S&P cuts Emergent BioSolutions

S&P said it lowered Emergent BioSolutions Inc.’s issuer rating to B- from B+ and its unsecured notes to CCC+ from B.

“The company lowered its revenue and adjusted EBITDA guidance by $100 million and $50 million at the midpoint, respectively, reflecting lower-than-expected volume in ACAM2000 (vaccine) and deferral of Tembexa. This was partially offset by continued strong performance in Narcan nasal spray, whose positive momentum should be supported by imminent over-the-counter sales,” S&P said in a press release.

The agency said government procurement is always volatile but the unexpected procurement deferrals and lower order volume were more severe than previously expected.

Emergent is also winding down its contract development and manufacturing organization (CDMO) business.

“The CDMO business has been a significant drag on operations for the past several quarters following high-profile quality issues at its Bayview facility in the production of Covid-19 vaccines. We view the winddown as credit-positive overall, given the recent severely negative impact on operating performance. However, the CDMO business had previously been viewed as a key growth driver for the future.

The outlook is negative.

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