Okay.
Good afternoon, and welcome to the Jefferies Global Healthcare Conference. My name is Victoria Gendron with the Jefferies Investment Banking Team, and it is with my great pleasure to introduce Richard Lindahl, the CFO of Emergent BioSolutions.
Okay, thank you very much, Victoria, and thank you all for coming today. We appreciate your interest in our company. I'm going to start with the standard Safe Harbor slide here that basically tells you to listen very carefully to what I say, but also please refer to our SEC filings. I will start by just introducing the company as one that we've been around for over 25 years, and we've been focused throughout all that time on providing solutions to public health threats. We focus on biological threats and preparedness for those. We also are very focused on the opioid crisis in America and Canada, and providing solutions to help save lives there. Very simply, our mission is to protect and save lives. We have, you can see at the bottom left hand of this slide, some of the dimensions of the company.
We have 11 products that we market today. We've anticipated 2025 revenue of between $750 million and $850 million. We employ about 900 people, and we are a strategic partner to governments, NGOs, and as well as biopharma innovators. On this slide, you can see we operate in two segments today. On the left-hand side, you can see our government or medical countermeasure segment. You can see highlighted here the primary threat areas that we focus on: anthrax, smallpox, botulism, and Ebola today. We provide a range of vaccines and therapeutic solutions to address the government's preparedness needs. We sell primarily to the U.S. government, but also to foreign allied governments around the world. I'll talk more about that in a little bit. Again, I referenced the opioid overdose emergency product, naloxone products. We have our flagship product is Narcan nasal spray, the 4 mg formulation.
We also recently acquired the rights to the commercial rights to Kloxxado, which is an 8 mg formulation. We have an experienced team. We're led by Joe Papa, our CEO, who joined us about 15 months ago, and he brought 35 years of experience in the industry to the team. You can see the rest of the team highlighted here. It's a tenured team. It's one that has significant experience in the industry and one that has been working together very closely as we move through our phases of development, which I'll highlight here on the next page. We are in the midst of a multi-year transformation plan. The first phase, which we completed last year, was to stabilize the company. That was characterized by a focus on improving our operating performance by focusing in on products. We divested some assets. We reduced significant costs.
We also reduced and refinanced our debt. We enhanced our cash liquidity and cash flow profile as well. With the stabilization complete, we've now moved into the turnaround phase, which is really our current focus. We're focused on further improving our overall profitability, finding avenues for profitable growth, creating long-term value for shareholders, and really realizing the full benefits of the actions that we've taken through the stabilization phase. One way to characterize this also is that our posture has moved from one of being very defensive to one being where we're more focused on offense and looking for opportunities to create value. That will lead us into our transformation phase, which we would expect to begin in 2026.
We would really be developing and leveraging the capabilities of our platform to expand the surface area of opportunities that we have to drive impact for our patients, employees, and shareholders. I'd like to take a moment and highlight some of the proof points of our progress against our turnaround. You can see them laid out on this slide. I would certainly highlight at first that we reaffirmed our guidance coming out of the first quarter for top-line revenue, as I said earlier, $750-$850 million and adjusted EBITDA of $150-$250 million for 2025. We got a good start against both of those objectives in the first quarter with the first quarter revenue of $222 million, which was in line with the midpoint of our guidance. We also improved our cash position.
We ended the first quarter with $149 million of cash, which is up significantly, about 50% from the prior year. We further enhanced that cash position through strong collections early in the second quarter. We also collected additional milestone payments from Bavarian Nordic, which were related to the divestiture of our travel health business back in 2023. We also collected a little over $36 million from the sale of one of our manufacturing plants, which we called the Bayview plant in Baltimore, Maryland. As a result of all these actions, we reduced our net leverage profile from 5.7 down to 2.8 times as of the end of the first quarter. Significant improvement on that metric.
Diving in a little bit more into the first quarter in terms of the revenue performance, it's important to highlight that about $91 million, which represented about 60% of our medical countermeasure sales in the first quarter, was related to international sales. International sales growth is an important priority and focus area for us as we go forward. We continue to see significant demand across all of our channels for naloxone as well. We are continuing to enhance and develop our R&D pipeline. We received an almost $17 million contract option for continued development of our Ebanga product under a contract that we have with BARDA. This is the product for the treatment of Ebola.
We also began enrolling patients in a trial in Africa, led by the African CDC, called the MOSA study, which is to evaluate the effectiveness of our Tembexa smallpox therapeutic against Mpox as well. Finally, we had two important strategic growth initiatives that were entered into in the quarter. First, as I mentioned earlier, we obtained the rights to Kloxxado, the 8 mg nasal spray formulation of naloxone. We also entered into an investment partnership with RocketVax, under which we're going to work together to develop and commercialize several candidates that they have in their pipeline. All of this is done with a focus on increasing shareholder value and continuing to stay focused on our commitment to patient safety, quality, and compliance. As I mentioned, we're off to a great start in the first quarter against our full year objectives.
We had strong execution. We continue to see solid revenue across our core business segments and strong profit follow-through from the performance in 2024. We expect to generate positive operating cash flow again in 2025. That is giving us the flexibility to consider additional strategic initiatives and other investments for growth for the future, which will all lead to other opportunities to create value as we move down the road. I'm going to take a moment and dive just a little deeper into first quarter updates. First, on this slide, this lays out our manufacturing footprint. I know a lot of people these days have lots of questions about tariffs and how that could affect the business.
I'm happy to say that because of our focus on North American manufacturing, principally in the United States, but we also have a plant in Winnipeg, Canada, all of these are compliant with the USMCA regulations, and so they are exempt at this stage from most, if not all, tariffs. We do have some components that we do import from the European Union that could potentially be subject to some tariffs, but the impact is not expected to be material at this point. You can see that we have five different manufacturing facilities that we either own or have access to. We own the Lansing, Michigan site, which is a specialized site that has capabilities for BSL2 and BSL3 requirements. Our Winnipeg site is one where we have an integrated plasma and hyperimmune capability platform.
Our Canton, Massachusetts, is a drug substance facility where we can, which is also capable for live virus BSL2 applications. In Rockville, Maryland, we have a fill-finish facility, which also has viral and non-viral drug product capabilities. Finally, in Bayview, Maryland, while we recently sold the facility, we retained the rights to have access to that facility for production under commercial arrangements with the new owner. A significant manufacturing footprint, again, focused on North America. Diving a little deeper into our commercial products, the Narcan and Kloxxado businesses are focused on the North American and Canadian markets. In North America, in the United States, we have most of the business concentrated on what we call the public interest sector. Think first responders, community organizations, and other organizations that are funded by state and local governments principally.
We continue to maintain a very strong share of that market, really as a result of some unique capabilities that we bring to the market, including the power of our Narcan brand name, our distribution capabilities, and some of the unique service elements that we provide to customers in terms of accessing funding sources, as well as increasing the awareness and accessibility of our products. We also see opportunities to expand into the business-to-business market. On the slide here on the right, you can see some pictures of some new kits that we've recently introduced. We really think of Narcan being an emergency life-saving device that is not dissimilar to an AED device. It is very logical that you would have that sitting next to that device, whether it's an office setting or a restaurant or a hotel or wherever it may be.
You can see the vision for that deployment in these pictures here. We are just getting started with that part of our market opportunity. We also have a significant business in Canada. In Canada, one of the highlights more recently was that we signed a three-year, CAD 65 million contract with Ontario's Ministry of Health. The Kloxxado product also received the approval from Health Canada for that nasal spray. That is an important opportunity in Canada as well. Broadly speaking, in the U.S., we expect that demand is going to continue. The opioid crisis remains a very significant problem. There are just way too many people dying from opioid overdoses, over 80,000 in 2024. It is a problem, especially exacerbated by the fentanyl situation. This is a very effective tool to respond and save people's lives.
The large opioid litigation settlements are providing, are expected to provide over $54 billion of funding to address the opioid crisis. Now, not all of that is going to go to spending on naloxone, but we believe that that will help support additional demand and procurement of that product over the next 10-15 years. At the federal level, there are still grants that are supporting access that reached $3.5 billion in 2025. On the medical countermeasure side, I would point out, first of all, we've been, again, throughout our entire 25-plus year history, we've been working with the U.S. government supplying medical countermeasures. We continue to have very strong positive working relationships with our counterparts in the U.S. government, maintaining a very consistent and open line of communication.
We continue to expect there's going to remain significant and ongoing demand for these products to prepare against the potential for the biological threats that our products are, in many cases, one of very few, if not the only solution for. This kind of preparedness remains a bipartisan priority. While there is a transition ongoing with the administration, again, based on everything that we understand, the requirements have not changed. Again, our dialogue would reinforce that there's going to be continued need for these products. Some evidence of some of that includes some of the international orders also that we have received, including the $27 million we announced earlier this year for 2025. Again, we secured an additional option from BARDA for development of Ebanga earlier this year.
In Europe, there's an organization called HERA that has been developing over the last couple of years to put a medical countermeasure strategy in place for the European Union. We are engaging with that organization as well to provide assistance where we can. We are also focused with our ACAM2000 vaccine, which is indicated for both smallpox and Mpox, on looking for ways to help with the situation, in particular in Africa with the Mpox outbreak there, both in terms of engaging with leaders as well as the WHO to determine how best to help with the ACAM2000, but also, as I mentioned earlier, with the African CDC MOSA trial for Tembexa to test the effectiveness of Tembexa for Mpox as well. On this slide, we highlight both the existing and future focus of our international business.
Again, our manufacturing and the majority of our business is within North America today. We also are focused on expanding into the European Union, the Middle East, Asia-Pacific, and Africa. We have been selling already into these markets. I mentioned earlier that in the first quarter, we had $91 million of revenue internationally into these markets. We continue to engage on additional opportunities as well as we continue to focus on expanding access into helping to provide preparedness solutions in what is, I think we'd all agree, an increasingly dangerous world. I'll now shift gears a little bit and just dive more deeply into our specific financial results in the first quarter. I mentioned earlier that our revenue in the quarter was $222 million. That was down year over year from the first quarter.
We tend to have fairly lumpy revenue, and there is variability quarter to quarter, but more consistency on an annual basis. Having said that, I referenced earlier that we took a number of actions in 2024 to address our cost structure. You can see the impact of those actions across the rest of these metrics on the slide. We improved our gross margins by about 700 basis points in the first quarter, which provided significant gross profit on the $222 million. We also held R&D expenses flat and then took out about $32 million or about 40% of our SG&A costs year over year. Those all combined to providing adjusted EBITDA improvement of 1,300 basis points and growth overall year over year despite a reduction in revenue year over year. Very strong financial performance in the first quarter.
Additionally, on the balance sheet and liquidity front, we also saw a significant improvement. I mentioned earlier that we ended the year with, I'm sorry, we ended the first quarter with $149 million of cash. That was up $70 million year over year and up significantly from the end of 2024. We also put a new revolver in place, a $100 million asset-backed revolver. Our liquidity improved from $79 million a year ago to $249 million at the end of the first quarter. Very strong liquidity position. I mentioned earlier that we worked to both reduce our debt and to improve our leverage. You can see on both a gross and a net debt basis, significant reductions year over year, particularly on net debt, where we took about $280 million off the balance sheet.
As I mentioned earlier, we basically cut our net leverage in half from 5.7 to 2.8 times. The balance sheet is in a very strong position as we came out of the first quarter and positions us to pursue our strategic initiatives as we move forward. I'm sorry. Let me talk just a minute about capital allocation. As I mentioned in the beginning, having come out of the stabilization phase, moving rapidly through turnaround, and looking ahead to our transformation phase, we are very focused on identifying opportunities for growth. We are looking for investment opportunities, both organically and inorganically, which could come in the form of either acquisition or licensing opportunities.
We are definitely looking to leverage the platform we have and the capabilities we have to grow the business further and, again, expand the surface area of opportunities that we have to drive impact in the public health threat space. We will also consider and look for opportunities to further repay our debt with excess cash flow. We also announced at the end of March a $50 million share repurchase program as an opportunity to provide some incremental value creation for our shareholders as well, given where our stock is trading today. On this slide, we lay out our guidance in detail. I'm not going to cover every single line here, but I mentioned earlier that we are anticipating revenue in the $750 million-$850 million range, as well as adjusted EBITDA in the $150 million-$200 million range.
That's driven by MCM product revenue of $435-$485 million and commercial product revenue, which is our naloxone nasal spray business, of $265-$315 million. We're also looking at gross margins in the 48%-51% area. All of that is going to lead to improvements in net income and adjusted net income as well. For the second quarter, we got it to $95-$120 million of revenue. That's down sequentially from the first quarter. Again, as I mentioned earlier, we tend to see some lumpiness in how our revenue comes through throughout the year. This is anticipated. What it means is just given the operating leverage in the business, we would expect less earnings in the second quarter versus the first quarter, as well as the lower revenue.
Again, as you can see, for the full year, we're still anticipating very solid performance on these various metrics. Looking ahead, when we think about how the company's positioned and some of the catalysts that we are already working on to realize growth going forward, I referenced earlier our partnership with RocketVax. We've invested in that company, and we are going to jointly develop and commercialize products that they have done the initial work on. We also obtained the rights to Kloxxado, which will provide incremental growth on the commercial side of the business. We continue to focus on not only the U.S., but the international medical countermeasure business to provide solutions to the threat areas that all of those entities are looking for preparedness solutions on.
Finally, our strong cash and liquidity positions give us the opportunity to pursue not only internal, but also external growth opportunities. In summary, again, strong first quarter performance, very solid cash position. We're on track executing against our priorities. We are looking for growth from existing products as well as geographic expansion and looking for business development opportunities. All the while, we continue to remain completely focused and committed to quality, patient safety, and compliance excellence throughout our business. With that, I would be happy, we have a few minutes, to take any questions that anybody has, and we can go from there.
Anybody?
Okay. We're not seeing any questions. Again, really appreciate your participation in the talk today and your interest in the company. Thank you very much.