S. sales channels, partially offset by lower product costs related to Canadian sales. Commercial Products segment adjusted gross margin in the current year period excludes the impact of intangible asset amortization of $9.4 million and the portion of stock-based compensation expense recorded as cost of sales of $0.1 million.

Current wording

Commercial Products gross margin decreased $31.4 million, or 56%, to $24.5 million for the nine months ended September 30, 2026. Commercial Products gross margin percentage decreased 12 percentage points to 18% for the nine months ended September 30, 2026. The decrease was largely due to an unfavorable price and volume mix of OTC NARCAN®across most U.S. sales channels, partially offset by reduced amortization expense as a result of the impairment charge taken on the NARCAN® asset group during the second quarter of 2026, and favorable product costs in the Canadian market. Commercial Products segment adjusted gross margin in the current year period excludes the impact of intangible asset amortization of $21.7 million and the portion of stock-based compensation expense recorded as cost of sales of $0.1 million.

Previous wording

Anthrax MCM sales increased $0.7 million, or 6%, to $12.3 million for the three months ended June 30, 2026. The increase was primarily attributable to a more favorable pricing mix driven by international sales of BioThrax®. This increase was partially offset by absence of international sales of ANTHRASIL®in the current period, compared to international sales in the prior-year period. 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 increased $23.7 million to $25.1 million for the three months ended September 30, 2026. The increase was primarily attributable to higher USG sales of CYFENDUS® 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 $61.0 million, or 150%, to $101.6 million for the three months ended June 30, 2026. The increase was primarily attributable to higher USG sales of ACAM2000® due to timing, higher CNJ-016® (VIGIV) sales with a more favorable price and volume mix of U.S. and international sales and higher TEMBEXA® international 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 the Company’s delivery of orders that follow.

Current wording

Smallpox MCM sales decreased $56.9 million, or 68%, to $26.7 million for the three months ended September 30, 2026. The decrease was primarily attributable to lower USG sales of ACAM2000® due to timing, lower USG sales due to timing as well as less international sales of CNJ-016® (VIGIV), partially offset by higher TEMBEXA® USG 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 the Company’s delivery of orders that follow.

Previous wording

Other Products sales increased $47.9 million to $54.1 million for the three months ended June 30, 2026. The increase was primarily due to higher USG and international BAT® sales due to timing.

Current wording

Other Products sales decreased $49.9 million, or 87%, to $7.6 million for the three months ended September 30, 2026. The decrease was primarily due to lower USG BAT® sales due to timing, partially offset by an increase in international BAT sales.

Previous wording

Cost of MCM product sales increased $27.0 million, or 105%, to $52.8 million for the three months ended June 30, 2026. The increase was primarily attributable to higher product sales volumes for BAT®, ACAM2000®, CNJ-016® (VIGIV), BioThrax®, and TEMBEXA®, as well as a significant non-recurring manufacturing cost related to the production of CYFENDUS®. These increases were partially offset by a decrease in cost of sales for ANTHRASIL® driven by lower sales volumes.

Current wording

Cost of MCM product sales increased $2.0 million, or 5%, to $40.1 million for the three months ended September 30, 2026. The increase was primarily attributable to higher product sales volumes for CYFENDUS®and TEMBEXA®as well as higher plant shutdown costs. These increases were partially offset by a decrease in cost of sales for BAT®, ACAM2000® and CNJ-016® (VIGIV) driven by lower sales volumes.

Previous wording

MCM Products gross margin increased $81.6 million to $107.4 million for the three months ended June 30, 2026. MCM Product gross margin percentage increased 20 percentage points to 64% for the three months ended June 30, 2026. The increase in gross margin percentage was primarily driven by a more favorable sales mix and increased sales volumes, which improved absorption of fixed manufacturing costs. These improvements were partially offset by a significant non-recurring manufacturing cost related to the production of CYFENDUS®. MCM Product segment adjusted gross margin in the current year period excludes the impacts of intangible asset amortization of $7.8 million, the portion of stock-based compensation expense recorded as cost of sales of $0.7 million and inventory step-up provision of $0.2 million.

Current wording

MCM Products gross margin decreased $86.0 million, or 88%, to $11.5 million for the three months ended September 30, 2026. MCM Product gross margin percentage decreased 49 percentage points to 19% for the three months ended September 30, 2026. The decrease in gross margin percentage was primarily driven by an unfavorable sales mix and decreased sales volumes, which decreased the absorption of fixed manufacturing costs. MCM Product segment adjusted gross margin in the current quarter period excludes the impacts of intangible asset amortization of $7.8 million, inventory step-up provision of $2.1 million, severance and restructuring costs of $1.3 million and the portion of stock-based compensation expense recorded as cost of sales of $0.7 million.

Previous wording

Anthrax MCM sales decreased $25.6 million, or 43%, to $33.9 million for the six months ended June 30, 2026. The decrease reflects the impact of lower international sales of ANTHRASIL®, mainly to the Canadian government, and USG sales of CYFENDUS®, partially offset by an increase of BioThrax® USG 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 Company delivery of orders that follow.

Current wording

Anthrax MCM sales decreased $1.8 million, or 3%, to $59.1 million for the nine months ended September 30, 2026. The decrease reflects the impact of lower international sales of ANTHRASIL®, mainly to the Canadian government, largely offset by an increase of BioThrax® and CYFENDUS® USG 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 Company delivery of orders that follow.

Previous wording

Smallpox MCM sales increased $18.9 million, or 13%, to $165.9 million for the six months ended June 30, 2026. The increase was primarily due to higher CNJ-016® (VIGIV) USG sales from timing, coupled with higher ACAM2000® sales due to timing of USG orders and international sales of TEMBEXA®. These increases were partially offset by lower international sales of ACAM2000® and lower TEMBEXA® USG 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 $38.1 million, or 17%, to $192.5 million for the nine months ended September 30, 2026. The decrease was primarily due to lower international and USG sales of ACAM2000®, and lower international sales of CNJ-016® (VIGIV) from timing. This decrease was partially offset by higher USG sales of CNJ-016® (VIGIV) from timing, and higher TEMBEXA® USG and international 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.

Previous wording

Other Products sales increased $61.5 million, to $70.0 million for the six months ended June 30, 2026. The increase was primarily due to higher USG sales as well as Canadian and other international BAT® sales due to timing.

Current wording

Other Products sales increased $11.6 million, or 18%, to $77.6 million for the nine months ended September 30, 2026. The increase was primarily due to higher Canadian and other international BAT® sales, offset by timing of USG BAT® sales.

Previous wording

Cost of MCM product sales increased $13.6 million, or 18%, to $89.6 million for the six months ended June 30, 2026. The increase was primarily due to higher cost of sales of BAT®, CNJ-016® (VIGIV) and BioThrax® and reflecting increased sales volumes, as well as increased non-recurring manufacturing costs related to production of CYFENDUS®. These increases were partially offset by lower cost of sales for ANTHRASIL®, and TEMBEXA® due to lower unit sales volume.

Current wording

Cost of MCM product sales increased $15.6 million, or 14%, to $129.7 million for the nine months ended September 30, 2026. The increase was primarily due to higher cost of sales of CYFENDUS®, CNJ-016® (VIGIV), BioThrax®, and TEMBEXA® reflecting increased sales volumes, as well as increased non-recurring manufacturing and product costs related to CYFENDUS®. These increases were partially offset by lower cost of sales for ANTHRASIL®, and ACAM2000® due to lower unit sales volume.

Previous wording

MCM Product gross margin increased $40.0 million, or 32%, to $165.4 million for the six months ended June 30, 2026. MCM Product gross margin percentage increased 3 percentage points to 61% for the six months ended June 30, 2026. The increase in gross margin percentage was primarily due to a favorable sales volume and product mix which was weighted more heavily towards higher margin products, the margin improvements were partially offset by non-recurring manufacturing costs mentioned above. MCM Product segment adjusted gross margin in the current year period excludes the impacts of intangible asset amortization of $14.8 million, the portion of stock-based compensation expense recorded as cost of sales of $1.2 million and inventory step-up provision of $0.3 million.

Current wording

MCM Product gross margin decreased $46.0 million, or 21%, to $176.9 million for the nine months ended September 30, 2026. MCM Product gross margin percentage decreased 8 percentage points to 54% for the nine months ended September 30, 2026. The decrease in gross margin percentage was primarily due to an unfavorable sales mix and decreased sales volumes, which decreased the absorption of fixed manufacturing costs, and discrete product costs related to CYFENDUS®. MCM Product segment adjusted gross margin in the current year period excludes the impacts of intangible asset amortization of $22.6 million, inventory step-up provision of $2.4 million, the portion of stock-based compensation expense recorded as cost of sales of $1.9 million and severance and restructuring costs of $1.3 million.