Emergent BioSolutions expects restructuring to save over $60 million

By William Gullotti

Buffalo, N.Y., Jan. 9 – Emergent BioSolutions Inc. released details pertaining to its organizational restructuring plan, anticipating annualized savings of over $60 million, according to an 8-K filing with the Securities and Exchange Commission.

On Monday, the company announced an organizational restructuring plan to reduce operating costs and improve operating margins. Emergent consolidated its research, product development and clinical teams into a newly created science and development function.

Although the plan is estimated to cost the company between $9 million and $11 million in the first quarter of 2023 due to employee transition, severance payments, employee benefits and share-based compensation, Emergent expects the plan to result in annualized savings of over $60 million.

The realignment eliminates 132 roles related to the consolidation, which represents approximately 5% of the company’s workforce. Furthermore, Emergent will also eliminate two executive positions, specifically executive vice presidents deemed chief people officer and chief strategy and development officer, effective March 17.

The restructuring follows a previously reported downgrade by Moody’s Investors Service on Nov. 14, 2022 in which the agency remarked, “The ratings downgrade reflects a delay relative to Moody's prior expectations of a U.S. government purchase order for ACAM2000, Emergent's smallpox vaccine supplied to the strategic national stockpile. The delay exacerbates the pressures in Emergent's contract development and manufacturing organization (CDMO), which remains unprofitable due to a high-cost structure including ongoing costs to improve compliance standards. In turn, the ACAM2000 delay will result in delayed profitability and cash flow, impeding deleveraging following the recent debt-financed acquisition of Tembexa.”

Emergent BioSolutions is a Gaithersburg, Md.-based life sciences company focused on providing specialty pharmaceutical products and contract development and manufacturing services that address several categories of public health threats.

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