Cover Page
Cover Page - USD ($) shares in Millions, $ in Billions | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 14, 2020 | Jun. 30, 2019 | |
Cover page. | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Transition Report | false | ||
Entity File Number | 001-33137 | ||
Entity Registrant Name | EMERGENT BIOSOLUTIONS INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 14-1902018 | ||
Entity Address, Address Line One | 400 Professional Drive, Suite 400 | ||
Entity Address, City or Town | Gaithersburg | ||
Entity Address, State or Province | MD | ||
Entity Address, Postal Zip Code | 21079 | ||
City Area Code | 240 | ||
Local Phone Number | 631-3200 | ||
Title of 12(b) Security | Common stock, $0.001 par value per share | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 2.5 | ||
Entity Common Stock, Shares Outstanding | 52 | ||
Documents Incorporated by Reference | Portions of the registrant's definitive proxy statement for its 2020 annual meeting of stockholders scheduled to be held in May 2020 , which is expected to be filed with the Securities and Exchange Commission not later than 120 days after the end of the registrant's fiscal year ended December 31, 2019 , are incorporated by reference into Part II, Item 5. and Part III of this annual report on Form 10-K. With the exception of the portions of the registrant's definitive proxy statement for its 2020 annual meeting of stockholders that are expressly incorporated by reference into this annual report on Form 10-K, such proxy statement shall not be deemed filed as part of this annual report on Form 10-K. | ||
Entity Central Index Key | 0001367644 | ||
Current Fiscal Year End Date | --12-31 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | EBS |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 167.8 | $ 112.2 |
Restricted cash | 0.2 | 0.2 |
Accounts receivable, net | 270.7 | 262.5 |
Inventories | 222.5 | 205.8 |
Income tax receivable, net | 4.6 | 8.6 |
Prepaid expenses and other current assets | 20.4 | 31.5 |
Total current assets | 686.2 | 620.8 |
Property, plant and equipment, net | 542.3 | 510.2 |
Intangible assets, net | 712.9 | 761.6 |
In-process research and development | 29 | 50 |
Goodwill | 266.6 | 259.7 |
Deferred tax assets, net | 13.4 | 13.4 |
Other assets | 76.9 | 13.7 |
Total assets | 2,327.3 | 2,229.4 |
Current liabilities: | ||
Accounts payable | 94.8 | 80.7 |
Accrued expenses | 39.5 | 30.7 |
Accrued compensation | 62.4 | 58.2 |
Debt, current portion | 12.9 | 10.1 |
Contingent consideration, current portion | 3.2 | 5.6 |
Other current liabilities | 3.5 | 15.1 |
Total current liabilities | 216.3 | 200.4 |
Contingent consideration, net of current portion | 26 | 54.4 |
Debt, net of current portion | 798.4 | 784.5 |
Deferred tax liability | 63.9 | 67.5 |
Contract liabilities, net of current portion | 85.6 | 62.5 |
Other liabilities | 48.6 | 49.2 |
Total liabilities | 1,238.8 | 1,218.5 |
Stockholders’ equity: | ||
Preferred stock, $0.001 par value; 15.0 shares authorized, 0 shares issued and outstanding at both December 31, 2019 and 2018 | 0 | 0 |
Common stock, $0.001 par value; 200.0 shares authorized, 52.9 shares issued and 51.7 shares outstanding at December 31, 2019; 52.4 shares issued and 51.2 shares outstanding at December 31, 2018 | 0.1 | 0.1 |
Treasury stock, at cost, 1.2 common shares at December 31, 2019 and 2018 | (39.6) | (39.6) |
Additional paid-in capital | 716.1 | 688.6 |
Accumulated other comprehensive loss, net | (9.9) | (5.5) |
Retained earnings | 421.8 | 367.3 |
Total stockholders’ equity | 1,088.5 | 1,010.9 |
Total liabilities and stockholders’ equity | $ 2,327.3 | $ 2,229.4 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 15,000,000 | 15,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 52,900,000 | 52,400,000 |
Common stock, shares outstanding (in shares) | 51,700,000 | 51,200,000 |
Treasury stock (in shares) | 1,200,000 | 1,200,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues: | |||
Total revenues | $ 1,106 | $ 782.4 | $ 560.9 |
Operating expenses: | |||
Cost of product sales and contract development and manufacturing services | 433.5 | 322.3 | 187.7 |
Research and development | 226.2 | 142.8 | 97.4 |
Selling, general and administrative | 273.5 | 202.5 | 142.9 |
Amortization of intangible assets | 58.7 | 25 | 8.6 |
Total operating expenses | 991.9 | 692.6 | 436.6 |
Income from operations | 114.1 | 89.8 | 124.3 |
Other income (expense): | |||
Interest expense | (38.4) | (9.9) | (6.6) |
Other income (expense), net | 1.7 | 1.6 | 0.9 |
Total other income (expense), net | (36.7) | (8.3) | (5.7) |
Income before provision for income taxes | 77.4 | 81.5 | 118.6 |
Provision for income taxes | 22.9 | 18.8 | 36 |
Net income | $ 54.5 | $ 62.7 | $ 82.6 |
Net income per share-basic (in dollars per share) | $ 1.06 | $ 1.25 | $ 1.98 |
Net income per share-diluted (in dollars per share) | $ 1.04 | $ 1.22 | $ 1.71 |
Weighted-average number of shares - basic (in shares) | 51.5 | 50.1 | 41.8 |
Weighted-average number of shares - diluted (in shares) | 52.4 | 51.4 | 50.3 |
Product sales, net | |||
Revenues: | |||
Total revenues | $ 903.5 | $ 606.5 | $ 421.5 |
Contract development and manufacturing services | |||
Revenues: | |||
Total revenues | 80 | 98.9 | 68.9 |
Contracts and grants | |||
Revenues: | |||
Total revenues | $ 122.5 | $ 77 | $ 70.5 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | |||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), after Reclassification, Tax | $ 0.4 | $ 0 | $ 0 |
Net income | 54.5 | 62.7 | 82.6 |
Other comprehensive income (loss), net of tax: | |||
Foreign currency translation | 0.4 | (1.6) | 0.6 |
Unrealized losses on hedging activities, net of tax | (1.6) | 0 | |
Unrealized losses on hedging activities, net of tax | 0 | ||
Unrealized losses on pension benefit obligation, net of tax | (3.2) | (0.2) | 0 |
Total other comprehensive income (loss), net of tax | (4.4) | (1.8) | 0.6 |
Comprehensive income | 50.1 | 60.9 | 83.2 |
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, Tax, Attributable to Parent | $ 0.5 | $ 0 | $ 0 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | |||
Net income | $ 54.5 | $ 62.7 | $ 82.6 |
Adjustments to reconcile to net cash provided by operating activities: | |||
Share-based compensation | 26.7 | 23.2 | 15.2 |
Depreciation and amortization | 110.7 | 62.2 | 42.6 |
Deferred income taxes | (1.1) | 8.6 | 3.3 |
Change in fair value of contingent consideration, net | 24.8 | 3.1 | 7.8 |
Impairment of IPR&D intangible asset | 12 | 0 | 0 |
Amortization of deferred financing costs | 3 | 0.9 | 1.7 |
Other | (0.2) | 0.2 | 1.2 |
Changes in operating assets and liabilities: | |||
Accounts receivable | (8.2) | (94.2) | (4.8) |
Inventories | (16.7) | (1.9) | 6.1 |
Income taxes | (11.7) | (5.1) | 20.1 |
Prepaid expenses and other assets | (27.4) | (7.9) | (3.7) |
Accounts payable | 16.5 | (7) | 16.1 |
Accrued expenses and other liabilities | (15.1) | (11.6) | 1.6 |
Accrued compensation | 4.2 | 8.4 | 3.3 |
Deferred revenue | 16 | 0.2 | 15 |
Net cash provided by operating activities: | 188 | 41.8 | 208.1 |
Cash flows from investing activities: | |||
Purchases of property, plant and equipment and other | (86.9) | (72.1) | (54.8) |
Milestone payment from asset acquisition | (10) | 0 | 0 |
Asset acquisitions | 0 | 0 | (77.6) |
Business acquisitions, net of cash acquired | 0 | (827.7) | (117.5) |
Proceeds from sale of assets | 0 | 2.6 | 0 |
Net cash used in investing activities: | (96.9) | (897.2) | (249.9) |
Cash flows from financing activities: | |||
Proceeds from revolving credit facility | 130 | 348 | 0 |
Proceeds from term loan facility | 0 | 450 | 0 |
Principal payments on revolving credit facility | (105) | 0 | 0 |
Principal payments on term loan facility | (11.3) | (2.8) | 0 |
Proceeds from issuance of common stock upon exercise of stock options | 8.2 | 15.9 | 19.3 |
Debt issuance costs | 0 | (13.4) | (1.4) |
Taxes paid on behalf of employees for equity activity | (7.4) | (6.6) | (4.3) |
Payment of notes payable to Aptevo | 0 | 0 | (20) |
Contingent consideration payments | (50.4) | (3.4) | (10.9) |
Receipts and payments of restricted cash | 0 | 1.1 | (1) |
Purchase of treasury stock | 0 | (0.1) | (33.1) |
Net cash (used in) provided by financing activities | (35.9) | 788.7 | (51.4) |
Effect of exchange rate changes on cash and cash equivalents | 0.4 | (0.2) | 0 |
Net increase (decrease) in cash and cash equivalents and restricted cash | 55.6 | (66.9) | (93.2) |
Cash and cash equivalents and restricted cash at beginning of year | 112.4 | 179.3 | 272.5 |
Cash and cash equivalents and restricted cash at end of year | 168 | 112.4 | 179.3 |
Supplemental disclosure of cash flow information: | |||
Cash paid during the year for interest | 34.5 | 10.2 | 8.4 |
Cash paid during the year for income taxes | 30.8 | 14 | 12 |
Supplemental information on non-cash investing and financing activities: | |||
Issuance of common stock to acquire Adapt Pharma | 0 | 37.7 | 0 |
Purchases of property, plant and equipment unpaid at year end | 12.3 | 14.7 | 4.6 |
Reconciliation of cash and cash equivalents and restricted cash: | |||
Total | $ 168 | $ 179.3 | $ 179.3 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity - USD ($) $ in Millions | Total | $0.001 Par Value Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Retained Earnings |
Beginning balance (in shares) at Dec. 31, 2016 | 41,000,000 | 400,000 | ||||
Beginning balance at Dec. 31, 2016 | $ 596.2 | $ 0 | $ 352.4 | $ (6.4) | $ (4.3) | $ 254.5 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Employee equity plans activity (in shares) | 1,100,000 | |||||
Employee equity plans activity | 28 | 28 | ||||
Shares issued to extinguish convertible notes (in shares) | 8,500,000 | |||||
Shares issued to extinguish convertible notes | 238 | $ 0.1 | 237.9 | |||
Treasury stock (in shares) | (800,000) | |||||
Treasury stock | (33.1) | $ (33.1) | ||||
Net income | 82.6 | 82.6 | ||||
Other comprehensive income (loss) | 0.6 | 0.6 | ||||
Ending balance (in shares) at Dec. 31, 2017 | 50,600,000 | 1,200,000 | ||||
Ending balance at Dec. 31, 2017 | 912.3 | $ 0.1 | 618.3 | $ (39.5) | (3.7) | 337.1 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Employee equity plans activity (in shares) | 1,100,000 | |||||
Employee equity plans activity | 32.6 | 32.6 | ||||
Issuance of common stock in acquisitions (in shares) | 700,000 | |||||
Issuance of common stock in acquisition | 37.7 | 37.7 | ||||
Treasury stock | (0.1) | $ (0.1) | ||||
Net income | 62.7 | 62.7 | ||||
Other comprehensive income (loss) | $ (1.8) | (1.8) | ||||
Ending balance (in shares) at Dec. 31, 2018 | 52,400,000 | 52,400,000 | 1,200,000 | |||
Ending balance at Dec. 31, 2018 | $ 1,010.9 | $ 0.1 | 688.6 | $ (39.6) | (5.5) | 367.3 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Employee equity plans activity (in shares) | 600,000 | |||||
Employee equity plans activity | 27.5 | 27.5 | ||||
Net income | 54.5 | 54.5 | ||||
Other comprehensive income (loss) | $ (4.4) | (4.4) | ||||
Ending balance (in shares) at Dec. 31, 2019 | 52,900,000 | 53,000,000 | 1,200,000 | |||
Ending balance at Dec. 31, 2019 | $ 1,088.5 | $ 0.1 | $ 716.1 | $ (39.6) | $ (9.9) | $ 421.8 |
Consolidated Statement of Cha_2
Consolidated Statement of Changes in Stockholders' Equity (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Stockholders' Equity [Abstract] | |||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 |
Nature of the business and orga
Nature of the business and organization | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of the business and organization | Nature of the business and organization Organization and business Emergent BioSolutions Inc. (the "Company" or "Emergent") is a global life sciences company focused on providing specialty products for civilian and military populations that address accidental, deliberate and naturally occurring public health threats ("PHTs," each a “PHT”). The Company is focused on innovative preparedness and response products and solutions addressing the following six distinct PHT categories: Chemical, Biological, Radiological, Nuclear and Explosives ("CBRNE"); emerging infectious diseases ("EID"); travel health; emerging health crises, acute/emergency care, and contract development and manufacturing ("CDMO") . The Company has a product portfolio of twelve products and product candidates (vaccines, therapeutics, and drug-device combination products) that generate a majority of our revenue. The U.S. government (the "USG') is the Company's largest customer and provides us with substantial funding for the development of a number of it s product candidates. The Company's product portfolio includes: Vaccines ▪ ACAM2000 ® (Smallpox (Vaccinia) Vaccine, Live), the only single-dose smallpox vaccine licensed by the FDA for active immunization against smallpox disease for persons determined to be at high risk for smallpox infection; ▪ BioThrax ® (Anthrax Vaccine Adsorbed), the only vaccine licensed by the U.S. Food and Drug Administration ("FDA"), for the general use prophylaxis and post-exposure prophylaxis of anthrax disease; ▪ Vaxchora® (Cholera Vaccine, Live, Oral), the only FDA-licensed vaccine for the prevention of cholera, it is orally delivered; and ▪ Vivotif® (Typhoid Vaccine Live Oral Ty21a), the only oral vaccine licensed by the FDA for the prevention of typhoid fever. Devices ▪ NARCAN® (naloxone HCl) Nasal Spray, the first and only needle-free formulation of naloxone approved by the FDA and Health Canada, for the emergency treatment of known or suspected opioid overdose as manifested by respiratory and/or central nervous system depression; ▪ RSDL ® (Reactive Skin Decontamination Lotion Kit), the only medical device cleared by the FDA to remove or neutralize the following chemical warfare agents from the skin: tabun, sarin, soman, cyclohexyl sarin, VR, VX, mustard gas and T-2 toxin; and Therapeutics ▪ raxibacumab (Anthrax Monoclonal), the first fully human monoclonal antibody therapeutic licensed by the FDA for the treatment and prophylaxis of inhalational anthrax; ▪ Anthrasil ® (Anthrax Immune Globulin Intravenous (Human)), the only polyclonal antibody therapeutic licensed by the FDA and Health Canada for the treatment of inhalational anthrax; ▪ BAT® (Botulism Antitoxin Heptavalent (A,B,C,D,E,F,G)-(Equine)), the only heptavalent antibody therapeutic licensed by the FDA and Health Canada for the treatment of botulism; and ▪ VIGIV (Vaccinia Immune Globulin Intravenous (Human)), the only polyclonal antibody therapeutic licensed by the FDA and Health Canada to address certain complications from smallpox vaccination. Product Candidates ▪ AV7909 ® (Anthrax Vaccine Absorbed with Adjuvant), is a product candidate being developed as a next generation anthrax vaccine for post-exposure prophylaxis of disease resulting from suspected or confirmed Bacillus antracis exposure. The USG has started procuring AV7909 for the SNS prior to its approval by the FDA and has been reducing its purchases of BioThrax as a result; ▪ Trobigard® is a combination drug-device auto-injector product candidate that contains atropine sulfate and obidoxime chloride. It has not been approved by the FDA or any similar health regulatory body, but is procured by certain authorized government buyers under special circumstances for potential use as a nerve agent countermeasure. The Company also generates revenue from contract development and manufacturing services on a clinical and commercial (small and large) scale by providing such services to the pharmaceutical and biotechnology industry. These services include process development and bulk drug substance and drug product manufacturing of biologics, fill/finish formulation and analytical development services for injectable and other sterile products, inclusive of process design, technical transfer, manufacturing validations, aseptic filling, lyophilization, final packaging and stability studies, as well as manufacturing of vial and pre-filled syringe formats across bacterial, viral and mammalian therapy technology platforms. We operate as one operating segment. |
Summary of significant accounti
Summary of significant accounting policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of significant accounting policies | Summary of significant accounting policies Basis of presentation and consolidation The accompanying consolidated financial statements include the accounts of Emergent and its wholly owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. Use of estimates The preparation of financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates, judgments and assumptions that affect the amounts and disclosures reported in the consolidated financial statements and accompanying notes. Management continually re-evaluates its estimates, judgments and assumptions, and management’s evaluations could change. These estimates are sometimes complex, sensitive to changes in assumptions and require fair value determinations using Level 3 fair value measurements. Actual results may differ materially from those estimates. Estimates and judgments inherent in the preparation of the consolidated financial statements include accounting for asset impairments, revenue recognition, allowances for doubtful accounts, inventory, depreciation and amortization, business comb inations, contingent consideration, stock-based compensation, income taxes, and other contingencies. Cash, cash equivalents and restricted cash Cash equivalents are highly liquid investments with a maturity of 90 days or less at the date of purchase and consist of time deposits and investments in money market funds with commercial banks and financial institutions. Also, the Company maintains cash balances with financial institutions in excess of insured limits. The Company does not anticipate any losses with such cash balances. Restricted cash includes cash that is not readily available for use in the Company's operating activities. Restricted cash is primarily comprised of cash pledged under letters of credit. Fair value measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, an exit price, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value include: Level 1 — Observable inputs for identical assets or liabilities such as quoted prices in active markets; Level 2 — Inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3 — Unobservable inputs in which little or no market data exists, which are therefore developed by the Company using estimates and assumptions that reflect those that a market participant would use. On a recurring basis, the Company measures and records money market funds (level 1), contingent purchase considerations (level 3) and interest-rate swap arrangements (level 2) using fair value measurements in the accompanying financial statements. On a non-recurring basis, the Company measures its IPR&D assets (level 3) using fair value measurements. The carrying amounts of the Company's short-term financial instruments, which include cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values due to their short maturities. The carrying amounts of the Company’s long-term debt arrangements approximates their fair values due to variable interest rates which fluctuate with changes in market rates. Significant customers and accounts receivable Billed accounts receivable are stated at invoice amounts and consist mostly of amounts due from the USG, as well as amounts due under reimbursement contracts with other government entities and non-government organizations. Our opioid overdose reversal product is sold commercially through physician-directed or standing order prescriptions at retail pharmacies, as well as state health departments, law enforcement agencies, state and local community based organizations, substance abuse centers and federal agencies. If necessary, the Company records a provision for doubtful receivables to allow for amounts which may be unrecoverable. This provision is based upon an analysis of the Company's prior collection experience, customer creditworthiness and current economic trends. Unbilled accounts receivable relates to various service contracts for which work has been performed, though invoicing has not yet occurred. Concentration Risk Customers The Company has long-term contracts with the USG that expire at various times from 2020 through 2029. The Company has derived a significant portion of its revenue from sales of ACAM2000 and Anthrax Vaccines under contracts with the USG. The Company's current USG contracts do not necessarily increase the likelihood that it will secure future comparable contracts with the USG. The Company expects that a significant portion of the business will continue to be under government contracts that present a number of risks that are not typically present in the commercial contracting process. USG contracts for ACAM 2000 and Anthrax Vaccines are subject to unilateral termination or modification by the government. The Company may fail to achieve significant sales of ACAM 2000 and Anthrax Vaccines to customers in addition to the USG, which would harm its growth opportunities. The Company may not be able to manufacture Anthrax Vaccines consistently in accordance with FDA specifications. The Company's other product sales are largely sold commercially through physician-directed or standing order prescriptions at retail pharmacies, as well as to state health departments, local law enforcement agencies, community-based organizations, substance abuse centers and other federal agencies. Although the Company seeks expand its customer base and to renew its agreements with its customers prior to expiration of a contract, a delay in securing a renewal or a failure to secure a renewal or a renewal on less favorable terms may have a material adverse effect on the Company’s financial condition and results of operations. The Company’s trade receivables do not represent a significant concentration of credit risk. The USG accounted for approximately 61% , 76% and 78% of total revenues for 2019 , 2018 and 2017 , respectively, and approximately 69% and 76% of total accounts receivable as of December 31, 2019 and 2018 , respectively. Because accounts receivable consists primarily of am ounts due from the USG for product sales and from government agencies under government grants and development contracts, management does not deem the credit risk to be significant. Financial Institutions Cash and cash equivalents are maintained with several financial institutions. The Company has deposits held with banks that exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions of reputable credit and, therefore, bear minimal credit risk. Lender Counterparties There is lender counterparty risk associated with the Company's revolving credit facility and derivatives instruments. There is risk that the Company’s revolving credit facility investors and derivative counterparties will not be available to fund as obligated. If funding under the revolving credit facility is unavailable, the Company may have to acquire a replacement credit facility from different counterparties at a higher cost or may be unable to find a suitable replacement. The Company seeks to manage risks from its revolving credit facility and derivative instruments by contracting with experienced large financial institutions and monitoring the credit quality of its lenders. As of December 31, 2019 , the Company did not anticipate nonperformance by any of its counterparties. Inventories Inventories are stated at the lower of cost or net realizable value with cost being determined using a standard cost method, which approximates average cost. Average cost consists primarily of material, labor and manufacturing overhead expenses (including fixed production-overhead costs) and includes the services and products of third-party suppliers. The Company analyzes its inventory levels quarterly and writes down, in the applicable period, inventory that has become obsolete, inventory that has a cost basis in excess of its expected net realizable value and inventory in excess of expected customer demand. The Company also writes off, in the applicable period, the costs related to expired inventory. Costs of purchased inventories are recorded using weighted-average costing. The Company determines normal capacity for each production facility and allocates fixed production-overhead costs on that basis. The Company records inventory acquired in business acquisitions utilizing the comparative sales method, which estimates the expected sales price reduced for all costs expected to be incurred to complete/dispose of the inventory with a profit on those costs. Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and impairments. Depreciation is computed using the straight-line method over the following estimated useful lives: Buildings 31-39 years Building improvements 10-39 years Furniture and equipment 3-15 years Software 3-7 years or product life Leasehold improvements Lesser of the asset life or lease term Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to operations. Repairs and maintenance costs are expensed as incurred. The Company capitalizes internal-use software when both (a) the software is internally developed, acquired, or modified solely to meet the entity’s internal needs and (b) during the software’s development or modification, no substantive plan either exists or is being developed to market the software externally. Capitalization of qualifying internal-use software costs begins when the preliminary project stage is completed, management with the relevant authority, implicitly or explicitly, authorizes and commits to the funding of the software project, and it is probable that the project will be completed and the software will be used to perform the function intended. The Company determines the fair value of the property, plant and equipment acquired in a business combination utilizing either the cost approach or the sales comparison approach. The cost approach is determined by establishing replacement cost of the ass et and then subtracting any value that has been lost due to economic obsolescence, functional obsolescence, or physical deterioration. The sales comparison approach determines an asset is equal to the market price of an asset of comparable features such as design, location, size, construction, materials, use, capacity, specification, operational characteristics and other features or descriptions. Income taxes Income taxes are accounted for using the liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss and research and development tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. Deferred income tax effects of transactions reported in different periods for financial reporting and income tax return purposes are recognized under the asset and liability method of accounting for income taxes. This method gives consideration to the future tax consequences of the deferred income tax items and immediately recognizes changes in income tax laws in the year of enactment. On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (the “Tax Reform Act”). Further information on the tax impacts of the Tax Reform Act is included in Note 12 of the Company’s consolidated financial statements. The Company's ability to realize deferred tax assets depends upon future taxable income as well as the limitations discussed below. For financial reporting purposes, a deferred tax asset must be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized prior to expiration. The Company considers future taxable income and ongoing tax planning strategies in assessing the need for valuation allowances. In general, if the Company determines that it is more likely than not to realize more than the recorded amounts of net deferred tax assets in the future, the Company will reverse all or a portion of the valuation allowance established against its deferred tax assets, resulting in a decrease to the provision for income taxes in the period in which the determination is made. Likewise, if the Company determines that it is not more likely than not to realize all or part of the net deferred tax asset in the future, the Company will establish a valuation allowance against deferred tax assets, with an offsetting increase to the provision for income taxes, in the period in which the determination is made. Under sections 382 and 383 of the Internal Revenue Code, if an ownership change occurs with respect to a "loss corporation", as defined therein, there are annual limitations on the amount of net operating losses and deductions that are available. The Company has recognized the portion of net operating losses and research and development tax credits acquired that will not be limited and are more likely than not to be realized. Because tax laws are complex and subject to different interpretations, significant judgment is required. As a result, the Company makes certain estimates and assumptions, in (1) calculating the Company's income tax expense, deferred tax assets and deferred tax liabilities, (2) determining any valuation allowance recorded against deferred tax assets and (3) evaluating the amount of u nrecognized tax benefits, as well as the interest and penalties related to such uncertain tax positions. The Company's estimates and assumptions may differ significantly from tax benefits ultimately realized. Acquisitions In determining whether an acquisition is a business combination versus an asset acquisition, the accounting guidance requires an entity to first evaluate whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If that threshold is met, the set of assets and activities is not a business and therefore treated as an asset acquisition. If that threshold is not met, the entity evaluates whether the set meets the definition of a business. If an acquired asset or asset group does not meet the definition of a business, the transaction is accounted for as an asset acquisition. Otherwise, the acquisition is treated as a business combination. In a business combination, the acquisition method of accounting requires that the assets acquired and liabilities assumed be recorded as of the date of the merger or acquisition at their respective fair values with limited exceptions and generally use Level 3 fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Accordingly, the Company may be required to value assets at fair values that do not reflect the Company's intended use of those assets. Any excess of the purchase price (consideration transferred) over the estimated fair values of net assets acquired is recorded as goodwill. Transaction costs and costs to restructure the acquired company are expensed as incurred. The operating results of the acquired business are reflected in the Company's consolidated financial statements after the date of the merger or acquisition. If the Company determines the assets acquired do not meet the definition of a business under the acquisition method of accounting, the transaction will be accounted for as an asset acquisition and recorded at cost rather than a business combination and, therefore, no goodwill will be recorded. The fair values of intangible assets, including acquired in-process research and development ("IPR&D"), are determined utilizing information available at or near the merger or acquisition date based on expectations and assumptions that are deemed reasonable by management. Given the considerable judgment involved in determining fair values, the Company typically obtains assistance from third-party valuation specialists for significant items. Amounts allocated to acquired IPR&D are capitalized and accounted for as indefinite-lived intangible assets. Upon successful completion of each project, the Company will make a separate determination as to the remaining useful life of the asset and begin amortization. The judgments made in determining estimated fair values assigned to assets acquired and liabilities assumed in a business combination, as well as asset lives, can materially affect the Company’s results of operations. The fair values of identifiable intangible assets related to current products and product rights are primarily determined by using an income approach through which fair value is estimated based on each asset’s discounted projected net cash flows. The Company's estimates of market participant net cash flows consider historical and projected pricing, margins and expense levels, the performance of competing products where applicable, relevant industry and therapeutic area growth drivers and factors, current and expected trends in technology and product life cycles, the time and investment that will be required to develop products and technologies, the ability to obtain marketing and regulatory approvals, the ability to manufacture and commercialize the products, the extent and timing of potential new product introductions by the Company’s competitors, and the life of each asset’s underlying patent, if any. The net cash flows are then probability-adjusted where appropriate to consider the uncertainties associated with the underlying assumptions, as well as the risk profile of the net cash flows utilized in the valuation. The probability-adjusted future net cash flows of each product are then discounted to present value utilizing an appropriate discount rate. The fair values of identifiable intangible assets related to IPR&D are determined using an income approach, through which fair value is estimated based on each asset’s probability-adjusted future net cash flows, which reflect the different stages of development of each product and the associated probability of successful completion. The net cash flows are then discounted to present value using an appropriate discount rate. Indefinite-lived intangible assets are tested for impairment annually or whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Assets acquired and liabilities assumed in a business combination that arise from contingencies are recognized at fair value if fair value can reasonably be estimated. If the acquisition date fair value of an asset acquired or liability assumed that arises from a contingency cannot be determined, the asset or liability is recognized if probable and reasonably estimable ; if these criteria are not met, no asset or liability is recognized. Asset Impairment Analysis Goodwill and Indefinite-lived Intangible Assets Goodwill is allocated to the Company's reporting units, which are one level below its operating segment. The Company evaluates goodwill and other indefinite-lived intangible assets for impairment annually as of October 1 and earlier if an event or other circumstance indicates that we may not recover the carrying value of the asset. If the Company believes that as a result of its qualitative assessment it is more likely than not that the fair value of a reporting unit or other indefinite-lived intangible asset is greater than its carrying amount, the quantitative impairment test is not required. If however it is determined that it is not more likely than not that the fair value of a reporting unit or other indefinite-lived intangible asset is greater than its carrying amount, a quantitative test is required. The quantitative goodwill impairment test is performed using a two-step process. The first step of the process is to compare the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired and the second step of the quantitative impairment test is not necessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the quantitative goodwill impairment test is required to be performed to measure the amount of impairment loss, if any. The second step of the quantitative goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. In other words, the estimated fair value of the reporting unit’s identifiable net assets excluding goodwill is compared to the fair value of the reporting unit as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The Company used a qualitative assessment for our goodwill impairment testing for 2019 and 2018 . The qualitative evaluation completed during the years ended December 31, 2019 and 2018 indicated no impairment losses. The Company has mater ial indefinite lived intangible assets associated with in-process research and development (IPR&D) which were acquired as part of the acquisitions completed in the fourth quarter of 2018 . Following a qualitative assessment indicating that it is not more likely than not that the fair value of the indefinite lived intangible asset exceeds its carrying amount, impairment of other intangible assets not subject to amortization involves a comparison of the estimated fair value of the intangible asset with its carrying value. If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. Determining fair value requires the exercise of judgment about appropriate discount rates, perpetual growth rates and the amount and timing of expected future cash flows. The Company used a quantitative assessment for our IPR&D impairment testing for 2019 and determined there was an impairment loss of $ 12.0 million, which was recorded as a component of R&D expense (see Notes 4 Acquisitions and 5 Fair value measurements ). Long-lived Assets Long-lived assets such as intangible assets and property, plant and equipment are not required to be tested for impairment annually. Instead, long-lived assets are tested for impairment whenever circumstances indicate that the carrying amount of the asset may not be recoverable, such as when the disposal of such assets is likely or there is an adverse change in the market involving the business employing the related assets. If an impairment analysis is required, the impairment test employed is based on whether the Company’s intent is to hold the asset for continued use or to hold the asset for sale. If the intent is to hold the asset for continued use, the impairment test first requires a comparison of undiscounted future cash flows to the carrying value of the asset. If the carrying value of the asset exceeds the undiscounted cash flows, the asset would not be deemed to be recoverable. Impairment would then be measured as the excess of the asset’s carrying value over its fair value. Fair value is typically determined by discounting the future cash flows associated with that asset. If the intent is to hold the asset for sale and certain other criteria are met, the impairment test involves comparing the asset’s carrying value to its fair value less costs to sell. To the extent the carrying value is greater than the asset’s fair value less costs to sell, an impairment loss is recognized in an amount equal to the difference. Significant judgments used for long-lived asset impairment assessments include identifying the appropriate asset groupings and primary assets within those groupings, determining whether events or circumstances indicate that the carrying amount of the asset may not be recoverable, determining the future cash flows for the assets involved and assumptions applied in determining fair value, which include, reasonable discount rates, growth rates, market risk premiums and other assumptions about the economic environment. Contingent Consideration In connection with the Company's acquisitions accounted for as business combinations, the Company records contingent consideration associated with sales-based royalties, sales-based milestones and development and regulatory milestones at fair value. The fair value model used to calculate these obligations is based on the income approach (a discounted cash flow model) that has been risk adjusted based on the probability of achievement of net sales and achievement of the milestones. The inputs the Company uses for determining the fair value of the contingent consideration associated with sales-based royalties, sales-based milestones and development and regulatory milestones are Level 3 fair value measurements. The Company re-evaluates the fair value on a quarterly basis. Changes in the fair value can result from adjustments to the discount rates and updates in the assumed timing of or achievement of net sales and/or the achievement of development and regulatory milestones. Any future increase in the fair value of the contingent consideration associated with sales-based royalties and sales-based milestones along with development and regulatory milestones are based on an increased likelihood that the underlying net sales or milestones will be achieved. The associated payments which will become due and payable for sales-based royalties and milestones result in a charge to cost of product sales and contract development and manufacturing in the period in which the increase is determined. Similarly, any future decrease in the fair value of contingent consideration associated with sales-based royalties and sales-based milestones will result in a reduction in cost of product sales and contract development and manufacturing. The changes in fair value for potential future sales-based royalties associated with product candidates in development will result in a charge to cost o f product sales and contract development and manufacturing services expense in the period in which the increase is determined. The associated payment or payments which will become due and payable for development and regulatory milestones will result in a charge to research and development expense in the period in which the increase is determined. Similarly, any future decrease i n the fair value for development and regulatory milestones will result in a reduction in research and development expense. Revenue recognition On January 1, 2018 the Company adopted ASC topic 606 using the modified retrospective approach applied to those contracts in effect as of January 1, 2018. Under this transition method, results for reporting periods beginning after January 1, 2018 are presented under the new standard, while prior period amounts are not adjusted and continue to be reported in accordance with historical accounting under Topic 605. See further discussion of the adoption of Topic 606, including the impact to our 2018 financial statements within the recently issued accounting standards section below. The Company recognizes revenue when the Company's customers obtain control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services by analyzing the following five steps: (1) identify the contract with a customer(s); (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. To indicate the transfer of control for the Company’s product sales and contract development and manufacturing services, it must have a present right to payment, legal title must have passed to the customer, and the customer must have the significant risks and rewards of ownership. Revenue for long-term development contracts is generally recognized based upon the cost-to-cost measure of progress, provided that the Company meets the criteria associated with transferring control of the good or service over time. Multiple performance obligations A performance obligation is a promise in a contract to transfer a distinct product or service to a customer and is the unit of account under ASC 606. Contracts sometimes include options for customers to purchase additional products or services in the future. Customer options that provide a material right to the customer, such as free or discounted products or services, give rise to a separate performance obligation. For contracts with multiple performance obligations, the Company allocates the contract price to each performance obligation on a relative standalone selling price basis using the Company’s best estimate of the standalone selling price of each distinct product or service in the contract. The primary method used to estimate standalone selling price is the price observed in standalone sales to customers, however when prices in standalone sales are not available the Company may use third-party pricing for similar products or services or estimate the standalone selling price. Allocation of the transaction price is determined at the contracts’ inception. Transaction price and variable consideration Once the performance obligations in the contract have been identified, the Company estimates the transaction price of the contract. The estimate includes amounts that are fixed as well as those that can vary based on expected outcomes of the activities or contractual terms. The Company's variable consideration includes for example consideration transferred under its development contracts with the USG as consideration received can vary based on developmental progression of the product candidate(s). When a contract's transaction price includes variable consideration, the Company evaluates the variable consideration to determine whether the estimate needs to be constrained; therefore, the Company includes the variable consideration in the transaction price only to the extent that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Variable consideration estimates are updated at each reporting date. There were no significant constraints or material changes to the Company's variable consideration estimates as of or during the twelve months ended December 31, 2019 . Contract financing In determining the transaction price, the Company adjusts the promised amount of consideration for the effects of the time value of money if the timing of payments agreed to by the parties to the contract (either explicitly or implicitly) provides the customer with a significant benefit of financing the transfer of goods or services to the customer, which is called a significant financing component. The Company does not adjust transaction price for the effects of a significant financing component when the period between the transfer of the promised good or service to the customer and payment for that good or service by the customer is expected to be one year or less. Product sales CBRNE The prim |
Revenue recognition
Revenue recognition | 12 Months Ended |
Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue recognition | Revenue recognition The Company operates in one business segment. Therefore, results of the Company's operations are reported on a consolidated basis for purposes of segment reporting, consistent with internal management reporting. For the years ended December 31, 2019 , 2018 and 2017 the Company's revenues disaggregated by the major sources was as follows: (in millions) Year Ended December 31, 2019 2018 2017 U.S Government Non-U.S. Government Total U.S Government Non-U.S. Government Total U.S Government Non-U.S. Government Total Product sales $ 568.8 $ 334.7 $ 903.5 $ 526.1 $ 80.4 $ 606.5 $ 374.8 $ 46.7 $ 421.5 Contract development and manufacturing services — 80.0 80.0 — 98.9 98.9 — 68.9 68.9 Contracts and grants 105.9 16.6 122.5 71.5 5.5 77.0 65.1 5.4 70.5 Total revenues $ 674.7 $ 431.3 $ 1,106.0 $ 597.6 $ 184.8 $ 782.4 $ 439.9 $ 121.0 $ 560.9 Contract liabilities When performance obligations are not transferred to a customer at the end of a reporting period, the amount allocated to those performance obligations are reflected as contract liabilities on the consolidated balance sheets and are deferred until control of these performance obligations is transferred to the customer. The following table presents the rollforward of contract liabilities: (in millions) December 31, 2017 $ 30.5 Adoption of new accounting standard (ASC 606) 42.4 January 1, 2018 72.9 Deferral of revenue 29.3 Revenue recognized (29.1 ) Balance at December 31, 2018 73.1 Deferral of revenue 46.7 Revenue recognized (30.9 ) Balance at December 31, 2019 $ 88.9 Transaction price allocated to remaining performance obligations As of December 31, 2019 , the Company had expected future revenues of approximately $600 million associated with performance obligations that have not been satisfied. The Company expects to recognize a majority of these revenues within the next 24 months , with the remainder recognized thereafter. However, the amount and timing of revenue recognition for unsatisfied performance obligations can materially change due to timing of funding appropriations from the USG and the overall success of the Company's development activities associated with its PHT product candidates that are then receiving development funding support from the USG under development contracts. In addition, the amount of future revenues associated with unsatisfied performance obligations excludes the value associated with unexercised option periods in the Company's contracts (which are not performance obligations as of December 31, 2019 ). Contract assets The Company considers unbilled accounts receivables and deferred costs associated with revenue generating contracts, which are not included in inventory or property, plant and equipments, as contract assets. As of December 31, 2019 and 2018 , the Company had contract assets associated with deferred costs of $34.0 million and $1.2 million , respectively, which is included in prepaid expenses and other current assets and other assets on the Company's consolidated balance sheets. Accounts receivable Accounts receivable including unbilled accounts receivable contract assets consist of the following: December 31, (in millions) 2019 2018 Billed, net $ 227.3 $ 234.0 Unbilled 43.4 28.5 Total, net $ 270.7 $ 262.5 As of December 31, 2019 and 2018 , the Company's accounts receivable balances were comprised of 69% and 76% , respectively, from the USG. As of December 31, 2019 and 2018 allowance for doubtful accounts were de minimis. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions Adapt On October 15, 2018, the Company acquired Adapt, a company focused on developing new treatment options and commercializing products addressing opioid overdose and addiction. Adapt's NARCAN® (naloxone HCI) Nasal Spray marketed product is the first needle-free formulation of naloxone approved by the FDA and Health Canada for the emergency treatment of known or suspected opioid overdose as manifested by respiratory and/or central nervous system depression. This acquisition included approximately 50 employees, located in the U.S., Canada, and Ireland, including those responsible for supply chain management, research and development, government affairs, and commercial operations. The products and product candidates within Adapt's portfolio are consistent with the Company's mission and expand the Company's core business of addressing public health threats. The total purchase price revised for adjustments is summarized below: (in millions) October 15, 2018 Cash $ 581.5 Equity 37.7 Fair value of contingent purchase consideration 48.0 Preliminary purchase consideration 667.2 Adjustments 1.5 Final purchase consideration $ 668.7 The Company issued 733,309 shares of Common Stock at $60.44 per share, the closing price of Emergent's share price on October 15, 2018, for a total of $44.3 million (inclusive of adjustments). The $44.3 million value of the common stock shares issued has been adjusted to a fair value of $37.7 million considering a discount for lack of marketability due to a two -year lock-up period beginning on October 15, 2018. The remaining consideration payable for the acquisition consists of up to $100 million in cash based on the achievement of certain sales milestones through 2022 which the Company has determined the fair value of to be $48.0 million as of the acquisition date. The fair value of the contingent purchase consideration is based on management’s assessment of the potential future realization of the contingent purchase consideration payments. This assessment is based on inputs that have no observable market (Level 3). The obligation is measured using a discounted cash flow model. This transaction was accounted for by the Company under the acquisition method of accounting, with the Company as the acquirer. Under the acquisition method of accounting, the assets and liabilities of Adapt were recorded as of October 15, 2018, the acquisition date, at their respective fair values, and combined with those of the Company. The Company reflects measurement period adjustments in the period in which the adjustments occur. The adjustments during the measurement period resulted from receipt of additional financial information associated with certain acquired contract assets and the value of associated contingent purchase consideration. These adjustments did not impact the Company's statements of operations. The table below summarizes the final allocation of the purchase price based upon fair values of assets acquired and liabilities assumed at October 15, 2018. (in millions) October 15, 2018 Measurement Period Adjustments Updated October 15, 2018 Fair value of tangible assets acquired and liabilities assumed: Cash $ 17.7 $ — $ 17.7 Accounts receivable 21.3 — 21.3 Inventory 41.4 — 41.4 Prepaid expenses and other assets 7.8 3.0 10.8 Accounts payable (32.2 ) — (32.2 ) Accrued expenses and other liabilities (50.4 ) — (50.4 ) Deferred tax liability, net (62.4 ) (0.5 ) (62.9 ) Total fair value of tangible assets acquired and liabilities assumed (56.8 ) 2.5 (54.3 ) Acquired in-process research and development 41.0 — 41.0 Acquired intangible asset 534.0 — 534.0 Goodwill 149.0 (1.0 ) 148.0 Total purchase price $ 667.2 $ 1.5 $ 668.7 The Company determined the fair value of the intangible asset using the income approach, which is based on the present value of future cash flows. The fair value measurements are based on significant unobservable inputs that are developed by the Company using estimates and assumptions of the respective market and market penetration of the Company's products. The fair value of the intangible asset acquired for Adapt's marketed product NARCAN® Nasal Spray was valued at $534.0 million . The Company has determined the useful life of the NARCAN® Nasal Spray intangible asset to be 15 years. The Company calculated the fair value of the NARCAN® Nasal Spray intangible asset using the income approach with a present value discount rate of 10.5% , which is based on the weighted-average cost of capital for companies with profiles substantially similar to that of Adapt. This is comparable to the internal rate of return for the acquisition and represents the rate that market participants would use to value these intangible assets. The projected cash flows from the NARCAN® Nasal Spray intangible asset were based on key assumptions including: estimates of revenues and operating profits; and risks related to the viability of and potential alternative treatments in any future target markets. The intangible asset associated with IPR&D acquired from Adapt is related to a product candidate. Management determined that the acquisition-date fair value of intangible assets related to IPR&D was $41.0 million . The fair value was determined using the income approach, which discounts expected future cash flows to present value. The Company calculated the fair value using a present value discount rate of 11% , which is based on the weighted-average cost of capital for companies with that profiles substantially similar to that of Adapt and IPR&D assets at a similar stage of development as the product candidate. This is comparable to the internal rate of return for the acquisition and represents the rate that market participants would use to value the IPR&D. The projected cash flows for the product candidate were based on key assumptions including: estimates of revenues and operating profits, considering its stage of development on the acquisition date; the time and resources needed to complete the development and approval of the product candidate; the life of the potential commercialized product and associated risks, including the inherent difficulties and uncertainties in developing a product candidate, such as obtaining marketing approval from the FDA and other regulatory agencies; and risks related to the viability of and potential for alternative treatments in any future target markets. Non-amortizing IPR&D assets are considered to be indefinite-lived until the completion or abandonment of the associated research and development effort and are evaluated for impairment annually. During the year ended December 31, 2019 , the Company recorded an impairment charge of $ 12.0 million to the IPR&D asset. The fair value of the IPR&D intangible asset is $ 29.0 million at December 31, 2019 (see Note 8 ). The Company determined the fair value of the inventory using the comparative sales method, which estimates the expected sales price reduced for all costs expected to be incurred to complete/dispose of the inventory with a profit on those costs. The Company recorded approximately $ 148.0 million in goodwill related to the Adapt acquisition, which is calculated as the purchase price paid in excess of the fair value of the tangible and intangible assets acquired representing the future economic benefits the Company expects to receive as a result of the acquisition. The goodwill created from the Adapt acquisition is associated with early stage pipeline products. The goodwill generated from the Adapt acquisition is not expected to be deductible for tax purposes. PaxVax On October 4, 2018, the Company completed the acquisition of PaxVax Holding Company Ltd. ("PaxVax"), a company focused on developing, manufacturing, and commercializing specialty vaccines that protect against existing and emerging infectious diseases. This acquisition includes Vivotif® (Typhoid Vaccine Live Oral Ty21a), the only oral vaccine licensed by the FDA for the prevention of typhoid fever, Vaxchora® (Cholera Vaccine, Live, Oral), the only FDA-licensed vaccine for the prevention of cholera, adenovirus 4/7 and additional clinical-stage vaccine candidates targeting chikungunya and other emerging infectious diseases, European-based current good manufacturing practices ("cGMP") biologics manufacturing facilities, and approximately 250 employees including those in research and development, manufacturing, and commercial operations with a specialty vaccines sales force in the U.S. and in select European countries. The products and product candidates within PaxVax's portfolio are consistent with the Company’s mission and will expand the Company’s core business of addressing PHTs. In addition, the acquisition expands the Company's manufacturing capabilities. At the closing, the Company paid a cash consideration of $273.1 million (inclusive of closing adjustments). This transaction was accounted for by the Company under the acquisition method of accounting, with the Company as the acquirer. Under the acquisition method of accounting, the assets and liabilities of PaxVax were recorded as of October 4, 2018, the acquisition date, at their respective fair values, and combined with those of the Company. The table below summarizes the final allocation of the purchase consideration based upon the fair values of assets acquired and liabilities assumed at October 4, 2018. (in millions) October 4, 2018 Measurement Period Adjustments Updated October 4, 2018 Fair value of tangible assets acquired and liabilities assumed: Cash $ 9.0 $ — $ 9.0 Accounts receivable 4.1 — 4.1 Inventory 19.7 — 19.7 Prepaid expenses and other assets 12.2 (0.3 ) 11.9 Property, plant and equipment 57.8 — 57.8 Deferred tax assets, net 3.8 1.8 5.6 Accounts payable (3.5 ) — (3.5 ) Accrued expenses and other liabilities (33.6 ) (0.4 ) (34.0 ) Total fair value of tangible assets acquired and liabilities assumed 69.5 1.1 70.6 Acquired in-process research and development 9.0 (9.0 ) — Acquired intangible assets 133.0 — 133.0 Goodwill 61.6 7.9 69.5 Total purchase consideration $ 273.1 $ — $ 273.1 The fair value of the intangible assets acquired for PaxVax's marketed products are valued at a total of $133.0 million . The Company has determined that the weighted average useful lives of the intangible assets to be 19 years. The Company determined the fair value of the intangible assets using the income approach, which is based on the present value of future cash flows. The fair value measurements are based on significant unobservable inputs that are developed by the Company using estimates and assumptions of the respective market and market penetration of the Company's products. The Company calculated the fair value of the Vivotif and Vaxchora intangible assets using the income approach with a present value discount rate of 14.5% and 15% , respectively, which is based on the weighted-average cost of capital for companies with profiles substantially similar to that of PaxVax. This is comparable to the internal rate of return for the acquisition and represents the rate that market participants would use to value these intangible assets. The projected cash flows from these intangible assets were based on key assumptions including: estimates of revenues and operating profits; and risks related to the viability of and potential alternative treatments in any future target markets. The intangible asset associated with IPR&D acquired from PaxVax is related to a product candidate. The Company has adjusted the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. The Company estimates the fair value based on the income approach. The Company determined the fair value of the inventory using the comparative sales method, which estimates the expected sales price reduced for all costs expected to be incurred to complete/dispose of the inventory with a profit on those costs. The Company determined the fair value of the property, plant and equipment utilizing either the cost approach or the sales comparison approach. The cost approach is determined by establishing replacement cost of the asset and then subtracting any value that has been lost due to economic obsolescence, functional obsolescence, or physical deterioration. The sales comparison approach determines an asset is equal to the market price of an asset of comparable features such as design, location, size, construction, materials, use, capacity, specification, operational characteristics and other features or descriptions. The Company recorded approximately $ 69.5 million in goodwill related to the PaxVax acquisition, calculated as the purchase price paid in the acquisition that was in excess of the fair value of the tangible and intangible assets acquired representing the future economic benefits the Company expects to receive as a result of the acquisition. The goodwill created from the PaxVax acquisition is associated with early stage pipeline products along with potential contract development and manufacturing services. The majority of the goodwill generated from the PaxVax acquisition is expected to be deductible for tax purposes. The Company has incurred transaction costs related to the PaxVax acquisition of approximately $4.5 million for the year ended December 31, 2018 , which have been recorded in selling, general and administrative expenses. Acquisition of ACAM2000 business On October 6, 2017, the Company completed the acquisition of the ACAM2000® (Smallpox (Vaccinia) Vaccine, Live) business of Sanofi Pasteur Biologics, LLC ("Sanofi"). This acquisition includes ACAM2000, the only smallpox vaccine licensed by the FDA, a current good manufacturing practices ("cGMP") live viral manufacturing facility and office and warehouse space, both in Canton, Massachusetts, and a cGMP viral fill/finish facility in Rockville, Maryland. With this acquisition, the Company also acquired an existing 10 -year contract with the CDC, which expired in March 2018. This contract had a stated value up to $425 million , with a remaining contract value of up to approximately $160 million as of the acquisition date, for the delivery of ACAM2000 to the SNS and establishing U.S.-based manufacturing of ACAM2000. This acquisition added to the Company's product portfolio and expanded the Company's manufacturing capabilities. At the closing, the Company paid $97.5 million in an upfront payment and $20 million in milestone payments earned as of the closing date tied to the achievement of certain regulatory and manufacturing-related milestones, for a total payment in cash of $117.5 million. The agreement includes an additional milestone payment of up to $7.5 million upon achievement of a regulatory milestone, which was achieved in November 2017. The $7.5 million milestone payment was made during the fourth quarter of 2018 and is reflected as a component of financing activities in the consolidated statement of cash flows. This transaction was accounted for by the Company under the acquisition method of accounting, with the Company as the acquirer. Under the acquisition method of accounting, the assets and liabilities of the ACAM2000 business were recorded as of October 6, 2017, the acquisition date, at their respective fair values, and combined with those of the Company. The contingent purchase consideration obligation is based on a regulatory milestone. At October 6, 2017, the contingent purchase consideration obligation related to the regulatory milestone was recorded at a fair value of $2.2 million. The Level 3 fair value of this obligation was based on a present value model of management's assessment of the probability of achievement of the regulatory milestone as of the acquisition date. This assessment is based on inputs that have no observable market. The total purchase price is summarized below: (in millions) Purchase Price Amount of cash paid $ 117.5 Fair value of contingent purchase consideration 2.2 Total purchase price $ 119.7 The table below summarizes the allocation of the purchase price based upon the fair values of assets acquired at October 6, 2017. The Company did not assume any liabilities in the acquisition. The Company has finalized the purchase price allocation related to this acquisition. (in millions) Purchase Price Fair value of tangible assets acquired: Inventory $ 74.9 Property, plant and equipment 20.0 Total fair value of tangible assets acquired 94.9 Acquired intangible asset 16.7 Goodwill 8.1 Total purchase price $ 119.7 The fair value measurements are based on significant unobservable inputs that are developed by the Company using estimates and assumptions of the respective market and market penetration of the Company's products. The Company determined the fair value of the ACAM2000 intangible asset using the income approach, which is based on the present value of future cash flows, with a present value discount rate of 15.50% , based on the weighted-average cost of capital for substantially similar companies. This is comparable to the internal rate of return for the acquisition and represents the rate that market participants would use to value these intangible assets. The projected cash flows from ACAM2000 intangible asset were based on key assumptions, including: estimates of revenues and operating profits, the life of the potential commercialized product and associated risks, and risks related to the viability of and potential alternative treatments in any future target markets. The Company has determined the ACAM2000 intangible asset will be amortized over 10 years . The Company determined the fair value of the inventory using the probability adjusted comparative sales method, which estimates the expected sales price reduced for all costs expected to be incurred to complete/dispose of the inventory with a profit on those costs. The Company determined the fair value of the property, plant and equipment utilizing either the cost approach or the sales comparison approach. The cost approach is determined based on the replacement cost of the asset and then subtracting any value that has been lost due to economic obsolescence, functional obsolescence, or physical deterioration. The sales comparison approach determines an asset is equal to the market price of an asset of comparable features such as design, location, size, construction, materials, use, capacity, specification, operational characteristics and other features or descriptions. The Company recorded approximately $8.1 million in goodwill related to the ACAM2000 acquisition, calculated as the purchase price paid in the acquisition that was in excess of the fair value of the tangible and intangible assets acquired and represents the future economic benefits the Company expects to receive as a result of the acquisition. Goodwill generated from the ACAM2000 acquisition is not expected to be deductible for tax purposes. Acquisition of raxibacumab asset On October 2, 2017, the Company completed the acquisition of raxibacumab, a fully human monoclonal antibody therapeutic product approved by the U.S. Food and Drug Administration ("FDA") for the treatment and prophylaxis of inhalational anthrax, from Human Genome Sciences, Inc. and GlaxoSmithKline LLC (collectively referred to as "GSK"). The all-cash transaction consists of a $76 million upfront payment and up to $20 million in product sale and manufacturing-related milestone payments. The Company recorded an asset (including transaction costs) of $77.6 million , at date of acquisition, which is recorded within intangible assets, net line item of the consolidated balance sheets. The Company has determined that substantially all of the value of raxibacumab is attributed to the raxibacumab asset and therefore the raxibacumab acquisition is considered an asset acquisition. During the twelve months ended December 31, 2019 , a contingent milestone was achieved which resulted in a payment of $ 10.0 |
Fair value measurements
Fair value measurements | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements | Fair value measurements The Company’s recurring fair value measurement items recorded on a recurring basis primarily consist of contingent consideration liabilities, interest rate swaps and investments in money market funds. Contingent consideration The contingent consideration liabilities have been generated from our acquisitions. These liabilities represent an obligation of the Company to transfer additional assets to the selling shareholders if future events occur or conditions are met. The Company’s contingent consideration is measured initially and subsequently at each reporting date at fair value. The changes in the fair value of contingent consideration obligations are primarily due to the expected amount and timing of future net sales and achieving regulatory milestones, which are inputs that have no observable market (Level 3). Any changes in expectations for the Company’s products are classified in the Company's statement of operations as cost of product sales and contract development and manufacturing. Any changes in expectations for the Company’s product candidates are recorded in research and development expense for regulatory and development milestones. The following table is a reconciliation of the beginning and ending balance of the contingent consideration liabilities measured at fair value using significant unobservable inputs (Level 3) during the years ended December 31, 2019 and 2018 . (in millions) Balance at December 31, 2017 $ 12.3 Expense included in earnings 3.1 Settlements (3.4 ) Additions due to acquisition 48.0 Balance at December 31, 2018 $ 60.0 Expense included in earnings 24.8 Milestone achievement - asset acquisition 10.0 Measurement period adjustment 1.5 Settlements (67.1 ) Balance at December 31, 2019 $ 29.2 Interest rate swaps The valuation of the interest rate swaps is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each interest rate swap. This analysis reflects the contractual terms of the interest rate swaps, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash payments (or receipts) and the discounted expected variable cash receipts (or payments). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. To comply with the provisions of ASC 820, Fair Value Measurement, we incorporate credit valuation adjustments in the fair value measurements to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk. These credit valuation adjustments were concluded to not be significant inputs for the fair value calculations for the periods presented. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as the posting of collateral, thresholds, mutual puts and guarantees. The valuation of interest rate swaps fall into Level 2 in the fair value hierarchy. See note 10 " Derivative Instruments " for further details on the interest rate swaps. Money market funds The fair values of the Company's money market funds are based on quoted prices in active markets for identical assets (level 1). As of December 31, 2019 and 2018 , the Company held cash in money market accounts of $52.2 million and $0 million , respectively. These amounts are included in cash and cash equivalents in the consolidated balance sheets. Non-recurring fair value measurements Separate disclosure is required for assets and liabilities measured at fair value on a recurring basis from those measured at fair value on a non-recurring basis. As of December 31, 2019 and 2018 , there were no assets or liabilities measured at fair value on a non-recurring basis, except for the IPR&D assets acquired with the Adapt acquisition and the assets acquired from PaxVax, Adapt. See Note 4 . " Acquisitions " and Note 8. "Intangible assets and goodwill" for further details on the IPR&D assets. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consist of the following: December 31, (in millions) 2019 2018 Raw materials and supplies $ 70.5 $ 51.8 Work-in-process 89.7 103.2 Finished goods 62.3 50.8 Total inventories $ 222.5 $ 205.8 |
Property, plant and equipment
Property, plant and equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property Plant and Equipment Income Statement Disclosures [Abstract] | |
Property, plant and equipment | Property, plant and equipment Property, plant and equipment consist of the following: December 31, (in millions) 2019 2018 Land and improvements $ 46.5 $ 44.6 Buildings, building improvements and leasehold improvements 234.8 216.2 Furniture and equipment 334.2 293.9 Software 55.7 55.2 Construction-in-progress 81.5 71.8 752.7 681.7 Less: Accumulated depreciation and amortization (210.4 ) (171.5 ) Total property, plant and equipment, net $ 542.3 $ 510.2 For the years ended December 31, 2019 and 2018 , construction-in-progress primarily includes costs related to construction of manufacturing capabilities. Depreciation and amortization expense associated with property, plant and equipment was $49.5 million , $36.3 million and $32.2 million for the years ended December 31, 2019 , 2018 , and 2017 , respectively. |
Intangible assets and goodwill
Intangible assets and goodwill | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible assets and goodwill | Intangible assets and goodwill The Company's intangible assets were acquired via business combinations or asset acquisitions. Changes in the Company’s intangible assets, excluding IPR&D and goodwill, consisted of the following: December 31, 2019 (in millions) Estimated Life Cost Additions Accumulated Amortization Net Products 9-22 years $ 778.0 $ 10.0 $ 82.2 $ 705.8 Corporate trade name 5 years 2.8 — 2.8 — Customer relationships 8 years 28.6 — 23.0 5.7 Contract development and manufacturing 8 years 5.5 — 4.0 1.5 Total intangible assets $ 814.9 $ 10.0 $ 112.0 $ 712.9 December 31, 2018 (in millions) Estimated Life Cost Additions Accumulated Amortization Net Products 9-22 years $ 111.0 $ 667.0 $ 27.9 $ 750.1 Corporate trade name 5 years 2.8 — 2.7 0.1 Customer relationships 8 years 28.6 — 19.4 9.2 Contract development and manufacturing 8 years 5.5 — 3.3 2.2 Total intangible assets $ 147.9 $ 667.0 $ 53.3 $ 761.6 For the years ended December 31, 2019 , 2018 , and 2017 , the Company recorded amortization expense for intangible assets of $58.7 million, $25.0 million and $8.6 million , respectively, which is included in the amortization of intangible assets line item of the consolidated statements of operations. As of December 31, 2019 , the weighted average amortization period remaining for intangible assets is 13.6 years . Future amortization expense as of December 31, 2019 is as follows: (in millions) 2020 $ 58.7 2021 57.3 2022 54.6 2023 54.4 2024 and beyond 487.9 Total remaining amortization $ 712.9 During the year ended December 31, 2019 , the Company recorded the impact of an impairment charge of $ 12.0 million related to our intangible assets associated with the IPR&D acquired as part of our acquisition of Adapt. The $ 12.0 million impairment charge is reflected as a component of research and development expense on the consolidated statement of operations. The IPR&D intangible asset balance on the consolidated balance sheet at December 31, 2019 was $ 29.0 million. The following table is a summary of changes in goodwill: Year ended December 31, (in millions) 2019 2018 Balance at beginning of the year $ 259.7 $ 49.1 Measurement period adjustments 6.9 — Additions — 210.6 Balance at end of the year $ 266.6 $ 259.7 |
Long-term debt
Long-term debt | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Long-term debt | Long-term debt The components of debt are as follows: December 31, (in millions) 2019 2018 Senior secured credit agreement - Term loan due 2023 $ 435.9 $ 447.2 Senior secured credit agreement - Revolver loan due 2023 373.0 348.0 2.875% Convertible Senior Notes due 2021 10.6 10.6 Other 3.0 3.0 Total debt $ 822.5 $ 808.8 Current portion of debt, net of debt issuance costs (12.9 ) (10.1 ) Unamortized debt issuance costs (11.2 ) (14.2 ) Debt, net of current portion $ 798.4 $ 784.5 Senior secured credit agreement On September 29, 2017, the Company entered into a senior secured credit agreement (the “2017 Credit Agreement”) with four lending financial institutions, which replaced the Company's prior senior secured credit agreement (the "2013 Credit Agreement"). On October 15, 2018, the Company entered into an Amended and Restated Credit Agreement (the "Amended Credit Agreement"), which modified the 2018 Credit Agreement. The Amended Credit Agreement (i) increased the revolving credit facility (the "Revolving Credit Facility") from $200 million to $600 million , (ii) extended the maturity of the Revolving Credit Facility from September 29, 2022 to October 13, 2023 , (iii) provided for a term loan in the original principal amount of $450 million (the "Term Loan Facility," and together with the Revolving Credit Facility, the "Senior Secured Credit Facilities"), (iv) added several additional lenders, (v) amended the applicable margin such that borrowings with respect to the Revolving Credit Facility will bear interest at the annual rate described below, (vi) amended the provision relating to incremental credit facilities such that the Company may request one or more incremental term loan facilities, or one or more increases in the commitments under the Revolving Credit Facility (each an "Incremental Loan"), in any amount if, on a pro forma basis, the Company's consolidated secured net leverage ratio does not exceed 2.50 to 1.00 after such incurrence, plus $200 million and (vii) amended the maximum consolidated net leverage ratio financial covenant from 3.50 to 1.0 (subject to 0.50% step up in connection with material acquisitions) to the maximum consolidated net leverage ratio described below. In October 2018, the Company borrowed $318.0 million under the Revolving Credit Facility and $450 million under the Term Loan Facility to finance a portion of the consideration for the PaxVax and Adapt acquisitions and related expenses. For the year ended December 31, 2019 , we did no t capitalize debt issuance costs. For the year ended December 31, 2018 we capitalized $13.4 million , as a direct reduction to the Term Loan and the revolver. Borrowings under the Revolving Credit Facility and the Term Loan Facility will bear interest at a rate per annum equal to (a) a eurocurrency rate plus a margin ranging from 1.25% to 2.00% per annum, depending on the Company's consolidated net leverage ratio or (b) a base rate (which is the highest of the prime rate, the federal funds rate plus 0.50% , and a eurocurrency rate for an interest period of one month plus 1% ) plus a margin ranging from 0.25% to 1.00% , depending on the Company's consolidated net leverage ratio. The Company is required to make quarterly payments under the Amended Credit Agreement for accrued and unpaid interest on the outstanding principal balance, based on the above interest rates. In addition, the Company is required to pay commitment fees ranging from 0.15% to 0.30% per annum, depending on the Company's consolidated net leverage ratio, in respect of the average daily unused commitments under the Revolving Credit Facility. The Company is to repay the outstanding principal amount of the Term Loan Facility in quarterly installments based on an annual percentage equal to 2.5% of the original principal amount of the Term Loan Facility during each of the first two years of the Term Loan Facility, 5% of the original principal amount of the Term Loan Facility during the third year of the Term Loan Facility and 7.5% of the original principal amount of the Term Loan Facility during each year of the remainder of the term of the Term Loan Facility until the maturity date of the Term Loan Facility, at which time the entire unpaid principal balance of the Term Loan Facility will be due and payable. The Company has the right to prepay the Term Loan Facility without premium or penalty. The Revolving Credit Facility and the Term Loan Facility mature (unless earlier terminated) on October 13, 2023 . The Amended Credit Agreement also requires mandatory prepayments of the Term Loan Facility in the event the Company or its Subsidiaries (a) incur indebtedness not otherwise permitted under the Amended Credit Agreement or (b) receive cash proceeds in excess of $100 million during the term of the Amended Credit Agreement from certain dispositions of property or from casualty events involving their property, subject to certain reinvestment rights. The Amended Credit Agreement contains financial covenants, which were then further amended in June 2019 . The financial covenants require the quarterly presentation of a minimum consolidated 12-month rolling debt service coverage ratio of 2.50 to 1.00 , and an amended maximum consolidated net leverage ratio of 4.95 to 1.00 for the quarter ended June 30, 2019 , 4.75 to 1.00 for the quarter ended September 30, 2019 , and 3.75 to 1.00, thereafter, which may be adjusted to 4.00 to 1.00 for a four quarter period in connection with a material permitted acquisition. The Amended Credit Agreement also contains affirmative and negative covenants, which were also amended in June 2019 to limit the amount of restricted payments as defined in the Amended Credit agreement to $25 million until the filing of the Company's December 31, 2019 Form 10-K. Negative covenants in the Amended Credit Agreement, among other things, limit the ability of the Company to incur indebtedness and liens, dispose of assets, make investments and enter into certain merger or consolidation transactions. As of the date of these financial statements, the Company is in compliance with affirmative and negative covenants. 2.875% Convertible senior notes due 2021 On November 14, 2017, the Company issued a notice of termination of conversion rights for its outstanding Notes, of which $250.0 million was outstanding as of the notice date. In connection with the notice of termination, bondholders were given the option to convert their notes into the Company’s stock at a rate of 32.386 per $1,000 of principal outstanding, plus a make-whole of an additional 3.1556 shares per $1,000 principal outstanding, in accordance with the terms of the indenture. The Company was not obligated to pay accrued or unpaid interest on converted notes, and bondholders who did not convert by the deadline of December 28, 2017 would retain their bonds but lose the conversion rights associated with the Notes and be paid interest of 2.875% until the earlier of maturity of the Notes in 2021 or the bonds being called and repaid in full by the Company. Between July 15, 2017 and the notification of termination of conversion rights, the Company accrued interest on the converted Notes of $2.4 million which was recorded as an increase in additional paid-in-capital on the balance sheet. Between November 14, 2017 and December 28, 2017 (the “conversion period”), approximately $239.4 million of bonds were converted into 8.5 million shares of the Company’s common stock, inclusive of shares issued as part of the make-whole provision. In addition, the Company recorded a reduction in additional paid-in-capital on the Company’s balance sheet of $3.6 million associated with debt issuance costs attributable to the converted notes. After giving effect to the converted bonds, the outstanding principal balance of the Notes as of December 31, 2019 was $10.6 million . Future debt payments of long-term indebtedness are as follows: (in millions) December 31, 2019 2020 $ 14.1 2021 35.9 2022 33.7 2023 735.8 2024 and thereafter 3.0 Total debt $ 822.5 |
Derivative Instruments
Derivative Instruments | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company has entered into interest rate swaps to manage exposures that arise from the Company's senior secured credit agreement's payments of variable interest rate debt. All outstanding cash flow hedges mature in October 2023. As of December 31, 2019 , the Company had the following outstanding interest rate swap derivatives that were designated as cash flow hedges of interest rate risk: Number of Instruments Notional amount (in millions) Interest Rate Swaps 7 350.0 The table below presents the fair value of the Company’s derivative financial instruments designated as hedges as well as their classification on the balance sheet. If current fair values of designated interest rate swaps remained static over the next twelve months, the Company would reclassify $ 0.5 million of net deferred losses from accumulated other comprehensive loss to the statement of operations over the next twelve months. Asset Derivatives Liability Derivatives December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Balance Sheet Location Fair Value Balance Sheet Location Fair Value Interest Rate Swaps Other Assets $ — Other Assets — Other Liabilities $ 2.0 Other Liabilities — The table below presents the effect of cash flow hedge accounting on accumulated other comprehensive income. Hedging derivatives Amount of Gain/(Loss) Recognized in OCI on Derivative Location of Gain or (Loss) Reclassified from Accumulated OCI into Income Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018 Interest Rate Swaps $ 2.0 — Interest expense $ 0.6 $ — |
Stockholders' equity
Stockholders' equity | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' equity | Stockholders' equity Preferred stock The Company is authorized to issue up to 15.0 million shares of preferred stock, $0.001 par value per share ("Preferred Stock"). Any Preferred Stock issued may have dividend rights, voting rights, conversion privileges, redemption characteristics, and sinking fund requirements as approved by the Company's board of directors. Common stock The Company currently has one class of common stock, $0.001 par value per share common stock ("Common Stock"), authorized and outstanding. The Company is authorized to issue up to 200.0 million shares of Common Stock. Holders of Common Stock are entitled to one vote for each share of Common Stock held on all matters, except as may be provided by law. Accounting for stock-based compensation The Company has one stock-based employee compensation plan, the Fourth Amended and Restated Emergent BioSolutions Inc. 2006 Stock Incentive Plan (the "Emergent Plan"), which includes both stock options and restricted stock units. As of December 31, 2019 , an aggregate of 21.9 million shares of common stock were authorized for issuance under the Emergent Plan, of which a total of approximately 5.8 million shares of common stock remain available for future awards to be made to plan participants. The exercise price of each option must be not less than 100% of the fair market value of the shares underlying such option on the date of grant. Awards granted under the Emergent Plan have a contractual life of no more than 10 years . The Company utilizes the Black-Scholes valuation model for estimating the fair value of all stock options granted. Set forth below are the assumptions used in valuing the stock options granted: Year Ended December 31, 2019 2018 2017 Expected dividend yield 0 % 0 % 0 % Expected volatility 37-39% 38-39% 37-40% Risk-free interest rate 1.57-2.48% 2.54-3.03% 1.66-1.88% Expected average life of options 4.5 years 4.5 years 4.3 years Stock options, restricted and performance stock units The following is a summary of stock option award activity under the Emergent Plan: Emergent Plan (in millions, except share and per share data) Number of Shares Weighted-Average Exercise Price Aggregate Intrinsic Value Outstanding at December 31, 2018 1,871,468 $ 32.59 $ 50.1 Granted 295,770 60.16 Exercised (199,352 ) 25.98 Forfeited (84,011 ) 52.26 Outstanding at December 31, 2019 1,883,875 $ 36.74 $ 34.5 Exercisable at December 31, 2019 1,253,658 $ 29.46 $ 30.8 The weighted average remaining contractual term of options outstanding as of December 31, 2019 and 2018 was 3.3 years and 4.0 years , respectively. The weighted average remaining contractual term of options exercisable as of December 31, 2019 and 2018 was 2.3 years and 3.0 years , respectively. The weighted average grant date fair value of options granted during the years ended December 31, 2019 , 2018 , and 2017 was $21.13 , $18.48 and $10.53 per share, respectively. The total intrinsic value of options exercised during the years ended December 31, 2019 , 2018 , and 2017 was $5.3 million , $24.4 million and $13.9 million , respectively. The total fair value of awards vested during 2019 , 2018 and 2017 was $16.9 million , $16.9 million and $17.9 million , respectively. As of the year ended December 31, 2019 , the total compensation cost and weighted average period over which total compensation is expected to be recognized related to unvested equity awards was $37.0 million and 1.5 years , respectively. The following is a summary of performance stock and restricted stock unit award activity under the Emergent Plan. Performance stock units of approximately 0.1 million shares were granted and remain outstanding the year ended December 31, 2019 , and are included in the table below. (in millions, except share and per share data) Number of Shares Weighted-Average Grant Price Aggregate Intrinsic Value Outstanding at December 31, 2018 921,093 $ 42.82 $ 54.6 Granted 594,752 57.94 Vested (434,629 ) 38.81 Forfeited (128,364 ) 53.17 Outstanding at December 31, 2019 952,852 $ 52.77 $ 51.5 Stock-based compensation expense was recorded in the following financial statement line items: Year Ended December 31, (in millions) 2019 2018 2017 Cost of product sales $ 3.1 $ 1.7 $ 1.1 Research and development 4.0 3.1 2.5 Selling, general and administrative 19.6 18.4 11.6 Total stock-based compensation expense $ 26.7 $ 23.2 $ 15.2 Accumulated Other Comprehensive Loss The following table includes changes in accumulated other comprehensive loss by component, net of tax: Defined Benefit Pension Plan Derivative Instruments Foreign Currency Translation Losses Total (in millions) Balance, January 1, 2018 $ — $ — $ (3.7 ) $ (3.7 ) Other comprehensive loss (0.2 ) — (1.6 ) (1.8 ) Balance, December 31, 2018 $ (0.2 ) $ — $ (5.3 ) (5.5 ) Other comprehensive (loss) income before reclassifications $ (3.2 ) $ (2.2 ) $ 0.4 $ (5.0 ) Amounts reclassified from accumulated other comprehensive income — 0.6 — 0.6 Net current period other comprehensive loss $ (3.2 ) $ (1.6 ) $ 0.4 $ (4.4 ) Balance, December 31, 2019 $ (3.4 ) $ (1.6 ) $ (4.9 ) $ (9.9 ) |
Income taxes
Income taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income taxes The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. Valuation allowances are recorded as appropriate to reduce deferred tax assets to the amount considered likely to be realized. As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the Tax Reform Act, the Company revalued its ending net deferred tax liabilities in the United States at December 31, 2017 and recognized a provisional $13.4 million tax benefit in the Company’s consolidated statement of income for the year ended December 31, 2017 . During 2018 , we adjusted the provisional estimate by approximately $4.5 million , bringing the total tax benefit recorded to date to $17.9 million related to the revaluation of our deferred tax assets and liabilities. The Tax Reform Act provided for a one-time deemed mandatory repatriation of post-1986 undistributed foreign subsidiary earnings and profits (“E&P”) through the year ended December 31, 2017 . The Company had an estimated $95.4 million of undistributed foreign E&P subject to the deemed mandatory repatriation and recognized a provisional transition tax of $13.6 million of income tax expense in the Company’s consolidated statement of income for the year ended December 31, 2017 . During 2018 we reduced the provisional transition tax by $0.3 million , bringing the total transition tax to $13.3 million . While the Tax Reform Act provides for a territorial tax system and it includes two new U.S. tax base erosion provisions, the global intangible low-taxed income (“GILTI”) provisions and the base-erosion and anti-abuse tax (“BEAT”) provisions. The GILTI provisions require the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The Company is subject to incremental U.S. tax on GILTI income. The Company has elected to account for GILTI tax in the period in which it is incurred, and therefore has not provided any deferred tax impacts of GILTI in its consolidated financial statements for the year ended December 31, 2019 . Significant components of the provisions for income taxes attributable to operations consist of the following: December 31, (in millions) 2019 2018 2017 Current Federal $ 1.4 $ 1.8 $ 29.4 State 11.6 2.4 3.0 International 11.0 6.0 0.3 Total current 24.0 10.2 32.7 Deferred Federal 1.9 7.5 (6.0 ) State 1.1 3.0 (0.6 ) International (4.1 ) (1.9 ) 9.9 Total deferred (1.1 ) 8.6 3.3 Total provision for income taxes $ 22.9 $ 18.8 $ 36.0 The Company's net deferred tax asset (liability) consists of the following: December 31, (in millions) 2019 2018 Federal losses carryforward $ 8.5 $ 10.7 State losses carryforward 17.4 18.1 Research and development carryforward 9.0 10.1 State research and development carryforward 5.0 5.0 Scientific research and experimental development credit carryforward 11.0 13.1 Stock compensation 7.6 7.5 Foreign NOLs 36.9 35.4 Deferred revenue 18.1 11.6 Inventory reserves 1.8 3.4 Lease liability 6.0 — Other 7.5 4.9 Deferred tax asset 128.8 119.8 Fixed assets (51.2 ) (46.4 ) Intangible assets (54.5 ) (60.4 ) Right-of-use asset (5.9 ) — Other (3.2 ) (0.7 ) Deferred tax liability (114.8 ) (107.5 ) Valuation allowance (64.5 ) (66.4 ) Net deferred tax asset (liability) $ (50.5 ) $ (54.1 ) As of December 31, 2019 , the Company has a net U.S. deferred tax liability in the amount of $7.7 million and a foreign net deferred tax liability in the amount of $42.8 million . The Company had a net U.S. deferred tax liability in the amount of $4.8 million and a foreign net deferred tax asset in the amount of $49.3 million as of December 31, 2018 . As of December 31, 2019 , the Company currently has approximately $40.5 million ( $8.5 million tax effected) in U.S. federal net operating loss carryforwards along with $14.0 million in research and development tax credit carryforwards for U.S. federal and state tax purposes that will begin to expire in 2027 and 2024 , respectively. The U.S. federal net operating loss carryforwards are recorded with a $4.7 million valuation allowance. The research and development tax credit carryforwards have a valuation allowance in the amount of $9.1 million . The Company has $280.7 million ( $17.4 million tax effected) in state net operating loss carryforwards, primarily in Maryland and California, that will begin to expire in 2025. The U.S. state tax loss carryforwards are recorded with a valuation allowance of $245.0 million ( $16.4 million tax effected). The Company has approximately $199.0 million ( $37.0 million tax effected) in net operating losses from foreign jurisdictions, some of which have an indefinite life (unless the foreign entities have a change in the nature or conduct of the business in the three years following a change in ownership), and some of which begin to expire in 2022. A valuation allowance in respect to these foreign losses has been recorded in the tax effected amount of $34.3 million . The Company currently has approximately $11.0 million in Manitoba scientific research and experimental development credit carryforwards that will begin to expire in 2027 . The use of any of these net operating losses and research and development tax credit carryforwards may be restricted due to future changes in the Company's ownership. The provision for income taxes differs from the amount of taxes determined by applying the U.S. federal statutory rate to income before the provision for income taxes as a result of the following: December 31, (in millions) 2019 2018 2017 US $ 63.9 $ 71.0 $ 80.7 International 13.5 10.5 37.9 Earnings before taxes on income 77.4 81.5 118.6 Federal tax at statutory rates $ 16.3 $ 17.1 $ 41.5 State taxes, net of federal benefit 10.3 4.3 1.3 Impact of foreign operations (6.9 ) 2.8 (2.2 ) Change in valuation allowance (1.0 ) (0.1 ) 0.3 Tax credits (3.6 ) (1.8 ) (1.9 ) Transition tax — (0.2 ) 13.6 Change in U.S. tax rate — (4.5 ) (13.4 ) Stock compensation (2.4 ) (5.8 ) (4.0 ) Other differences — (1.3 ) (0.7 ) Return to provision true-ups (2.3 ) 1.1 — Transaction costs — 5.4 — Contingent consideration 4.7 — — Compensation limitation 1.3 1.1 1.3 FIN 48 1.1 0.3 0.5 GILTI, net 3.6 0.4 — Permanent differences 1.8 — (0.3 ) Provision for income taxes $ 22.9 $ 18.8 $ 36.0 The effective annual tax rate for the years ended December 31, 2019 , 2018 , and 2017 was 30% , 23% and 30% , respectively. The effective annual tax rate of 30% in 2019 is higher than the statutory rate primarily due to the impact of state taxes, GILTI, contingent consideration and other non-deductible items. This is partially offset by stock option deduction benefits, tax credits, and favorable rates in foreign jurisdictions. The effective annual tax rate of 23% in 2018 is higher than the statutory rate primarily due to the impact of state taxes, GILTI, acquisition transaction costs and other non-deductible items, and the jurisdictional mix of earnings. This is partially offset by the impact of the SAB 118 benefit and the stock option deduction benefit. The effective annual tax rate of 30% in 2017 differs from statutory rate primarily due to the jurisdictional mix of earnings. Due to the impact of the Tax Reform Act enacted on December 22, 2017, the Company recognized a $ 13.4 million tax benefit as a result of revaluing the U.S. ending net deferred tax liabilities from 35% to the newly enacted U.S. corporate income tax rate of 21% . The tax benefit was fully offset by tax expense of $13.6 million for the transition tax on the deemed mandatory repatriation of undistributed earnings. The Company recognizes interest in interest expense and recognizes potential penalties related to unrecognized tax benefits in selling, general and administrative expense. Of the total unrecognized tax benefits recorded at December 31, 2019 and 2018 , $0.0 million and $0.4 million , respectively, is classified as a current liability and $10.4 million and $8.4 million , respectively, is classified as a non-current liability on the balance sheet. The table below presents the gross unrecognized tax benefits activity for 2019 , 2018 and 2017 : (in millions) Gross unrecognized tax benefits at December 31, 2016 $ 1.8 Increases for tax positions for prior years — Decreases for tax positions for prior years — Increases for tax positions for current year 0.5 Settlements (0.3 ) Lapse of statute of limitations — Gross unrecognized tax benefits at December 31, 2017 $ 2.0 Unrecognized tax benefits acquired in business combinations 6.5 Increases for tax positions for prior years — Decreases for tax positions for prior years — Increases for tax positions for current year 0.3 Settlements — Lapse of statute of limitations — Gross unrecognized tax benefits at December 31, 2018 $ 8.8 Increases for tax positions for prior years 0.5 Unrecognized tax benefits acquired in business combinations — Decreases for tax positions for prior years — Increases for tax positions for current year 1.5 Settlements (0.4 ) Lapse of statute of limitations — Gross unrecognized tax benefits at December 31, 2019 $ 10.4 The total gross unrecognized tax benefit of $10.4 million of which $7.0 million relates to the acquisition of PaxVax is entirely offset by a receivable pursuant to a Tax Indemnity Agreement that became effective as at the close of the acquisition. When resolved, substantially all of these reserves would impact the effective tax rate. The Company's federal and state income tax returns for the tax years 2016 to 2018 remain open to examination. The Company's tax returns in the United Kingdom remain open to examination for the tax years 2012 to 2018, and tax returns in Germany remain open indefinitely. The Company's tax returns for Canada remain open to examination for the tax years 2012 to 2018. The Company's Swiss tax returns remain open to federal examination for 2018. The Company's Irish tax returns remain open to examination for the tax years 2013 to 2018. As of December 31, 2019 , the Company’s Canadian 2017 Scientific Research and Experimental Development Claim is under audit. As of December 31, 2019 , the Company's 2017 Canadian and US federal income tax returns for the Adapt entities prior to acquisition are under audit. |
Defined benefit and 401(k) savi
Defined benefit and 401(k) savings plan | 12 Months Ended |
Dec. 31, 2019 | |
Retirement Benefits [Abstract] | |
Defined benefit and 401(k) savings plan | Defined benefit and 401(k) savings plan The Company sponsors a defined benefit pension plan covering eligible employees in Switzerland (the "Swiss Plan"). Under the Swiss Plan, the Company and certain of its employees with annual earnings in excess of government determined amounts are required to make contributions into a fund managed by an independent investment fiduciary. Employer contributions must be in an amount at least equal to the employee’s contribution. The Swiss Plan assets are comprised of an insurance contract that has a fair value consistent with its contract value based on the practicability exception using level 3 inputs. The entire liability is listed as non-current, because plan assets are greater than the expected benefit payments over the next year. The Company recognizes pension expense as a component of selling, general and administrative expense. The Company recognized pension expense related to the Swiss Plan of $1.0 million reflected as a component of selling, general and administrative for the year ended December 31, 2019 . The funded status of the Swiss Plan is as follows: (in millions) December 31, 2019 December 31, 2018 Fair value of plan assets, beginning of year $ 18.2 $ — Acquisitions — 18.2 Employer contributions 1.0 0.2 Employee contributions 0.7 0.1 Net benefits received (paid) 1.7 0.3 Actual return on plan assets 1.7 — Settlements (3.0 ) (0.6 ) Currency impact 0.3 — Fair value of plan assets, end of year $ 20.6 $ 18.2 Projected benefit obligation, beginning of year $ 28.6 $ — Acquisitions — 28.3 Service cost 1.3 0.3 Interest Cost 0.2 0.1 Employee contributions 0.7 0.1 Actuarial loss 7.0 0.3 Net benefits received (paid) 1.7 (0.1 ) Plan amendment (1.7 ) 0.1 Settlements (3.0 ) (0.6 ) Currency impact 0.4 0.1 Projected benefit obligation, end of year $ 35.3 $ 28.6 Funded status, end of year $ (14.7 ) $ (10.4 ) Accumulated benefit obligation, end of year $ 31.0 $ 25.6 Since assets exceed the present value of expected benefit payments for the next twelve months, all of the liability is classified as non-current. Components of net periodic pension cost incurred during the year are as follows: (in millions) December 31, 2019 December 31, 2018 Service cost $ 1.3 $ 0.3 Interest cost 0.2 0.1 Expected return on plan assets (0.5 ) (0.1 ) Net periodic benefit cost $ 1.0 $ 0.3 The weighted average assumptions used to calculate the projected benefit obligations are as follows: December 31, 2019 December 31, 2018 Discount rate 0.2 % 0.9 % Expected rate of return 3.0 % 3.0 % Rate of future compensation increases 1.5 % 1.5 % The overall expected long-term rate of return on assets assumption considers historical returns, as well as expected future returns based on the fact that investment returns are insured, and the legal minimum interest crediting rate as applicable. Total contributions expected to be made into the plan for the year-ended December 31, 2020 is $1.1 million . The following table presents losses recognized in accumulated other comprehensive loss before income tax related to the Company’s defined benefit pension plans: (in millions) Year Ended December 31, 2019 Year Ended December 31, 2018 Net actuarial loss $ 5.4 $ 0.1 Prior service cost (1.7 ) 0.1 Total recognized in accumulated other comprehensive loss $ 3.7 $ 0.2 Actuarial losses in accumulated other comprehensive loss related to the Company’s defined benefit pension plans expected to be recognized as components of net periodic benefit cost over the year ending December 31, 2020 are de minimis. Future benefits expected to be paid as of December 31, 2019 are as follows: (In millions) December 31, 2019 2020 $ 1.0 2021 1.0 2022 1.5 2023 1.0 2024 1.0 Thereafter 6.6 Total $ 12.1 401(k) savings plan The Company has established a defined contribution savings plan under Section 401(k) of the Internal Revenue Code. The 401(k) Plan covers substantially all U.S. employees. Under the 401(k) Plan, employees may make elective salary deferrals. During the years ended December 31, 2019 , 2018 and 2017 , the Company made matching contributions of approximately $5.1 million , $3.1 million and $2.7 million , respectively. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Leases | Leases The Company has operating leases for corporate offices, research and development facilities and manufacturing facilities. We determine if an arrangement is a lease at inception. Operating leases are included in right-of-use ("ROU") assets and liabilities. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company's leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses an implicit rate when readily determinable. At the beginning of a lease, the operating lease ROU asset also includes any concentrated lease payments expected to be paid and excludes lease incentives. The Company's lease ROU asset may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise those options. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are accounted for separately. The Company's leases have remaining lease terms of 1 year to 14 years , some of which include options to extend the leases for up to 5 years , and some of which include options to terminate the leases within 1 year . The components of lease expense were as follows: December 31, 2019 Operating lease cost: Amortization of right-of-use assets $ 2.7 Interest on lease liabilities 0.6 Total operating lease cost $ 3.3 For the years ended December 31, 2018 and 2017 total lease expense was $ 3.3 million and $ 1.6 million, respectively. Supplemental balance sheet information related to leases was as follows as of December 31, 2019 : (In millions, except lease term and discount rate) Balance Sheet Location December 31, 2019 Operating lease right-of-use assets Other assets $ 24.7 Operating lease liabilities, current portion Other current liabilities 3.6 Operating lease liabilities Other liabilities 22.1 Total operating lease liabilities 25.7 Operating leases: Weighted average remaining lease term (years) 8.0 Weighted average discount rate 4.2 % |
Leases | Leases The Company has operating leases for corporate offices, research and development facilities and manufacturing facilities. We determine if an arrangement is a lease at inception. Operating leases are included in right-of-use ("ROU") assets and liabilities. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company's leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses an implicit rate when readily determinable. At the beginning of a lease, the operating lease ROU asset also includes any concentrated lease payments expected to be paid and excludes lease incentives. The Company's lease ROU asset may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise those options. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are accounted for separately. The Company's leases have remaining lease terms of 1 year to 14 years , some of which include options to extend the leases for up to 5 years , and some of which include options to terminate the leases within 1 year . The components of lease expense were as follows: December 31, 2019 Operating lease cost: Amortization of right-of-use assets $ 2.7 Interest on lease liabilities 0.6 Total operating lease cost $ 3.3 For the years ended December 31, 2018 and 2017 total lease expense was $ 3.3 million and $ 1.6 million, respectively. Supplemental balance sheet information related to leases was as follows as of December 31, 2019 : (In millions, except lease term and discount rate) Balance Sheet Location December 31, 2019 Operating lease right-of-use assets Other assets $ 24.7 Operating lease liabilities, current portion Other current liabilities 3.6 Operating lease liabilities Other liabilities 22.1 Total operating lease liabilities 25.7 Operating leases: Weighted average remaining lease term (years) 8.0 Weighted average discount rate 4.2 % |
Earnings per share
Earnings per share | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings per share | Earnings per share The following table presents the calculation of basic and diluted net income per share: Year Ended December 31, (in millions, except per share data) 2019 2018 2017 Numerator: Net earnings $ 54.5 $ 62.7 $ 82.6 Interest expense, net of tax — — 2.6 Amortization of debt issuance costs, net of tax — — 0.7 Net income, adjusted $ 54.5 $ 62.7 $ 85.9 Denominator: Weighted-average number of shares-basic 51.5 50.1 41.8 Dilutive securities-equity awards 0.9 1.3 1.1 Dilutive securities-convertible debt — — 7.4 Weighted-average number of shares-diluted 52.4 51.4 50.3 Net income per share-basic $ 1.06 $ 1.25 $ 1.98 Net income per share-diluted $ 1.04 $ 1.22 $ 1.71 For the year ending December 31, 2019 approximately 0.9 million shares of common stock are not considered in the diluted earnings per share calculation because the exercise price of these options is greater than the average per share closing price during the year and their effect would be anti-dilutive. For the years ending December 31, 2018 , and 2017 , substantially all of the outstanding stock options to purchase shares of common stock were included in the calculation of diluted earnings per share. |
Purchase commitments
Purchase commitments | 12 Months Ended |
Dec. 31, 2019 | |
Purchase Obligation, Fiscal Year Maturity [Abstract] | |
Purchase commitment | Purchase commitments As of December 31, 2019 the Company has approximately $59.7 million of purchase commitments associated with raw materials and contract development and manufacturing services that will be purchased in the next three years . For the years ended December 31, 2019 , 2018 , and 2017 , the Company purchased $51.3 million , $12.1 million and $3.0 million , respectively, of materials under this commitment. |
Segment information
Segment information | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment information | Segment information For financial reporting purposes, the Company reports financial information for one reportable segment. This reportable segment engages in business activities based on financial information that is provided to and resources which are allocated by the Chief Operating Decision Maker. The accounting policies of the reportable segment is the same as those described in the summary of significant accounting policies. For the years ended December 31, 2019 , 2018 , and 2017 , the Company’s revenues within the United States comprised 90% , 91% and 89% , respectively, of total revenues. For the years ended December 31, 2019 , 2018 , and 2017 , product sales from ACAM 2000 and Anthrax Vaccines to the USG comprised approximately 43% , 65% and 68% , respectively, of total product sales. The Company's product sales from Anthrax Vaccines, ACAM2000, NARCAN Nasal Spray and Other comprised approximately: 2019 2018 2017 % of product sales: Anthrax Vaccines 19 % 46 % 68 % ACAM2000 27 % 19 % — % NARCAN Nasal Spray 31 % 7 % — % Other 23 % 28 % 32 % As of December 31, 2019 , 2018 and 2017 , aside from Anthrax Vaccines and ACAM2000, there were no other product sales to an individual customer or for an individual product in excess of 10% of total revenues. For years ended December 31, 2019 and 2018 , the Company had long-lived assets outside of the United States of approximately $90.6 million and $82.9 million , respectively, which are primarily located within Canada and Switzerland. |
Quarterly financial data (unaud
Quarterly financial data (unaudited) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly financial data (Unaudited) | Quarterly financial data (unaudited) Quarterly financial information for the years ended December 31, 2019 and 2018 is presented in the following tables: Quarter Ended (in millions, except per share data) March 31, June 30, September 30, December 31, 2019: Revenue $ 190.6 $ 243.2 $ 311.8 $ 360.4 Income (loss) from operations (27.4 ) (7.0 ) 70.7 77.8 Net income (loss) (26.1 ) (9.5 ) 43.2 46.9 Net income (loss) per share-basic $ (0.51 ) $ (0.18 ) $ 0.84 $ 0.91 Net income (loss) per share-diluted $ (0.51 ) $ (0.18 ) $ 0.83 $ 0.90 2018: Revenue $ 117.8 $ 220.2 $ 173.7 $ 270.7 Income (loss) from operations (9.5 ) 66.8 21.3 11.2 Net income (loss) (4.9 ) 50.1 20.9 (3.4 ) Net income (loss) per share-basic $ (0.10 ) $ 1.00 $ 0.42 $ (0.07 ) Net income (loss) per share-diluted $ (0.10 ) $ 0.98 $ 0.41 $ (0.07 ) |
Litigation
Litigation | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | Litigation ANDA Litigation On September 14, 2018, Adapt Pharma Inc., Adapt Pharma Operations Limited and Adapt Pharma Ltd. (collectively, "Adapt Pharma"), and Opiant Pharmaceuticals, Inc. ("Opiant"), received notice from Perrigo UK FINCO Limited Partnership ("Perrigo"), that Perrigo had filed an Abbreviated New Drug Application ("ANDA"), with the United States Food and Drug Administration seeking regulatory approval to market a generic version of NARCAN®(naloxone hydrochloride) Nasal Spray 4mg/spray before the expiration of U.S. Patent Nos. 9,211,253, (the "‘253 Patent"), 9,468,747 (the "‘747 Patent"), 9,561,177, (the "‘177 Patent"), 9,629,965, (the "‘965 Patent") and 9,775,838 (the "‘838 Patent"). On or about October 25, 2018, Perrigo sent a subsequent notice letter relating to U.S. Patent No. 10,085,937 (the "937 Patent"). Perrigo’s notice letters assert that its generic product will not infringe any valid and enforceable claim of these patents. On October 25, 2018, Emergent BioSolutions’ Adapt Pharma subsidiaries and Opiant, (collectively, the "Plaintiffs"), filed a complaint for patent infringement of the ‘253, ‘747, ‘177, ‘965, and the ‘838 Patents against Perrigo in the United States District Court for the District of New Jersey arising from Perrigo’s ANDA filing with the FDA. Plaintiffs filed a second complaint against Perrigo on December 7, 2018, for the infringement of the ‘937 Patent. On February 12, 2020, Adapt Pharma and Perrigo entered into a settlement agreement to resolve the ongoing litigation. Under the terms of the settlement, Perrigo has received a non-exclusive license under Adapt’s patents to make, have made and market its generic naloxone hydrochloride nasal spray under its own ANDA. Perrigo’s license will be effective as of January 5, 2033 or earlier under certain circumstances including circumstances related to the outcome of the current litigation against Teva (as defined below) or litigation against future ANDA filers. The Perrigo settlement agreement is subject to review by the U.S. Department of Justice and the Federal Trade Commission, and entry of an order dismissing the litigation by the U.S. District Court for the District of New Jersey. On or about February 27, 2018, Adapt Pharma Inc. and Adapt Pharma Operations Limited and Opiant received notice from Teva Pharmaceuticals Industries Ltd. and Teva Pharmaceuticals USA, Inc. (collectively "Teva"), that Teva had filed an ANDA with the FDA seeking regulatory approval to market a generic version of NARCAN® (naloxone hydrochloride) Nasal Spray 2 mg/spray before the expiration of U.S. Patent No. 9,480,644, (the "‘644 Patent"), and U.S. Patent No. 9,707,226, (the "'226 Patent"). Teva's notice letter asserts that the commercial manufacture, use or sale of its generic drug product described in its ANDA will not infringe the '644 Patent or the '226 Patent, or that the '644 Patent and '226 Patent are invalid or unenforceable. Adapt Pharma Inc. and Adapt Pharma Operations Limited and Opiant filed a complaint for patent infringement against Teva in the United States District Court for the District of New Jersey. On or about September 13, 2016, Adapt Pharma Inc. and Adapt Pharma Operations Limited and Opiant received notice from Teva that Teva had filed an ANDA with the FDA seeking regulatory approval to market a generic version of NARCAN® (naloxone hydrochloride) Nasal Spray 4 mg/spray before the expiration of U.S. Patent No. 9,211,253 (the "'253 Patent"). Adapt Pharma Inc. and Adapt Pharma Operations Limited and Opiant received additional notices from Teva relating to the '747, the '177, the '965, the '838, and the ‘937 Patents. Teva's notice letters assert that the commercial manufacture, use or sale of its generic drug product described in its ANDA will not infringe the '253, the '747, the '177, the '965, the '838, or the ‘937 Patent, or that the '253, the '747, the '177, the '965, the '838, and the ‘937 Patents are invalid or unenforceable. Adapt Pharma Inc. and Adapt Pharma Operations Limited and Opiant filed a complaint for patent infringement against Teva in the United States District Court for the District of New Jersey with respect to the '253 Patent. Adapt Pharma Inc. and Adapt Pharma Operations Limited and Opiant also filed complaints for patent infringement against Teva in the United States District Court for the District of New Jersey with respect to the '747, the '177, the '965, and the '838 Patents. All five proceedings have been consolidated. As of the date of this filing, Adapt Pharma Inc., Adapt Pharma Operations Limited, and Opiant, have not filed a complaint related to the ‘937 Patent. Closing arguments are scheduled for February 26, 2020. In the complaints described in the paragraphs above, the Plaintiffs seek, among other relief, orders that the effective date of FDA approvals of the Teva ANDA products and the Perrigo ANDA product be a date not earlier than the expiration of the patents listed for each product, equitable relief enjoining Teva and Perrigo from making, using, offering to sell, selling, or importing the products that are the subject of Teva and Perrigo’s respective ANDAs, until after the expiration of the patents listed for each product, and monetary relief or other relief as deemed just and proper by the court. Nalox-1 Pharmaceuticals, a non-practicing entity, filed petitions with the United States Patent and Trademark Office Patent Trial and Appeal Board (the "PTAB") requesting inter parties review ("IPR") of five of the six patents listed in the Orange Book related to NARCAN® Nasal Spray 4mg/spray. In a series of decisions, the PTAB agreed to institute a review |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2019 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Schedule II - Valuation and Qualifying Accounts | SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (in millions) Beginning Balance Additions from Acquisition Charged to costs and expenses Deductions Ending Balance Year Ended December 31, 2019 Inventory allowance $ 14.0 $ — $ 23.0 $ (19.1 ) $ 17.9 Prepaid expenses and other current assets allowance 4.3 — — (0.3 ) 4.0 Year Ended December 31, 2018 Inventory allowance $ 3.8 $ 4.4 $ 14.6 $ (8.8 ) $ 14.0 Prepaid expenses and other current assets allowance 5.3 — — (1.0 ) 4.3 Year Ended December 31, 2017 Inventory allowance $ 3.5 $ — $ 8.8 $ (8.5 ) $ 3.8 Prepaid expenses and other current assets allowance 4.9 — 0.4 — 5.3 |
Summary of significant accoun_2
Summary of significant accounting policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of presentation and consolidation | Basis of presentation and consolidation The accompanying consolidated financial statements include the accounts of Emergent and its wholly owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. |
Use of estimates | Use of estimates The preparation of financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates, judgments and assumptions that affect the amounts and disclosures reported in the consolidated financial statements and accompanying notes. Management continually re-evaluates its estimates, judgments and assumptions, and management’s evaluations could change. These estimates are sometimes complex, sensitive to changes in assumptions and require fair value determinations using Level 3 fair value measurements. Actual results may differ materially from those estimates. Estimates and judgments inherent in the preparation of the consolidated financial statements include accounting for asset impairments, revenue recognition, allowances for doubtful accounts, inventory, depreciation and amortization, business comb inations, contingent consideration, stock-based compensation, income taxes, and other contingencies. |
Cash and cash equivalents and restricted cash | Cash, cash equivalents and restricted cash Cash equivalents are highly liquid investments with a maturity of 90 days or less at the date of purchase and consist of time deposits and investments in money market funds with commercial banks and financial institutions. Also, the Company maintains cash balances with financial institutions in excess of insured limits. The Company does not anticipate any losses with such cash balances. Restricted cash includes cash that is not readily available for use in the Company's operating activities. Restricted cash is primarily comprised of cash pledged under letters of credit. |
Fair value measurements | Fair value measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, an exit price, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value include: Level 1 — Observable inputs for identical assets or liabilities such as quoted prices in active markets; Level 2 — Inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3 — Unobservable inputs in which little or no market data exists, which are therefore developed by the Company using estimates and assumptions that reflect those that a market participant would use. On a recurring basis, the Company measures and records money market funds (level 1), contingent purchase considerations (level 3) and interest-rate swap arrangements (level 2) using fair value measurements in the accompanying financial statements. On a non-recurring basis, the Company measures its IPR&D assets (level 3) using fair value measurements. The carrying amounts of the Company's short-term financial instruments, which include cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values due to their short maturities. The carrying amounts of the Company’s long-term debt arrangements approximates their fair values due to variable interest rates which fluctuate with changes in market rates. |
Significant customers and accounting receivable | Significant customers and accounts receivable Billed accounts receivable are stated at invoice amounts and consist mostly of amounts due from the USG, as well as amounts due under reimbursement contracts with other government entities and non-government organizations. Our opioid overdose reversal product is sold commercially through physician-directed or standing order prescriptions at retail pharmacies, as well as state health departments, law enforcement agencies, state and local community based organizations, substance abuse centers and federal agencies. If necessary, the Company records a provision for doubtful receivables to allow for amounts which may be unrecoverable. This provision is based upon an analysis of the Company's prior collection experience, customer creditworthiness and current economic trends. Unbilled accounts receivable relates to various service contracts for which work has been performed, though invoicing has not yet occurred. |
Concentration risk | Concentration Risk Customers The Company has long-term contracts with the USG that expire at various times from 2020 through 2029. The Company has derived a significant portion of its revenue from sales of ACAM2000 and Anthrax Vaccines under contracts with the USG. The Company's current USG contracts do not necessarily increase the likelihood that it will secure future comparable contracts with the USG. The Company expects that a significant portion of the business will continue to be under government contracts that present a number of risks that are not typically present in the commercial contracting process. USG contracts for ACAM 2000 and Anthrax Vaccines are subject to unilateral termination or modification by the government. The Company may fail to achieve significant sales of ACAM 2000 and Anthrax Vaccines to customers in addition to the USG, which would harm its growth opportunities. The Company may not be able to manufacture Anthrax Vaccines consistently in accordance with FDA specifications. The Company's other product sales are largely sold commercially through physician-directed or standing order prescriptions at retail pharmacies, as well as to state health departments, local law enforcement agencies, community-based organizations, substance abuse centers and other federal agencies. Although the Company seeks expand its customer base and to renew its agreements with its customers prior to expiration of a contract, a delay in securing a renewal or a failure to secure a renewal or a renewal on less favorable terms may have a material adverse effect on the Company’s financial condition and results of operations. The Company’s trade receivables do not represent a significant concentration of credit risk. The USG accounted for approximately 61% , 76% and 78% of total revenues for 2019 , 2018 and 2017 , respectively, and approximately 69% and 76% of total accounts receivable as of December 31, 2019 and 2018 , respectively. Because accounts receivable consists primarily of am ounts due from the USG for product sales and from government agencies under government grants and development contracts, management does not deem the credit risk to be significant. Financial Institutions Cash and cash equivalents are maintained with several financial institutions. The Company has deposits held with banks that exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions of reputable credit and, therefore, bear minimal credit risk. Lender Counterparties There is lender counterparty risk associated with the Company's revolving credit facility and derivatives instruments. There is risk that the Company’s revolving credit facility investors and derivative counterparties will not be available to fund as obligated. If funding under the revolving credit facility is unavailable, the Company may have to acquire a replacement credit facility from different counterparties at a higher cost or may be unable to find a suitable replacement. The Company seeks to manage risks from its revolving credit facility and derivative instruments by contracting with experienced large financial institutions and monitoring the credit quality of its lenders. As of December 31, 2019 , the Company did not anticipate nonperformance by any of its counterparties. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value with cost being determined using a standard cost method, which approximates average cost. Average cost consists primarily of material, labor and manufacturing overhead expenses (including fixed production-overhead costs) and includes the services and products of third-party suppliers. The Company analyzes its inventory levels quarterly and writes down, in the applicable period, inventory that has become obsolete, inventory that has a cost basis in excess of its expected net realizable value and inventory in excess of expected customer demand. The Company also writes off, in the applicable period, the costs related to expired inventory. Costs of purchased inventories are recorded using weighted-average costing. The Company determines normal capacity for each production facility and allocates fixed production-overhead costs on that basis. The Company records inventory acquired in business acquisitions utilizing the comparative sales method, which estimates the expected sales price reduced for all costs expected to be incurred to complete/dispose of the inventory with a profit on those costs. |
Property, plant and equipment | Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and impairments. Depreciation is computed using the straight-line method over the following estimated useful lives: Buildings 31-39 years Building improvements 10-39 years Furniture and equipment 3-15 years Software 3-7 years or product life Leasehold improvements Lesser of the asset life or lease term Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to operations. Repairs and maintenance costs are expensed as incurred. The Company capitalizes internal-use software when both (a) the software is internally developed, acquired, or modified solely to meet the entity’s internal needs and (b) during the software’s development or modification, no substantive plan either exists or is being developed to market the software externally. Capitalization of qualifying internal-use software costs begins when the preliminary project stage is completed, management with the relevant authority, implicitly or explicitly, authorizes and commits to the funding of the software project, and it is probable that the project will be completed and the software will be used to perform the function intended. The Company determines the fair value of the property, plant and equipment acquired in a business combination utilizing either the cost approach or the sales comparison approach. The cost approach is determined by establishing replacement cost of the ass et and then subtracting any value that has been lost due to economic obsolescence, functional obsolescence, or physical deterioration. The sales comparison approach determines an asset is equal to the market price of an asset of comparable features such as design, location, size, construction, materials, use, capacity, specification, operational characteristics and other features or descriptions. |
Income taxes | Income taxes Income taxes are accounted for using the liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss and research and development tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. Deferred income tax effects of transactions reported in different periods for financial reporting and income tax return purposes are recognized under the asset and liability method of accounting for income taxes. This method gives consideration to the future tax consequences of the deferred income tax items and immediately recognizes changes in income tax laws in the year of enactment. On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (the “Tax Reform Act”). Further information on the tax impacts of the Tax Reform Act is included in Note 12 of the Company’s consolidated financial statements. The Company's ability to realize deferred tax assets depends upon future taxable income as well as the limitations discussed below. For financial reporting purposes, a deferred tax asset must be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized prior to expiration. The Company considers future taxable income and ongoing tax planning strategies in assessing the need for valuation allowances. In general, if the Company determines that it is more likely than not to realize more than the recorded amounts of net deferred tax assets in the future, the Company will reverse all or a portion of the valuation allowance established against its deferred tax assets, resulting in a decrease to the provision for income taxes in the period in which the determination is made. Likewise, if the Company determines that it is not more likely than not to realize all or part of the net deferred tax asset in the future, the Company will establish a valuation allowance against deferred tax assets, with an offsetting increase to the provision for income taxes, in the period in which the determination is made. Under sections 382 and 383 of the Internal Revenue Code, if an ownership change occurs with respect to a "loss corporation", as defined therein, there are annual limitations on the amount of net operating losses and deductions that are available. The Company has recognized the portion of net operating losses and research and development tax credits acquired that will not be limited and are more likely than not to be realized. Because tax laws are complex and subject to different interpretations, significant judgment is required. As a result, the Company makes certain estimates and assumptions, in (1) calculating the Company's income tax expense, deferred tax assets and deferred tax liabilities, (2) determining any valuation allowance recorded against deferred tax assets and (3) evaluating the amount of u nrecognized tax benefits, as well as the interest and penalties related to such uncertain tax positions. The Company's estimates and assumptions may differ significantly from tax benefits ultimately realized. |
Acquisitions | Acquisitions In determining whether an acquisition is a business combination versus an asset acquisition, the accounting guidance requires an entity to first evaluate whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If that threshold is met, the set of assets and activities is not a business and therefore treated as an asset acquisition. If that threshold is not met, the entity evaluates whether the set meets the definition of a business. If an acquired asset or asset group does not meet the definition of a business, the transaction is accounted for as an asset acquisition. Otherwise, the acquisition is treated as a business combination. In a business combination, the acquisition method of accounting requires that the assets acquired and liabilities assumed be recorded as of the date of the merger or acquisition at their respective fair values with limited exceptions and generally use Level 3 fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Accordingly, the Company may be required to value assets at fair values that do not reflect the Company's intended use of those assets. Any excess of the purchase price (consideration transferred) over the estimated fair values of net assets acquired is recorded as goodwill. Transaction costs and costs to restructure the acquired company are expensed as incurred. The operating results of the acquired business are reflected in the Company's consolidated financial statements after the date of the merger or acquisition. If the Company determines the assets acquired do not meet the definition of a business under the acquisition method of accounting, the transaction will be accounted for as an asset acquisition and recorded at cost rather than a business combination and, therefore, no goodwill will be recorded. The fair values of intangible assets, including acquired in-process research and development ("IPR&D"), are determined utilizing information available at or near the merger or acquisition date based on expectations and assumptions that are deemed reasonable by management. Given the considerable judgment involved in determining fair values, the Company typically obtains assistance from third-party valuation specialists for significant items. Amounts allocated to acquired IPR&D are capitalized and accounted for as indefinite-lived intangible assets. Upon successful completion of each project, the Company will make a separate determination as to the remaining useful life of the asset and begin amortization. The judgments made in determining estimated fair values assigned to assets acquired and liabilities assumed in a business combination, as well as asset lives, can materially affect the Company’s results of operations. The fair values of identifiable intangible assets related to current products and product rights are primarily determined by using an income approach through which fair value is estimated based on each asset’s discounted projected net cash flows. The Company's estimates of market participant net cash flows consider historical and projected pricing, margins and expense levels, the performance of competing products where applicable, relevant industry and therapeutic area growth drivers and factors, current and expected trends in technology and product life cycles, the time and investment that will be required to develop products and technologies, the ability to obtain marketing and regulatory approvals, the ability to manufacture and commercialize the products, the extent and timing of potential new product introductions by the Company’s competitors, and the life of each asset’s underlying patent, if any. The net cash flows are then probability-adjusted where appropriate to consider the uncertainties associated with the underlying assumptions, as well as the risk profile of the net cash flows utilized in the valuation. The probability-adjusted future net cash flows of each product are then discounted to present value utilizing an appropriate discount rate. The fair values of identifiable intangible assets related to IPR&D are determined using an income approach, through which fair value is estimated based on each asset’s probability-adjusted future net cash flows, which reflect the different stages of development of each product and the associated probability of successful completion. The net cash flows are then discounted to present value using an appropriate discount rate. Indefinite-lived intangible assets are tested for impairment annually or whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Assets acquired and liabilities assumed in a business combination that arise from contingencies are recognized at fair value if fair value can reasonably be estimated. If the acquisition date fair value of an asset acquired or liability assumed that arises from a contingency cannot be determined, the asset or liability is recognized if probable and reasonably estimable ; if these criteria are not met, no asset or liability is recognized. |
Asset impairment analysis | Asset Impairment Analysis Goodwill and Indefinite-lived Intangible Assets Goodwill is allocated to the Company's reporting units, which are one level below its operating segment. The Company evaluates goodwill and other indefinite-lived intangible assets for impairment annually as of October 1 and earlier if an event or other circumstance indicates that we may not recover the carrying value of the asset. If the Company believes that as a result of its qualitative assessment it is more likely than not that the fair value of a reporting unit or other indefinite-lived intangible asset is greater than its carrying amount, the quantitative impairment test is not required. If however it is determined that it is not more likely than not that the fair value of a reporting unit or other indefinite-lived intangible asset is greater than its carrying amount, a quantitative test is required. The quantitative goodwill impairment test is performed using a two-step process. The first step of the process is to compare the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired and the second step of the quantitative impairment test is not necessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the quantitative goodwill impairment test is required to be performed to measure the amount of impairment loss, if any. The second step of the quantitative goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. In other words, the estimated fair value of the reporting unit’s identifiable net assets excluding goodwill is compared to the fair value of the reporting unit as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The Company used a qualitative assessment for our goodwill impairment testing for 2019 and 2018 . The qualitative evaluation completed during the years ended December 31, 2019 and 2018 indicated no impairment losses. The Company has mater ial indefinite lived intangible assets associated with in-process research and development (IPR&D) which were acquired as part of the acquisitions completed in the fourth quarter of 2018 . Following a qualitative assessment indicating that it is not more likely than not that the fair value of the indefinite lived intangible asset exceeds its carrying amount, impairment of other intangible assets not subject to amortization involves a comparison of the estimated fair value of the intangible asset with its carrying value. If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. Determining fair value requires the exercise of judgment about appropriate discount rates, perpetual growth rates and the amount and timing of expected future cash flows. The Company used a quantitative assessment for our IPR&D impairment testing for 2019 and determined there was an impairment loss of $ 12.0 million, which was recorded as a component of R&D expense (see Notes 4 Acquisitions and 5 Fair value measurements ). Long-lived Assets Long-lived assets such as intangible assets and property, plant and equipment are not required to be tested for impairment annually. Instead, long-lived assets are tested for impairment whenever circumstances indicate that the carrying amount of the asset may not be recoverable, such as when the disposal of such assets is likely or there is an adverse change in the market involving the business employing the related assets. If an impairment analysis is required, the impairment test employed is based on whether the Company’s intent is to hold the asset for continued use or to hold the asset for sale. If the intent is to hold the asset for continued use, the impairment test first requires a comparison of undiscounted future cash flows to the carrying value of the asset. If the carrying value of the asset exceeds the undiscounted cash flows, the asset would not be deemed to be recoverable. Impairment would then be measured as the excess of the asset’s carrying value over its fair value. Fair value is typically determined by discounting the future cash flows associated with that asset. If the intent is to hold the asset for sale and certain other criteria are met, the impairment test involves comparing the asset’s carrying value to its fair value less costs to sell. To the extent the carrying value is greater than the asset’s fair value less costs to sell, an impairment loss is recognized in an amount equal to the difference. Significant judgments used for long-lived asset impairment assessments include identifying the appropriate asset groupings and primary assets within those groupings, determining whether events or circumstances indicate that the carrying amount of the asset may not be recoverable, determining the future cash flows for the assets involved and assumptions applied in determining fair value, which include, reasonable discount rates, growth rates, market risk premiums and other assumptions about the economic environment. |
Contingent consideration | Contingent Consideration In connection with the Company's acquisitions accounted for as business combinations, the Company records contingent consideration associated with sales-based royalties, sales-based milestones and development and regulatory milestones at fair value. The fair value model used to calculate these obligations is based on the income approach (a discounted cash flow model) that has been risk adjusted based on the probability of achievement of net sales and achievement of the milestones. The inputs the Company uses for determining the fair value of the contingent consideration associated with sales-based royalties, sales-based milestones and development and regulatory milestones are Level 3 fair value measurements. The Company re-evaluates the fair value on a quarterly basis. Changes in the fair value can result from adjustments to the discount rates and updates in the assumed timing of or achievement of net sales and/or the achievement of development and regulatory milestones. Any future increase in the fair value of the contingent consideration associated with sales-based royalties and sales-based milestones along with development and regulatory milestones are based on an increased likelihood that the underlying net sales or milestones will be achieved. The associated payments which will become due and payable for sales-based royalties and milestones result in a charge to cost of product sales and contract development and manufacturing in the period in which the increase is determined. Similarly, any future decrease in the fair value of contingent consideration associated with sales-based royalties and sales-based milestones will result in a reduction in cost of product sales and contract development and manufacturing. The changes in fair value for potential future sales-based royalties associated with product candidates in development will result in a charge to cost o f product sales and contract development and manufacturing services expense in the period in which the increase is determined. The associated payment or payments which will become due and payable for development and regulatory milestones will result in a charge to research and development expense in the period in which the increase is determined. Similarly, any future decrease i n the fair value for development and regulatory milestones will result in a reduction in research and development expense. |
Revenue recognition | Revenue recognition On January 1, 2018 the Company adopted ASC topic 606 using the modified retrospective approach applied to those contracts in effect as of January 1, 2018. Under this transition method, results for reporting periods beginning after January 1, 2018 are presented under the new standard, while prior period amounts are not adjusted and continue to be reported in accordance with historical accounting under Topic 605. See further discussion of the adoption of Topic 606, including the impact to our 2018 financial statements within the recently issued accounting standards section below. The Company recognizes revenue when the Company's customers obtain control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services by analyzing the following five steps: (1) identify the contract with a customer(s); (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. To indicate the transfer of control for the Company’s product sales and contract development and manufacturing services, it must have a present right to payment, legal title must have passed to the customer, and the customer must have the significant risks and rewards of ownership. Revenue for long-term development contracts is generally recognized based upon the cost-to-cost measure of progress, provided that the Company meets the criteria associated with transferring control of the good or service over time. Multiple performance obligations A performance obligation is a promise in a contract to transfer a distinct product or service to a customer and is the unit of account under ASC 606. Contracts sometimes include options for customers to purchase additional products or services in the future. Customer options that provide a material right to the customer, such as free or discounted products or services, give rise to a separate performance obligation. For contracts with multiple performance obligations, the Company allocates the contract price to each performance obligation on a relative standalone selling price basis using the Company’s best estimate of the standalone selling price of each distinct product or service in the contract. The primary method used to estimate standalone selling price is the price observed in standalone sales to customers, however when prices in standalone sales are not available the Company may use third-party pricing for similar products or services or estimate the standalone selling price. Allocation of the transaction price is determined at the contracts’ inception. Transaction price and variable consideration Once the performance obligations in the contract have been identified, the Company estimates the transaction price of the contract. The estimate includes amounts that are fixed as well as those that can vary based on expected outcomes of the activities or contractual terms. The Company's variable consideration includes for example consideration transferred under its development contracts with the USG as consideration received can vary based on developmental progression of the product candidate(s). When a contract's transaction price includes variable consideration, the Company evaluates the variable consideration to determine whether the estimate needs to be constrained; therefore, the Company includes the variable consideration in the transaction price only to the extent that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Variable consideration estimates are updated at each reporting date. There were no significant constraints or material changes to the Company's variable consideration estimates as of or during the twelve months ended December 31, 2019 . Contract financing In determining the transaction price, the Company adjusts the promised amount of consideration for the effects of the time value of money if the timing of payments agreed to by the parties to the contract (either explicitly or implicitly) provides the customer with a significant benefit of financing the transfer of goods or services to the customer, which is called a significant financing component. The Company does not adjust transaction price for the effects of a significant financing component when the period between the transfer of the promised good or service to the customer and payment for that good or service by the customer is expected to be one year or less. Product sales CBRNE The primary customer for the Company's CBRNE products and the primary source of funding for the development of its CBNRE product candidate portfolio is the USG. The Company's contracts for the sale of CBRNE products generally have a single performance obligation. Certain product sales contracts with the USG include multiple performance obligations, which generally include the marketed product, stability testing associated with that product, expiry extensions and plasma collection. The USG contracts for the sale of the Company's CBRNE products are normally multi-year contracts. AV7909 and Trobigard are product candidates that are not approved by the FDA or any other health agency, but are procured by certain government agencies under special circumstances. The transaction price for product sales are based on a cost build-up model with a mark-up. For our product sales, we recognize revenue at a "point in time" when the Company’s performance obligations have been satisfied and control of the products transfer to the customer. This “point in time” depends on several factors, including delivery, transfer of legal title, transition of risk and rewards of the product to the customer and the Company's right to payment. The USG contracts for the sale of the Company's CBRNE products also include certain acceptance criteria before title passes to the USG. Opioid and travel health products Revenues are recognized when control of the goods are transferred to our customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Prior to recognizing revenue, the Company makes estimates of the transaction price, including variable consideration that is subject to a constraint. Allowances for returns, specialty distributor fees, wholesaler fees, prompt payment discounts, government rebates, chargebacks and rebates under managed care plans are considered in determining the variable consideration. Revenues from sales of products is recognized to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with such variable consideration is subsequently resolved. Product sales revenue is recognized when control has transferred to the customer, which occurs at a point in time, which is typically upon delivery to the customer. Provisions for variable consideration revenues from sales of products are recorded at the net sales price, which includes estimates of variable consideration for which provisions are established and which relate to returns, specialty distributor fees, wholesaler fees, prompt payment discounts, government rebates, chargebacks and rebates under managed care plans. Calculating certain of these provisions involves estimates and judgments and the Company determines their expected value based on sales or invoice data, contractual terms, historical utilization rates, new information regarding changes in these programs’ regulations and guidelines that would impact the amount of the actual rebates, the Company's expectations regarding future utilization rates for these programs and channel inventory data. These provisions reflect the Company's best estimate of the amount of consideration to which the Company is entitled based on the terms of the contract. The amount of variable consideration that is included in the transaction price may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. The Company reassesses the Company's provisions for variable consideration at each reporting date. Historically, adjustments to estimates for these provisions have not been material. Provisions for returns, specialty distributor fees, wholesaler fees, government rebates and rebates under managed care plans are included within current liabilities in the Company's consolidated balance sheets. Provisions for chargebacks and prompt payment discounts are shown as a reduction in accounts receivable. Contract development and manufacturing services The Company performs contract development and manufacturing services for third parties. Under these contracts, activities can include pharmaceutical product process development, manufacturing and filling services for injectable and other sterile products, inclusive of process design, technical transfer, manufacturing validations, laboratory analytical development support, aseptic filling, lyophilization, final packaging and accelerated and ongoing stability studies. These contracts, with a duration that is less than one year, generally include a single performance obligation as the customer benefits from our performance upon full completion of our services. The performance obligation is satisfied when the Company must have a present right to payment because legal title has passed to the customer, the goods are in the customer’s possession with all the risks and rewards of ownership, and the efficacy of the goods has been confirmed. The Company recognizes revenue at a "point in time" based on when the performance obligation to the customer is satisfied. Contracts and grants |
Research and development | Research and development We expense research and development costs as incurred. The Company's research and development expenses consist primarily of: ▪ personnel-related expenses; ▪ fees to professional service providers for, among other things, analytical testing, independent monitoring or other administration of the Company's clinical trials and obtaining and evaluating data from the Company's clinical trials and non-clinical studies; ▪ costs of contract development and manufacturing services for clinical trial material; and ▪ costs of materials used in clinical trials and research and development. |
Comprehensive income | Comprehensive income Comprehensive income is comprised of net income and other changes in equity that are excluded from net income. The Company includes translation gains and losses incurred when converting its subsidiaries' financial statements from their functional currency to the U.S. dollar in accumulated other comprehensive income as well as gains and losses on its pension benefit obligation and derivative instruments. |
Translation of foreign currencies | Translation of Foreign Currencies For our non-U.S. subsidiaries that transact in a functional currency other than the U.S. dollar, assets and liabilities are translated at current rates of exchange at the balance sheet date. Income and expense items are translated at the average foreign currency exchange rates for the period. Adjustments resulting from the translation of the financial statements of our foreign operations into U.S. dollars are excluded from the determination of net income and are recorded in accumulated other comprehensive income, a separate component of equity. For subsidiaries where the functional currency of the assets and liabilities differ from the local currency, non-monetary assets and liabilities are translated at the rate of exchange in effect on the date assets were acquired while monetary assets and liabilities are translated at current rates of exchange as of the balance sheet date. Income and expense items are translated at the average foreign currency rates for the period. Translation adjustments of these subsidiaries are included in other income (expense), net in our consolidated statements of income. |
Earnings per share | Earnings per share The Company calculates basic earnings per share by dividing net income by the weighted average number of shares of common stock outstanding during the period. |
Accounting for stock-based compensation | Accounting for stock-based compensation The Company has one stock-based employee compensation plan, the Emergent BioSolutions Inc. Stock Incentive Plan (the "Emergent Plan"), under which the Company may grant various types of equity awards including stock options, restricted stock units and performance stock units. The terms and conditions of equity awards (such as price, vesting schedule, term and number of shares) under the Emergent Plan is determined by the compensation committee of the Company's board of directors, which administers the Emergent Plan. Each equity award granted under the Emergent Plan vests as specified in the relevant agreement with the award recipient and no option can be exercised after either seven or ten years from the date of grant depending on the grant date. The Company charges the estimated fair value of awards against income on a straight-line basis over the requisite service period, which is generally the vesting period. Where awards are made with non-substantive vesting periods (for instance, where a portion of the award vests upon retirement eligibility), the Company estimate and recognize expense based on the period from the grant date to the date the employee becomes retirement eligible. The Company determines the fair value of restricted stock units using the closing market price of the Company's common stock on the day prior to the date of grant. The Company's performance stock units settle in stock. The fair value is determined on the date of the grant using the number of shares expected to be earned and the ending market value of the stock on the grant date. The number of shares expected to vest is determined by assessing the probability that the performance criteria will be met and the associated targeted payout level that is forecasted will be achieved. The Company utilizes the Black-Scholes valuation model for estimating the fair value of all stock options granted. Set forth below is a discussion of the Company's methodology for developing each of the assumptions used: ▪ Expected dividend yield — the Company does not pay regular dividends on its common stock and does not anticipate paying any dividends in the foreseeable future. ▪ Expected volatility — a measure of the amount by which a financial variable, such as share price, has fluctuated (historical volatility) or is expected to fluctuate (implied volatility) during a period. The Company analyzed its own historical volatility to estimate expected volatility over the same period as the expected average life of the options. ▪ Risk-free interest rate — the range of U.S. Treasury rates with a term that most closely resembles the expected life of the option as of the date on which the option is granted. ▪ Expected average life of options — the period of time that options granted are expected to remain outstanding, based primarily on the Company's expectation of optionee exercise behavior subsequent to vesting of options. |
Pension plans | Pension plans The Company maintains defined benefit plans for employees in certain countries outside the U.S., including retirement benefit plans required by applicable local law. The plans are valued by independent actuaries using the projected unit credit method. The liabilities correspond to the projected benefit obligations of which the discounted net present value is calculated based on years of employment, expected salary increase, and pension adjustments. The Company reviews its actuarial assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends. Actuarial gains and losses are deferred in accumulated other comprehensive income, net of tax and are amortized over the remaining service attribution periods of the employees under the corridor method. Differences between the expected long-term return on plan assets and the actual annual return are amortized to net periodic benefit cost over the estimated remaining life as a component of selling, general and administrative expenses in the consolidated statements of operations. |
Recently issued accounting standards | Recently issued accounting standards Recently Adopted ASU 2016-2, Leases (Topic 842) ("ASU 2016-2") In February 2016, the FASB issued ASU 2016-2. ASU 2016-2 increased transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities on the balance sheet and disclosure of key information about leasing arrangements for both lessees and lessors. The Company adopted the new standard effective January 1, 2019 using the modified retrospective approach. An entity that applies the transition provisions at the beginning of the period of adoption records its cumulative adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented (i.e., January 1, 2019). In this case, an entity continues to apply the legacy guidance in ASC 840, including its disclosure requirements, in the comparative periods presented in the year it adopts the standard. The Company utilized the transition package of certain practical expedients permitted: ASC 842-10-65-1(f) and ASC 842-10-65-1(g). The Company made an accounting policy election that kept leases with an initial term of 12 months or less off of the balance sheet which resulted in recognizing those lease payments in the consolidated statements of operations on a straight-line basis over the lease term. In addition, the Company has made an accounting policy election, by class of underlying asset, to not separate non-lease components from lease components and instead to account for each separate lease component, and the non-lease components associated with that lease component, as a single lease component. As of January 1, 2019 the total right of use assets increased $13.4 million , while total operating lease liabilities increased $14.0 million . There was no adjustment to the opening balance of retained earnings as of January 1, 2019 . The standard has not materially affect the Company's consolidated net earnings. The Company continues to apply the legacy guidance from the old lease accounting standard, including its disclosure requirements, in the comparative periods presented (see Note 14 ). ASU No. 2014-9, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-9") In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-9. ASU No. 2014-9 (known as ASC 606) supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, as well as most industry-specific guidance, and significantly enhances comparability of revenue recognition practices across entities and industries by providing a principles-based, comprehensive framework for addressing revenue recognition issues. The Company adopted ASC 606 as of January 1, 2018 using the modified retrospective method resulting in an adjustment to opening retained earnings of $32.5 million for the cumulative effect of initially applying the new standard. Under ASC 606, the Company finalized the review of its portfolio of revenue contracts that were not complete as of the adoption date and made its determination of its revenue streams as well as completed extensive contract specific reviews to determine the impact of the new standard on its historical and prospective revenue recognition. Because many of the Company's significant contracts with customers have unique contract terms, the Company reviewed all its non-standard agreements in order to determine the effect of adoption. The Company tested a sample of remaining agreements to verify that there were no changes in accounting based on the assumption that these contracts had similar characteristics and that the effects on the financial statements would not differ materially from applying this guidance to the individual contracts. To estimate the financial impacts of the adoption, the Company did not apply the contract modification practical expedient and retrospectively restated long-term contracts for any contract modifications. The opening balance sheet adjustment as of January 1, 2018, was the result of the Centers for Innovation in Advanced Development and Manufacturing ("CIADM") contract with the Biomedical Advanced Research and Development Authority ("BARDA"). Under ASC 606 at January 1, 2018, the Company determined that the performance obligation under the arrangement is to provide ongoing manufacturing capability to the USG and would recognize the consideration received in the initial 7 years year base period on a straight-line basis over a 24 -year period as the capability being created during the base period of the contract is being provided to the customer over both the base period contract term as well as 17 additional option periods. As the Company’s performance obligation is providing the USG with continuous access to its production capabilities throughout the contract duration, a time-based measure resulting in straight-line revenue recognition is proportionate to the Company’s progress in satisfying the performance obligation when compared to the total progress. This measure of progress is most reflective of the Company satisfying the performance obligation over time. Beginning in June 2013, the Company was expected to be able to stand ready and be available to respond to the USG and importantly to respond to any task orders that may be issued during the base period and additional option periods. Being able to stand ready to perform in the event of an outbreak is of importance to the USG and by entering into this arrangement with the Company, the USG expected to receive the benefit of having access to Company’s readiness and its capability to immediately respond to public health threats. The Company concluded the identified stand-ready performance obligations represent a series of distinct services that are substantially the same and have the same pattern of transfer to the customer. In addition, the Company determined the CIADM contract includes a significant financing component which is included in the transaction price. The Company calculated the financing component using an interest rate the Company had on its other debt obligations at inception of the contract. The difference in revenue recognized under ASC 605 vs. ASC 606, as of the adoption date, was primarily attributable to the difference in the overall consideration or transaction price resulting from different accounting treatment related to options within the contract and the inclusion of a significant financing component under ASC 606. Prior to the adoption of ASC 606, the Company recognized revenue under the CIADM contract on a straight-line basis, based upon its estimate of the total payments to be received under the contract. The Company analyzes the estimated payments to be received on a quarterly basis to determine if an adjustment to revenue was required. As a result of the adoption of ASC 606, as of January 1, 2018, there was an increase in the deferred revenue liability of $42.4 million and an increase in deferred tax assets of $9.9 million with an offsetting reduction to retained earnings of $32.5 million . ASU 2018-2, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ("ASU 2018-2") In February 2018, the FASB issued ASU 2018-2. ASU 2018-2 provides the option to reclassify certain income tax effects related to the Tax Cuts and Jobs Act passed in December of 2017 between accumulated other comprehensive income and retained earnings and also requires additional disclosures. ASU 2018-2 is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. Adoption of ASU 2018-2 is to be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the tax laws or rates were recognized. The adoption of ASU 2018-2 did not have a material impact on the Company's consolidated financial statements. Not Yet Adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13") In June 2016, the FASB issued ASU 2016-13. ASU 2016-13 provides guidance on measurement of credit losses on financial instruments that changes the impairment model for most financial assets and certain other instruments, including trade and other receivables, held-to-maturity debt securities and loans, and that requires entities to use a new, forward-looking “expected loss” model that is expected to generally result in the earlier recognition of allowances for losses. The guidance became effective for annual periods beginning after December 15, 2019, including interim periods within those years, but early adoption is permitted. The Company has evaluated the effects of this standard and determined that the adoption will not have a material impact on the Company's consolidated financial statements. ASU 2017-4, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-4") In January 2017, the FASB issued ASU 2017-4. ASU 2017-4 simplifies the subsequent measurement of goodwill and eliminates Step 2 from the goodwill impairment test. ASU 2017-4 is effective for annual and interim goodwill tests beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates on or after January 1, 2017. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements. ASU 2018-13, Fair Value Measurement - Disclosure Framework (Topic 820) ("ASU 2018-13") In August 2018, the FASB issued ASU 2018-13. ASU 2018-13 improves the disclosure requirements on fair value measurements. The updated guidance if effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. The Company is currently assessing the timing and impact of adopting the updated provisions. ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans ("ASU 2018-14") In August 2018, the FASB issued ASU 2018-14. ASU 2018-14 modifies the disclosure requirements for defined benefit pension plans and other post-retirement plans. ASU 2018-14 is effective for all entities for fiscal years ending after December 15, 2020, and earlier adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2018-14 on its consolidated financial statements. ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15") In August 2018, the FASB issued ASU 2018-15. ASU 2018-15 clarifies the accounting for implementation costs in cloud computing arrangements. ASU 2018-15 is effective for all entities for fiscal years beginning after December 15, 2019, and earlier adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2018-15 on its consolidated financial statements. ASU 2019-12, Simplifications to Accounting for Income Taxes ("ASU 2019-12") In December 2019, the FASB issued ASU 2019-12. ASU 2019-12 removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including deferred taxes for goodwill and allocating taxes for members of a consolidated group. ASU 2019-12 is effective for all entities for fiscal years beginning after December |
Summary of significant accoun_3
Summary of significant accounting policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Property, Plant and Equipment Useful Lives | Property, plant and equipment are stated at cost less accumulated depreciation and impairments. Depreciation is computed using the straight-line method over the following estimated useful lives: Buildings 31-39 years Building improvements 10-39 years Furniture and equipment 3-15 years Software 3-7 years or product life Leasehold improvements Lesser of the asset life or lease term Property, plant and equipment consist of the following: December 31, (in millions) 2019 2018 Land and improvements $ 46.5 $ 44.6 Buildings, building improvements and leasehold improvements 234.8 216.2 Furniture and equipment 334.2 293.9 Software 55.7 55.2 Construction-in-progress 81.5 71.8 752.7 681.7 Less: Accumulated depreciation and amortization (210.4 ) (171.5 ) Total property, plant and equipment, net $ 542.3 $ 510.2 |
Revenue recognition (Tables)
Revenue recognition (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Summary of Disaggregation of Revenue | For the years ended December 31, 2019 , 2018 and 2017 the Company's revenues disaggregated by the major sources was as follows: (in millions) Year Ended December 31, 2019 2018 2017 U.S Government Non-U.S. Government Total U.S Government Non-U.S. Government Total U.S Government Non-U.S. Government Total Product sales $ 568.8 $ 334.7 $ 903.5 $ 526.1 $ 80.4 $ 606.5 $ 374.8 $ 46.7 $ 421.5 Contract development and manufacturing services — 80.0 80.0 — 98.9 98.9 — 68.9 68.9 Contracts and grants 105.9 16.6 122.5 71.5 5.5 77.0 65.1 5.4 70.5 Total revenues $ 674.7 $ 431.3 $ 1,106.0 $ 597.6 $ 184.8 $ 782.4 $ 439.9 $ 121.0 $ 560.9 |
Summary of Deferred Revenue Contract Liabilities | The following table presents the rollforward of contract liabilities: (in millions) December 31, 2017 $ 30.5 Adoption of new accounting standard (ASC 606) 42.4 January 1, 2018 72.9 Deferral of revenue 29.3 Revenue recognized (29.1 ) Balance at December 31, 2018 73.1 Deferral of revenue 46.7 Revenue recognized (30.9 ) Balance at December 31, 2019 $ 88.9 |
Schedule of Accounts Receivable, Net | Accounts receivable including unbilled accounts receivable contract assets consist of the following: December 31, (in millions) 2019 2018 Billed, net $ 227.3 $ 234.0 Unbilled 43.4 28.5 Total, net $ 270.7 $ 262.5 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The total purchase price is summarized below: (in millions) Purchase Price Amount of cash paid $ 117.5 Fair value of contingent purchase consideration 2.2 Total purchase price $ 119.7 The total purchase price revised for adjustments is summarized below: (in millions) October 15, 2018 Cash $ 581.5 Equity 37.7 Fair value of contingent purchase consideration 48.0 Preliminary purchase consideration 667.2 Adjustments 1.5 Final purchase consideration $ 668.7 |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The table below summarizes the final allocation of the purchase consideration based upon the fair values of assets acquired and liabilities assumed at October 4, 2018. (in millions) October 4, 2018 Measurement Period Adjustments Updated October 4, 2018 Fair value of tangible assets acquired and liabilities assumed: Cash $ 9.0 $ — $ 9.0 Accounts receivable 4.1 — 4.1 Inventory 19.7 — 19.7 Prepaid expenses and other assets 12.2 (0.3 ) 11.9 Property, plant and equipment 57.8 — 57.8 Deferred tax assets, net 3.8 1.8 5.6 Accounts payable (3.5 ) — (3.5 ) Accrued expenses and other liabilities (33.6 ) (0.4 ) (34.0 ) Total fair value of tangible assets acquired and liabilities assumed 69.5 1.1 70.6 Acquired in-process research and development 9.0 (9.0 ) — Acquired intangible assets 133.0 — 133.0 Goodwill 61.6 7.9 69.5 Total purchase consideration $ 273.1 $ — $ 273.1 The table below summarizes the allocation of the purchase price based upon the fair values of assets acquired at October 6, 2017. The Company did not assume any liabilities in the acquisition. The Company has finalized the purchase price allocation related to this acquisition. (in millions) Purchase Price Fair value of tangible assets acquired: Inventory $ 74.9 Property, plant and equipment 20.0 Total fair value of tangible assets acquired 94.9 Acquired intangible asset 16.7 Goodwill 8.1 Total purchase price $ 119.7 The table below summarizes the final allocation of the purchase price based upon fair values of assets acquired and liabilities assumed at October 15, 2018. (in millions) October 15, 2018 Measurement Period Adjustments Updated October 15, 2018 Fair value of tangible assets acquired and liabilities assumed: Cash $ 17.7 $ — $ 17.7 Accounts receivable 21.3 — 21.3 Inventory 41.4 — 41.4 Prepaid expenses and other assets 7.8 3.0 10.8 Accounts payable (32.2 ) — (32.2 ) Accrued expenses and other liabilities (50.4 ) — (50.4 ) Deferred tax liability, net (62.4 ) (0.5 ) (62.9 ) Total fair value of tangible assets acquired and liabilities assumed (56.8 ) 2.5 (54.3 ) Acquired in-process research and development 41.0 — 41.0 Acquired intangible asset 534.0 — 534.0 Goodwill 149.0 (1.0 ) 148.0 Total purchase price $ 667.2 $ 1.5 $ 668.7 |
Fair value measurements (Tables
Fair value measurements (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Summary of Reconciliation of Contingent Consideration Liabilities Measured at Fair Value | The following table is a reconciliation of the beginning and ending balance of the contingent consideration liabilities measured at fair value using significant unobservable inputs (Level 3) during the years ended December 31, 2019 and 2018 . (in millions) Balance at December 31, 2017 $ 12.3 Expense included in earnings 3.1 Settlements (3.4 ) Additions due to acquisition 48.0 Balance at December 31, 2018 $ 60.0 Expense included in earnings 24.8 Milestone achievement - asset acquisition 10.0 Measurement period adjustment 1.5 Settlements (67.1 ) Balance at December 31, 2019 $ 29.2 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consist of the following: December 31, (in millions) 2019 2018 Raw materials and supplies $ 70.5 $ 51.8 Work-in-process 89.7 103.2 Finished goods 62.3 50.8 Total inventories $ 222.5 $ 205.8 |
Property, plant and equipment (
Property, plant and equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property Plant and Equipment Income Statement Disclosures [Abstract] | |
Schedule of Property, Plant and Equipment | Property, plant and equipment are stated at cost less accumulated depreciation and impairments. Depreciation is computed using the straight-line method over the following estimated useful lives: Buildings 31-39 years Building improvements 10-39 years Furniture and equipment 3-15 years Software 3-7 years or product life Leasehold improvements Lesser of the asset life or lease term Property, plant and equipment consist of the following: December 31, (in millions) 2019 2018 Land and improvements $ 46.5 $ 44.6 Buildings, building improvements and leasehold improvements 234.8 216.2 Furniture and equipment 334.2 293.9 Software 55.7 55.2 Construction-in-progress 81.5 71.8 752.7 681.7 Less: Accumulated depreciation and amortization (210.4 ) (171.5 ) Total property, plant and equipment, net $ 542.3 $ 510.2 |
Intangible assets and goodwill
Intangible assets and goodwill (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | The Company's intangible assets were acquired via business combinations or asset acquisitions. Changes in the Company’s intangible assets, excluding IPR&D and goodwill, consisted of the following: December 31, 2019 (in millions) Estimated Life Cost Additions Accumulated Amortization Net Products 9-22 years $ 778.0 $ 10.0 $ 82.2 $ 705.8 Corporate trade name 5 years 2.8 — 2.8 — Customer relationships 8 years 28.6 — 23.0 5.7 Contract development and manufacturing 8 years 5.5 — 4.0 1.5 Total intangible assets $ 814.9 $ 10.0 $ 112.0 $ 712.9 |
Summary of Future Amortization Expense | Future amortization expense as of December 31, 2019 is as follows: (in millions) 2020 $ 58.7 2021 57.3 2022 54.6 2023 54.4 2024 and beyond 487.9 Total remaining amortization $ 712.9 |
Summary of Goodwill | The following table is a summary of changes in goodwill: Year ended December 31, (in millions) 2019 2018 Balance at beginning of the year $ 259.7 $ 49.1 Measurement period adjustments 6.9 — Additions — 210.6 Balance at end of the year $ 266.6 $ 259.7 |
Long-term debt (Tables)
Long-term debt (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The components of debt are as follows: December 31, (in millions) 2019 2018 Senior secured credit agreement - Term loan due 2023 $ 435.9 $ 447.2 Senior secured credit agreement - Revolver loan due 2023 373.0 348.0 2.875% Convertible Senior Notes due 2021 10.6 10.6 Other 3.0 3.0 Total debt $ 822.5 $ 808.8 Current portion of debt, net of debt issuance costs (12.9 ) (10.1 ) Unamortized debt issuance costs (11.2 ) (14.2 ) Debt, net of current portion $ 798.4 $ 784.5 |
Summary of Future Debt Payments of Long-Term Indebtedness | Future debt payments of long-term indebtedness are as follows: (in millions) December 31, 2019 2020 $ 14.1 2021 35.9 2022 33.7 2023 735.8 2024 and thereafter 3.0 Total debt $ 822.5 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | As of December 31, 2019 , the Company had the following outstanding interest rate swap derivatives that were designated as cash flow hedges of interest rate risk: Number of Instruments Notional amount (in millions) Interest Rate Swaps 7 350.0 |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The table below presents the fair value of the Company’s derivative financial instruments designated as hedges as well as their classification on the balance sheet. If current fair values of designated interest rate swaps remained static over the next twelve months, the Company would reclassify $ 0.5 million of net deferred losses from accumulated other comprehensive loss to the statement of operations over the next twelve months. Asset Derivatives Liability Derivatives December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Balance Sheet Location Fair Value Balance Sheet Location Fair Value Interest Rate Swaps Other Assets $ — Other Assets — Other Liabilities $ 2.0 Other Liabilities — |
Derivative Instruments, Gain (Loss) | The table below presents the effect of cash flow hedge accounting on accumulated other comprehensive income. Hedging derivatives Amount of Gain/(Loss) Recognized in OCI on Derivative Location of Gain or (Loss) Reclassified from Accumulated OCI into Income Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018 Interest Rate Swaps $ 2.0 — Interest expense $ 0.6 $ — |
Stockholders' equity (Tables)
Stockholders' equity (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Share-based Payment Award, Valuation Assumptions, Stock Options Granted | The Company utilizes the Black-Scholes valuation model for estimating the fair value of all stock options granted. Set forth below are the assumptions used in valuing the stock options granted: Year Ended December 31, 2019 2018 2017 Expected dividend yield 0 % 0 % 0 % Expected volatility 37-39% 38-39% 37-40% Risk-free interest rate 1.57-2.48% 2.54-3.03% 1.66-1.88% Expected average life of options 4.5 years 4.5 years 4.3 years |
Summary of Stock Option Award Activity | The following is a summary of stock option award activity under the Emergent Plan: Emergent Plan (in millions, except share and per share data) Number of Shares Weighted-Average Exercise Price Aggregate Intrinsic Value Outstanding at December 31, 2018 1,871,468 $ 32.59 $ 50.1 Granted 295,770 60.16 Exercised (199,352 ) 25.98 Forfeited (84,011 ) 52.26 Outstanding at December 31, 2019 1,883,875 $ 36.74 $ 34.5 Exercisable at December 31, 2019 1,253,658 $ 29.46 $ 30.8 |
Summary of Restricted Stock Unit Award Activity | The following is a summary of performance stock and restricted stock unit award activity under the Emergent Plan. Performance stock units of approximately 0.1 million shares were granted and remain outstanding the year ended December 31, 2019 , and are included in the table below. (in millions, except share and per share data) Number of Shares Weighted-Average Grant Price Aggregate Intrinsic Value Outstanding at December 31, 2018 921,093 $ 42.82 $ 54.6 Granted 594,752 57.94 Vested (434,629 ) 38.81 Forfeited (128,364 ) 53.17 Outstanding at December 31, 2019 952,852 $ 52.77 $ 51.5 |
Summary of Stock-Based Compensation Expense | Stock-based compensation expense was recorded in the following financial statement line items: Year Ended December 31, (in millions) 2019 2018 2017 Cost of product sales $ 3.1 $ 1.7 $ 1.1 Research and development 4.0 3.1 2.5 Selling, general and administrative 19.6 18.4 11.6 Total stock-based compensation expense $ 26.7 $ 23.2 $ 15.2 |
Schedule of Accumulated Other Comprehensive Income (Loss) | The following table includes changes in accumulated other comprehensive loss by component, net of tax: Defined Benefit Pension Plan Derivative Instruments Foreign Currency Translation Losses Total (in millions) Balance, January 1, 2018 $ — $ — $ (3.7 ) $ (3.7 ) Other comprehensive loss (0.2 ) — (1.6 ) (1.8 ) Balance, December 31, 2018 $ (0.2 ) $ — $ (5.3 ) (5.5 ) Other comprehensive (loss) income before reclassifications $ (3.2 ) $ (2.2 ) $ 0.4 $ (5.0 ) Amounts reclassified from accumulated other comprehensive income — 0.6 — 0.6 Net current period other comprehensive loss $ (3.2 ) $ (1.6 ) $ 0.4 $ (4.4 ) Balance, December 31, 2019 $ (3.4 ) $ (1.6 ) $ (4.9 ) $ (9.9 ) |
Income taxes (Tables)
Income taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Summary of Significant Components of the Provisions for Income Taxes Attributable to Operations | Significant components of the provisions for income taxes attributable to operations consist of the following: December 31, (in millions) 2019 2018 2017 Current Federal $ 1.4 $ 1.8 $ 29.4 State 11.6 2.4 3.0 International 11.0 6.0 0.3 Total current 24.0 10.2 32.7 Deferred Federal 1.9 7.5 (6.0 ) State 1.1 3.0 (0.6 ) International (4.1 ) (1.9 ) 9.9 Total deferred (1.1 ) 8.6 3.3 Total provision for income taxes $ 22.9 $ 18.8 $ 36.0 |
Schedule of Deferred Tax Assets and Liabilities | The Company's net deferred tax asset (liability) consists of the following: December 31, (in millions) 2019 2018 Federal losses carryforward $ 8.5 $ 10.7 State losses carryforward 17.4 18.1 Research and development carryforward 9.0 10.1 State research and development carryforward 5.0 5.0 Scientific research and experimental development credit carryforward 11.0 13.1 Stock compensation 7.6 7.5 Foreign NOLs 36.9 35.4 Deferred revenue 18.1 11.6 Inventory reserves 1.8 3.4 Lease liability 6.0 — Other 7.5 4.9 Deferred tax asset 128.8 119.8 Fixed assets (51.2 ) (46.4 ) Intangible assets (54.5 ) (60.4 ) Right-of-use asset (5.9 ) — Other (3.2 ) (0.7 ) Deferred tax liability (114.8 ) (107.5 ) Valuation allowance (64.5 ) (66.4 ) Net deferred tax asset (liability) $ (50.5 ) $ (54.1 ) |
Reconciliation of Income Before the Provision for Income Taxes | The provision for income taxes differs from the amount of taxes determined by applying the U.S. federal statutory rate to income before the provision for income taxes as a result of the following: December 31, (in millions) 2019 2018 2017 US $ 63.9 $ 71.0 $ 80.7 International 13.5 10.5 37.9 Earnings before taxes on income 77.4 81.5 118.6 Federal tax at statutory rates $ 16.3 $ 17.1 $ 41.5 State taxes, net of federal benefit 10.3 4.3 1.3 Impact of foreign operations (6.9 ) 2.8 (2.2 ) Change in valuation allowance (1.0 ) (0.1 ) 0.3 Tax credits (3.6 ) (1.8 ) (1.9 ) Transition tax — (0.2 ) 13.6 Change in U.S. tax rate — (4.5 ) (13.4 ) Stock compensation (2.4 ) (5.8 ) (4.0 ) Other differences — (1.3 ) (0.7 ) Return to provision true-ups (2.3 ) 1.1 — Transaction costs — 5.4 — Contingent consideration 4.7 — — Compensation limitation 1.3 1.1 1.3 FIN 48 1.1 0.3 0.5 GILTI, net 3.6 0.4 — Permanent differences 1.8 — (0.3 ) Provision for income taxes $ 22.9 $ 18.8 $ 36.0 |
Schedule of Unrecognized Tax Benefits Activity | The table below presents the gross unrecognized tax benefits activity for 2019 , 2018 and 2017 : (in millions) Gross unrecognized tax benefits at December 31, 2016 $ 1.8 Increases for tax positions for prior years — Decreases for tax positions for prior years — Increases for tax positions for current year 0.5 Settlements (0.3 ) Lapse of statute of limitations — Gross unrecognized tax benefits at December 31, 2017 $ 2.0 Unrecognized tax benefits acquired in business combinations 6.5 Increases for tax positions for prior years — Decreases for tax positions for prior years — Increases for tax positions for current year 0.3 Settlements — Lapse of statute of limitations — Gross unrecognized tax benefits at December 31, 2018 $ 8.8 Increases for tax positions for prior years 0.5 Unrecognized tax benefits acquired in business combinations — Decreases for tax positions for prior years — Increases for tax positions for current year 1.5 Settlements (0.4 ) Lapse of statute of limitations — Gross unrecognized tax benefits at December 31, 2019 $ 10.4 |
Defined benefit and 401(k) sa_2
Defined benefit and 401(k) savings plan (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Retirement Benefits [Abstract] | |
Summary of Funded Status of the Swiss Plan | The funded status of the Swiss Plan is as follows: (in millions) December 31, 2019 December 31, 2018 Fair value of plan assets, beginning of year $ 18.2 $ — Acquisitions — 18.2 Employer contributions 1.0 0.2 Employee contributions 0.7 0.1 Net benefits received (paid) 1.7 0.3 Actual return on plan assets 1.7 — Settlements (3.0 ) (0.6 ) Currency impact 0.3 — Fair value of plan assets, end of year $ 20.6 $ 18.2 Projected benefit obligation, beginning of year $ 28.6 $ — Acquisitions — 28.3 Service cost 1.3 0.3 Interest Cost 0.2 0.1 Employee contributions 0.7 0.1 Actuarial loss 7.0 0.3 Net benefits received (paid) 1.7 (0.1 ) Plan amendment (1.7 ) 0.1 Settlements (3.0 ) (0.6 ) Currency impact 0.4 0.1 Projected benefit obligation, end of year $ 35.3 $ 28.6 Funded status, end of year $ (14.7 ) $ (10.4 ) Accumulated benefit obligation, end of year $ 31.0 $ 25.6 |
Components of Net Periodic Pension Cost | Components of net periodic pension cost incurred during the year are as follows: (in millions) December 31, 2019 December 31, 2018 Service cost $ 1.3 $ 0.3 Interest cost 0.2 0.1 Expected return on plan assets (0.5 ) (0.1 ) Net periodic benefit cost $ 1.0 $ 0.3 |
Schedule of Weighted Average Assumptions | The weighted average assumptions used to calculate the projected benefit obligations are as follows: December 31, 2019 December 31, 2018 Discount rate 0.2 % 0.9 % Expected rate of return 3.0 % 3.0 % Rate of future compensation increases 1.5 % 1.5 % |
Schedule of Accumulated Other Comprehensive Loss Before Income Tax | The following table presents losses recognized in accumulated other comprehensive loss before income tax related to the Company’s defined benefit pension plans: (in millions) Year Ended December 31, 2019 Year Ended December 31, 2018 Net actuarial loss $ 5.4 $ 0.1 Prior service cost (1.7 ) 0.1 Total recognized in accumulated other comprehensive loss $ 3.7 $ 0.2 |
Schedule of Expected Future Benefits Payments | Future benefits expected to be paid as of December 31, 2019 are as follows: (In millions) December 31, 2019 2020 $ 1.0 2021 1.0 2022 1.5 2023 1.0 2024 1.0 Thereafter 6.6 Total $ 12.1 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Summary of Lease Expense Cost | Supplemental balance sheet information related to leases was as follows as of December 31, 2019 : (In millions, except lease term and discount rate) Balance Sheet Location December 31, 2019 Operating lease right-of-use assets Other assets $ 24.7 Operating lease liabilities, current portion Other current liabilities 3.6 Operating lease liabilities Other liabilities 22.1 Total operating lease liabilities 25.7 Operating leases: Weighted average remaining lease term (years) 8.0 Weighted average discount rate 4.2 % The components of lease expense were as follows: December 31, 2019 Operating lease cost: Amortization of right-of-use assets $ 2.7 Interest on lease liabilities 0.6 Total operating lease cost $ 3.3 |
Earnings per share (Tables)
Earnings per share (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Net Income Per Share, Basic and Diluted | The following table presents the calculation of basic and diluted net income per share: Year Ended December 31, (in millions, except per share data) 2019 2018 2017 Numerator: Net earnings $ 54.5 $ 62.7 $ 82.6 Interest expense, net of tax — — 2.6 Amortization of debt issuance costs, net of tax — — 0.7 Net income, adjusted $ 54.5 $ 62.7 $ 85.9 Denominator: Weighted-average number of shares-basic 51.5 50.1 41.8 Dilutive securities-equity awards 0.9 1.3 1.1 Dilutive securities-convertible debt — — 7.4 Weighted-average number of shares-diluted 52.4 51.4 50.3 Net income per share-basic $ 1.06 $ 1.25 $ 1.98 Net income per share-diluted $ 1.04 $ 1.22 $ 1.71 |
Segment information (Tables)
Segment information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Product Sales | The Company's product sales from Anthrax Vaccines, ACAM2000, NARCAN Nasal Spray and Other comprised approximately: 2019 2018 2017 % of product sales: Anthrax Vaccines 19 % 46 % 68 % ACAM2000 27 % 19 % — % NARCAN Nasal Spray 31 % 7 % — % Other 23 % 28 % 32 % |
Quarterly financial data (una_2
Quarterly financial data (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | Quarterly financial information for the years ended December 31, 2019 and 2018 is presented in the following tables: Quarter Ended (in millions, except per share data) March 31, June 30, September 30, December 31, 2019: Revenue $ 190.6 $ 243.2 $ 311.8 $ 360.4 Income (loss) from operations (27.4 ) (7.0 ) 70.7 77.8 Net income (loss) (26.1 ) (9.5 ) 43.2 46.9 Net income (loss) per share-basic $ (0.51 ) $ (0.18 ) $ 0.84 $ 0.91 Net income (loss) per share-diluted $ (0.51 ) $ (0.18 ) $ 0.83 $ 0.90 2018: Revenue $ 117.8 $ 220.2 $ 173.7 $ 270.7 Income (loss) from operations (9.5 ) 66.8 21.3 11.2 Net income (loss) (4.9 ) 50.1 20.9 (3.4 ) Net income (loss) per share-basic $ (0.10 ) $ 1.00 $ 0.42 $ (0.07 ) Net income (loss) per share-diluted $ (0.10 ) $ 0.98 $ 0.41 $ (0.07 ) |
Nature of the business and or_2
Nature of the business and organization (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019segment | Dec. 31, 2019categorysegmentproduct | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Number of categories of public health threats | category | 6 | |
Number of revenue generating products | product | 12 | |
Number of operating segments | segment | 1 | 1 |
Summary of significant accoun_4
Summary of significant accounting policies - Concentration Risk (Details) - Customer Concentration Risk | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue from Contract with Customer | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 61.00% | 76.00% | 78.00% |
Accounts Receivable | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 69.00% | 76.00% |
Summary of significant accoun_5
Summary of significant accounting policies - Estimated Useful Lives (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Buildings | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | P31Y |
Buildings | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | P39Y |
Building improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | P10Y |
Building improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | P39Y |
Furniture and equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | P3Y |
Furniture and equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | P15Y |
Software product life | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | P3Y |
Software product life | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | P7Y |
Summary of significant accoun_6
Summary of significant accounting policies - Asset Impairment Analysis (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Indefinite-lived Intangible Assets [Line Items] | ||
Goodwill, impairment loss | $ 0 | $ 0 |
Summary of significant accoun_7
Summary of significant accounting policies - Earnings Per Share (Details) - shares shares in Millions | 3 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2019 | Nov. 14, 2017 | Jan. 29, 2014 | |
Long-Term Debt [Line Items] | ||||
Shares of common stock due to conversions (in shares) | 8.5 | |||
2.875% Convertible Senior Notes Due 2021 | ||||
Long-Term Debt [Line Items] | ||||
Interest rate, stated percentage | 2.875% | 2.875% | 2.875% |
Summary of significant accoun_8
Summary of significant accounting policies - Accounting for Stock-based Compensation (Details) - Emergent Plans - plan | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of stock based employee compensation plans | 1 | |
Exercise period of options | 10 years | 7 years |
Summary of significant accoun_9
Summary of significant accounting policies - Recently Issued Accounting Standards (Details) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2019USD ($)Period | Jan. 01, 2019USD ($) | Dec. 31, 2018USD ($) | Jan. 01, 2018USD ($) | Dec. 31, 2017USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Operating lease, liability | $ 25.7 | ||||
Adoption of new accounting standard (ASC 606), net of tax | $ (32.5) | ||||
Contract liability | $ 88.9 | $ 73.1 | $ 30.5 | ||
CIADM | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Base period | 7 years | ||||
Term of contract | 24 years | ||||
Number of additional option periods | Period | 17 | ||||
Accounting Standards Update 2016-02 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Operating lease right-of-use assets | $ 13.4 | ||||
Operating lease, liability | $ 14 | ||||
Accounting Standards Update 2014-09 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Contract liability | 72.9 | ||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Contract liability | 42.4 | ||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | CIADM | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Contract liability | 42.4 | ||||
Deferred tax assets | 9.9 | ||||
Retained Earnings | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Adoption of new accounting standard (ASC 606), net of tax | (32.5) | ||||
Retained Earnings | Accounting Standards Update 2014-09 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Adoption of new accounting standard (ASC 606), net of tax | 32.5 | ||||
Retained Earnings | Accounting Standards Update 2014-09 | CIADM | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Adoption of new accounting standard (ASC 606), net of tax | $ 32.5 |
Revenue recognition - Narrative
Revenue recognition - Narrative (Details) $ in Millions | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2019segment | Dec. 31, 2019USD ($)segment | Dec. 31, 2018USD ($) | |
Concentration Risk [Line Items] | |||
Number of operating segments | segment | 1 | 1 | |
Revenue, remaining performance obligation, amount | $ 600 | ||
Deferred costs, current | $ 34 | $ 1.2 | |
Customer Concentration Risk | Accounts Receivable | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 69.00% | 76.00% | |
Customer Concentration Risk | Accounts Receivable | USG | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 69.00% | 76.00% |
Revenue recognition - Remaining
Revenue recognition - Remaining Performance Obligation (Details) | Dec. 31, 2019 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 24 months |
Revenue recognition - Disaggreg
Revenue recognition - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenues | $ 360.4 | $ 311.8 | $ 243.2 | $ 190.6 | $ 270.7 | $ 173.7 | $ 220.2 | $ 117.8 | $ 1,106 | $ 782.4 | $ 560.9 |
U.S Government | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenues | 674.7 | 597.6 | 439.9 | ||||||||
Non-U.S. Government | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenues | 431.3 | 184.8 | 121 | ||||||||
Product sales, net | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenues | 903.5 | 606.5 | 421.5 | ||||||||
Product sales, net | U.S Government | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenues | 568.8 | 526.1 | 374.8 | ||||||||
Product sales, net | Non-U.S. Government | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenues | 334.7 | 80.4 | 46.7 | ||||||||
Contract development and manufacturing services | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenues | 80 | 98.9 | 68.9 | ||||||||
Contract development and manufacturing services | U.S Government | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenues | 0 | 0 | 0 | ||||||||
Contract development and manufacturing services | Non-U.S. Government | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenues | 80 | 98.9 | 68.9 | ||||||||
Contracts and grants | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenues | 122.5 | 77 | 70.5 | ||||||||
Contracts and grants | U.S Government | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenues | 105.9 | 71.5 | 65.1 | ||||||||
Contracts and grants | Non-U.S. Government | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenues | $ 16.6 | $ 5.5 | $ 5.4 |
Revenue recognition - Contract
Revenue recognition - Contract Liabilities (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Change in Contract With Customer, Liability [Roll Forward] | ||
Beginning balance | $ 73.1 | $ 30.5 |
Deferral of revenue | 46.7 | 29.3 |
Revenue recognized | (30.9) | (29.1) |
Ending balance | $ 88.9 | $ 73.1 |
Revenue recognition - Accounts
Revenue recognition - Accounts Receivable (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Accounts receivable [Abstract] | ||
Billed, net | $ 227.3 | $ 234 |
Unbilled | 43.4 | 28.5 |
Total, net | $ 270.7 | $ 262.5 |
Acquisitions - Adapt Narrative
Acquisitions - Adapt Narrative (Details) | Oct. 15, 2018USD ($)employee$ / sharesshares | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) |
Business Acquisition [Line Items] | |||
Issuance of common stock in acquisition | $ 37,700,000 | ||
Goodwill, impairment loss | $ 0 | 0 | |
Goodwill | 266,600,000 | $ 259,700,000 | |
Adapt Pharma | |||
Business Acquisition [Line Items] | |||
Number of employees | employee | 50 | ||
Common stock issued for acquisition (in shares) | shares | 733,309 | ||
Share price (in dollars per share) | $ / shares | $ 60.44 | ||
Amount of common stock issued for acquisition including adjustments | $ 44,300,000 | ||
Issuance of common stock in acquisition | $ 37,700,000 | ||
Lock-up period for adjustment of fair value | 2 years | ||
Fair value of contingent purchase consideration | $ 48,000,000 | ||
Acquired intangible asset | $ 534,000,000 | ||
Amortization period of intangible assets | 15 years | ||
Present value discount rate | 10.50% | ||
Acquired in-process research and development | $ 41,000,000 | 29,000,000 | |
Goodwill | 148,000,000 | ||
Maximum | Adapt Pharma | |||
Business Acquisition [Line Items] | |||
Remaining consideration payable for acquisition cash amount | $ 100,000,000 | ||
In Process Research and Development | Adapt Pharma | |||
Business Acquisition [Line Items] | |||
Present value discount rate | 11.00% | ||
In Process Research and Development | Adapt Pharma | |||
Business Acquisition [Line Items] | |||
Goodwill, impairment loss | $ 12,000,000 |
Acquisitions - Adapt Preliminar
Acquisitions - Adapt Preliminary Purchase Consideration (Details) - USD ($) $ in Millions | Oct. 15, 2018 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Business Acquisition [Line Items] | ||||
Equity | $ 37.7 | |||
Adjustments | $ 0 | |||
Adapt Pharma | ||||
Business Acquisition [Line Items] | ||||
Cash | $ 581.5 | |||
Equity | 37.7 | |||
Fair value of contingent purchase consideration | 48 | |||
Total purchase price | 668.7 | |||
Adjustments | 1.5 | $ 1.5 | ||
Previously Reported | Adapt Pharma | ||||
Business Acquisition [Line Items] | ||||
Total purchase price | $ 667.2 |
Acquisitions - Adapt Prelimin_2
Acquisitions - Adapt Preliminary Allocation of Purchase Price (Details) - USD ($) $ in Millions | Oct. 15, 2018 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Fair value of tangible assets acquired and liabilities assumed: | ||||
Goodwill | $ 266.6 | $ 259.7 | ||
Measurement Period Adjustments | ||||
Measurement period adjustments | 6.9 | $ 0 | ||
Total purchase price | $ 0 | |||
Adapt Pharma | ||||
Fair value of tangible assets acquired and liabilities assumed: | ||||
Cash | $ 17.7 | |||
Accounts receivable | 21.3 | |||
Inventory | 41.4 | |||
Prepaid expenses and other assets | 10.8 | |||
Accounts payable | (32.2) | |||
Accrued expenses and other liabilities | (50.4) | |||
Deferred tax liability, net | (62.9) | |||
Total fair value of tangible assets acquired and liabilities assumed | (54.3) | |||
Acquired in-process research and development | 41 | 29 | ||
Acquired intangible asset | 534 | |||
Goodwill | 148 | |||
Total purchase price | 668.7 | |||
Measurement Period Adjustments | ||||
Prepaid expenses and other assets, measurements period adjustments | 3 | |||
Deferred tax liability, net, measurement period adjustments | (0.5) | |||
Total fair value of tangible assets acquired and liabilities assumed, measurement period adjustments | 2.5 | |||
Measurement period adjustments | (1) | |||
Total purchase price | 1.5 | $ 1.5 | ||
Previously Reported | Adapt Pharma | ||||
Fair value of tangible assets acquired and liabilities assumed: | ||||
Cash | 17.7 | |||
Accounts receivable | 21.3 | |||
Inventory | 41.4 | |||
Prepaid expenses and other assets | 7.8 | |||
Accounts payable | (32.2) | |||
Accrued expenses and other liabilities | (50.4) | |||
Deferred tax liability, net | (62.4) | |||
Total fair value of tangible assets acquired and liabilities assumed | (56.8) | |||
Acquired intangible asset | 534 | |||
Goodwill | 149 | |||
Total purchase price | 667.2 | |||
In Process Research and Development | Previously Reported | Adapt Pharma | ||||
Fair value of tangible assets acquired and liabilities assumed: | ||||
Acquired in-process research and development | $ 41 |
Acquisitions - PaxVax Narrative
Acquisitions - PaxVax Narrative (Details) $ in Millions | Oct. 04, 2018USD ($)employee | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) |
Business Acquisition [Line Items] | |||
Intangible assets, weighted average useful life | 13 years 7 months 6 days | ||
Goodwill | $ 266.6 | $ 259.7 | |
PaxVax | |||
Business Acquisition [Line Items] | |||
Number of employees | employee | 250 | ||
Total purchase price | $ 273.1 | ||
Acquired intangible assets | $ 133 | ||
Intangible assets, weighted average useful life | 19 years | ||
Acquired in-process research and development | $ 0 | ||
Goodwill | $ 69.5 | ||
Transaction costs | $ 4.5 | ||
Vivotif | PaxVax | |||
Business Acquisition [Line Items] | |||
Present value discount rate | 14.50% | ||
Vaxchora | PaxVax | |||
Business Acquisition [Line Items] | |||
Present value discount rate | 15.00% |
Acquisitions - PaxVax Prelimina
Acquisitions - PaxVax Preliminary Allocation of Purchase Price (Details) - USD ($) $ in Millions | Oct. 04, 2018 | Sep. 30, 2019 | Dec. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Fair value of tangible assets acquired and liabilities assumed: | |||||
Goodwill | $ 266.6 | $ 259.7 | |||
Measurement Period Adjustments | |||||
Measurement period adjustments | $ 6.9 | $ 0 | |||
Total purchase price | $ 0 | ||||
PaxVax | |||||
Fair value of tangible assets acquired and liabilities assumed: | |||||
Cash | $ 9 | ||||
Accounts receivable | 4.1 | ||||
Inventory | 19.7 | ||||
Prepaid expenses and other assets | 11.9 | ||||
Prepaid expenses and other assets, measurements period adjustments | $ (0.3) | ||||
Property, plant and equipment | 57.8 | ||||
Deferred tax assets, net | 5.6 | ||||
Deferred tax assets, measurement period adjustments | 1.8 | ||||
Accounts payable | (3.5) | ||||
Accrued expenses and other liabilities | (34) | ||||
Total fair value of tangible assets acquired and liabilities assumed | 70.6 | ||||
Acquired in-process research and development | 0 | ||||
Acquired intangible assets | 133 | ||||
Goodwill | 69.5 | ||||
Total purchase price | 273.1 | ||||
Measurement Period Adjustments | |||||
Accrued expenses and other liabilities, measurement period adjustment | (0.4) | ||||
Total fair value of tangible assets acquired and liabilities assumed, measurement period adjustments | 1.1 | ||||
Acquired in-process research and development, measurement period adjustment | (9) | ||||
Measurement period adjustments | $ 7.9 | ||||
Previously Reported | PaxVax | |||||
Fair value of tangible assets acquired and liabilities assumed: | |||||
Cash | 9 | ||||
Accounts receivable | 4.1 | ||||
Inventory | 19.7 | ||||
Prepaid expenses and other assets | 12.2 | ||||
Property, plant and equipment | 57.8 | ||||
Deferred tax assets, net | 3.8 | ||||
Accounts payable | (3.5) | ||||
Accrued expenses and other liabilities | (33.6) | ||||
Total fair value of tangible assets acquired and liabilities assumed | 69.5 | ||||
Acquired in-process research and development | 9 | ||||
Acquired intangible assets | 133 | ||||
Goodwill | 61.6 | ||||
Total purchase price | $ 273.1 |
Acquisitions - Acquisition of A
Acquisitions - Acquisition of ACAM2000 Narrative (Details) - USD ($) $ in Millions | Oct. 06, 2017 | Dec. 31, 2019 | Dec. 31, 2018 |
Business Acquisition [Line Items] | |||
Goodwill | $ 266.6 | $ 259.7 | |
ACAM2000 | |||
Business Acquisition [Line Items] | |||
Term of contract under acquisition | 10 years | ||
Value of contract | $ 425 | ||
Amount for deliveries of product | 160 | ||
Upfront payments | 97.5 | ||
Amount of payment for manufacturing related milestones | 20 | ||
Cash | 117.5 | ||
Amount of payment for regulatory related milestones | $ 7.5 | $ 7.5 | |
Fair value of contingent purchase consideration | $ 2.2 | ||
Present value discount rate | 15.50% | ||
Amortization period of intangible assets | 10 years | ||
Goodwill | $ 8.1 |
Acquisitions - Acquisition of_2
Acquisitions - Acquisition of ACAM2000 Business (Details) - USD ($) $ in Millions | Oct. 06, 2017 | Dec. 31, 2019 | Dec. 31, 2018 |
Fair value of tangible assets acquired: | |||
Goodwill | $ 266.6 | $ 259.7 | |
ACAM2000 | |||
Business Combination, Consideration Transferred [Abstract] | |||
Amount of cash paid | $ 117.5 | ||
Fair value of contingent purchase consideration | 2.2 | ||
Total purchase price | 119.7 | ||
Fair value of tangible assets acquired: | |||
Inventory | 74.9 | ||
Property, plant and equipment | 20 | ||
Total fair value of tangible assets acquired and liabilities assumed | 94.9 | ||
Acquired intangible assets | 16.7 | ||
Goodwill | 8.1 | ||
Total purchase price | $ 119.7 |
Acquisitions - Acquisition of R
Acquisitions - Acquisition of Raxibacumab Asset (Details) - Raxibacumab - USD ($) $ in Millions | Oct. 02, 2017 | Dec. 31, 2019 |
Business Acquisition [Line Items] | ||
Upfront payments | $ 76 | |
Amount of payment for manufacturing related milestones | 20 | |
Transaction costs | $ 77.6 | |
Increase to contingent consideration liability | $ 10 |
Fair value measurements (Detail
Fair value measurements (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance, beginning of period | $ 60 | $ 12.3 |
Expense included in earnings | 24.8 | 3.1 |
Milestone achievement - asset acquisition | 10 | |
Measurement period adjustment | 1.5 | |
Settlements | (67.1) | (3.4) |
Additions due to acquisition | 48 | |
Balance, end of period | $ 29.2 | $ 60 |
Fair value measurements - Narra
Fair value measurements - Narrative (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Money Market Funds | Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash held in money market accounts | $ 52.2 | $ 0 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials and supplies | $ 70.5 | $ 51.8 |
Work-in-process | 89.7 | 103.2 |
Finished goods | 62.3 | 50.8 |
Total inventories | $ 222.5 | $ 205.8 |
Property, plant and equipment_2
Property, plant and equipment (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 752.7 | $ 681.7 | |
Less: Accumulated depreciation and amortization | (210.4) | (171.5) | |
Total property, plant and equipment, net | 542.3 | 510.2 | |
Depreciation and amortization | 49.5 | 36.3 | $ 32.2 |
Land and improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 46.5 | 44.6 | |
Buildings, building improvements and leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 234.8 | 216.2 | |
Furniture and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 334.2 | 293.9 | |
Software | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 55.7 | 55.2 | |
Construction-in-progress | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 81.5 | $ 71.8 |
Intangible assets and goodwil_2
Intangible assets and goodwill - Schedule of Finite-lived Intangible Assets (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 814.9 | $ 147.9 |
Additions | 10 | 667 |
Accumulated Amortization | 112 | 53.3 |
Net | 712.9 | 761.6 |
Products | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Cost | 778 | 111 |
Additions | 10 | 667 |
Accumulated Amortization | 82.2 | 27.9 |
Net | $ 705.8 | $ 750.1 |
Products | Minimum | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Estimated Life | 9 years | 9 years |
Products | Maximum | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Estimated Life | 22 years | 22 years |
Corporate trade name | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Estimated Life | 5 years | 5 years |
Cost | $ 2.8 | $ 2.8 |
Accumulated Amortization | 2.8 | 2.7 |
Net | $ 0 | $ 0.1 |
Customer relationships | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Estimated Life | 8 years | 8 years |
Cost | $ 28.6 | $ 28.6 |
Accumulated Amortization | 23 | 19.4 |
Net | $ 5.7 | $ 9.2 |
Contract development and manufacturing services | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Estimated Life | 8 years | 8 years |
Cost | $ 5.5 | $ 5.5 |
Accumulated Amortization | 4 | 3.3 |
Net | $ 1.5 | $ 2.2 |
Intangible assets and goodwil_3
Intangible assets and goodwill - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | $ 58,700,000 | $ 25,000,000 | $ 8,600,000 |
Intangible assets, weighted average useful life | 13 years 7 months 6 days | ||
Goodwill, impairment loss | $ 0 | 0 | |
In-process research and development | $ 29,000,000 | $ 50,000,000 |
Intangible assets and goodwil_4
Intangible assets and goodwill - Future Amortization Expense (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2020 | $ 58.7 | |
2021 | 57.3 | |
2022 | 54.6 | |
2023 | 54.4 | |
2024 and beyond | 487.9 | |
Net | $ 712.9 | $ 761.6 |
Intangible assets and goodwil_5
Intangible assets and goodwill - Summary Changes in Goodwill (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | $ 259.7 | $ 49.1 |
Measurement period adjustments | 6.9 | 0 |
Additions | 0 | 210.6 |
Goodwill, ending balance | $ 266.6 | $ 259.7 |
Long-term debt - Components of
Long-term debt - Components of Long-term Indebtedness (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Nov. 14, 2017 | Jan. 29, 2014 |
Debt Instrument [Line Items] | ||||
Total debt | $ 822.5 | $ 808.8 | ||
Current portion of debt, net of debt issuance costs | (12.9) | (10.1) | ||
Unamortized debt issuance costs | (11.2) | (14.2) | ||
Debt, net of current portion | 798.4 | 784.5 | ||
2.875% Convertible Senior Notes Due 2021 | ||||
Debt Instrument [Line Items] | ||||
Total debt | $ 10.6 | 10.6 | ||
Interest rate, stated percentage | 2.875% | 2.875% | 2.875% | |
Other | ||||
Debt Instrument [Line Items] | ||||
Total debt | $ 3 | 3 | ||
Term Loan Facility | ||||
Debt Instrument [Line Items] | ||||
Total debt | 435.9 | 447.2 | ||
Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Total debt | $ 373 | $ 348 |
Long-term debt - Senior Secured
Long-term debt - Senior Secured Credit Agreement (Details) | Oct. 15, 2018USD ($) | Sep. 29, 2017USD ($)lending_institution | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Oct. 31, 2018USD ($) |
Debt Instrument [Line Items] | |||||||||
Debt issuance capitalized costs | $ 0 | $ 0 | $ 13,400,000 | ||||||
Credit Agreement | |||||||||
Debt Instrument [Line Items] | |||||||||
Number of lending institutions | lending_institution | 4 | ||||||||
Current borrowing capacity | $ 200,000,000 | ||||||||
Amended Credit Agreement | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, restricted payments limit, amount | $ 25,000,000 | ||||||||
Amended Credit Agreement | Minimum | |||||||||
Debt Instrument [Line Items] | |||||||||
Commitment fee percentage | 0.15% | ||||||||
Amended Credit Agreement | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Commitment fee percentage | 0.30% | ||||||||
Amended Credit Agreement | Federal Funds Rate | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 0.50% | ||||||||
Amended Credit Agreement | Eurodollar | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 1.00% | ||||||||
Debt instrument, term of variable rate | 1 month | ||||||||
Amended Credit Agreement | Eurodollar | Minimum | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 1.25% | ||||||||
Amended Credit Agreement | Eurodollar | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 2.00% | ||||||||
Amended Credit Agreement | Base Rate | Minimum | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 0.25% | ||||||||
Amended Credit Agreement | Base Rate | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 1.00% | ||||||||
Revolving Credit Facility | Amended Credit Agreement | |||||||||
Debt Instrument [Line Items] | |||||||||
Current borrowing capacity | $ 600,000,000 | ||||||||
Net leverage ratio | 2.50 | ||||||||
Amount required for net leverage ratio | $ 200,000,000 | ||||||||
Covenant, leverage ratio | 3.50 | ||||||||
Outstanding credit facility | $ 318,000,000 | ||||||||
Revolving Credit Facility | Amended Credit Agreement | Minimum | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt service coverage ratio | 2.50 | ||||||||
Revolving Credit Facility | Amended Credit Agreement | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Net leverage ratio one | 4.95 | ||||||||
Debt covenant, leverage ratio from September 30, 2019 to September 29, 2020 | 4.75 | ||||||||
Net leverage ratio three | 3.75 | ||||||||
Net leverage ratio four | 4 | ||||||||
Term Loan Facility | Amended Credit Agreement | |||||||||
Debt Instrument [Line Items] | |||||||||
Current borrowing capacity | $ 450,000,000 | ||||||||
Outstanding credit facility | $ 450,000,000 | ||||||||
Percentage of original principal amount required to repay in the first two years | 2.50% | ||||||||
Percentage of original principal amount required to repay during the third year | 5.00% | ||||||||
Percentage of original principal amount required to repay remaining year | 7.50% | ||||||||
Cash proceeds excess amount from dispositions of property or casualty events subject to certain reinvestment right | $ 100,000,000 |
Long-term debt - Convertible Se
Long-term debt - Convertible Senior Notes (Details) - 2.875% Convertible Senior Notes Due 2021 - USD ($) | Nov. 14, 2017 | Aug. 12, 2016 | Dec. 28, 2017 | Dec. 31, 2019 | Jan. 29, 2014 |
Long-Term Debt [Line Items] | |||||
Interest rate, stated percentage | 2.875% | 2.875% | 2.875% | ||
Face amount | $ 250,000,000 | $ 239,400,000 | $ 10,600,000 | ||
Conversion rate of notes per $1,000 principal amount (in shares) | 32.386 | 8,500,000 | |||
Debt issuance costs | $ 3,600,000 | ||||
Additional conversion rate of notes per $1,000 principal amount (in shares) | 3.1556 | ||||
Accrued interest on converted notes | $ 2,400,000 |
Long-term debt - Future Debt Pa
Long-term debt - Future Debt Payments of Long-term Indebtedness (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
2020 | $ 14.1 | |
2021 | 35.9 | |
2022 | 33.7 | |
2023 | 735.8 | |
2024 and thereafter | 3 | |
Total debt | $ 822.5 | $ 808.8 |
Derivative Instruments - Deriva
Derivative Instruments - Derivative Designated as Cash Flow Hedges (Details) - Interest Rate Swaps - Designated as Hedging Instrument | Dec. 31, 2019USD ($)instrument |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |
Number of Instruments | instrument | 7 |
Notional amount | $ | $ 350,000,000 |
Derivative Instruments - Narrat
Derivative Instruments - Narrative (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Interest Rate Swaps | |
Derivatives, Fair Value [Line Items] | |
Reclassification of net deferred losses from accumulated other comprehensive loss | $ 0.5 |
Derivative Instruments - Fair V
Derivative Instruments - Fair Value by Balance Sheet Location (Details) - Interest Rate Swaps - Designated as Hedging Instrument - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Other Assets | ||
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | $ 0 | $ 0 |
Other Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Liability Derivatives | $ 2 | $ 0 |
Derivative Instruments - Cash F
Derivative Instruments - Cash Flow Hedging on AOCI (Details) - Interest Rate Swaps - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Amount of Gain/(Loss) Recognized in OCI on Derivative | $ 2 | |
Amount of Gain/(Loss) Recognized in OCI on Derivative | $ 0 | |
Interest expense | Cash Flow Hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income | $ 0.6 | |
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income | $ 0 |
Stockholders' equity - Narrativ
Stockholders' equity - Narrative (Details) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2019USD ($)vote$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($)$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Preferred stock, shares authorized (in shares) | 15,000,000 | 15,000,000 | |
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 | |
Common stock, voting rights | vote | 1 | ||
Weighted average remaining contractual term of options outstanding | 3 years 3 months 18 days | 4 years | |
Weighted average remaining contractual term of options exercisable | 2 years 3 months 18 days | 3 years | |
Weighted average grant date fair value of options granted (in dollars per share) | $ / shares | $ 21.13 | $ 18.48 | $ 10.53 |
Total intrinsic value of options exercised | $ | $ 5.3 | $ 24.4 | $ 13.9 |
Compensation cost expected to be recognized related to unvested equity awards | $ | $ 37 | ||
Weighted average period expected to be recognized related to unvested equity awards | 1 year 6 months | ||
Employee Stock Option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock authorized for issuance under the plan (in shares) | 21,900,000 | ||
Common stock available for future awards (in shares) | 5,800,000 | ||
Exercise price of option as percentage of fair market value at grant date, minimum | 100.00% | ||
Contractual life of awards | 10 years | ||
Total fair value of awards vested | $ | $ 16.9 | $ 16.9 | $ 17.9 |
Stockholders' equity - Stock Op
Stockholders' equity - Stock Options Valuation Assumptions (Details) - Employee Stock Option | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Expected average life of options | 4 years 6 months | 4 years 6 months | 4 years 3 months 18 days |
Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility | 37.00% | 38.00% | 37.00% |
Risk-free interest rate | 1.57% | 2.54% | 1.66% |
Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility | 39.00% | 39.00% | 40.00% |
Risk-free interest rate | 2.48% | 3.03% | 1.88% |
Stockholders' equity - Stock _2
Stockholders' equity - Stock Options and Restricted Stock Units (Details) - 2006 Stock Incentive Plan - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Number of Shares | ||
Outstanding, beginning of period (in shares) | 1,871,468 | |
Stock options granted (in shares) | 295,770 | |
Exercised (in shares) | (199,352) | |
Forfeited (in shares) | (84,011) | |
Outstanding, end of period (in shares) | 1,883,875 | |
Exercisable, end of period (in shares) | 1,253,658 | |
Weighted-Average Exercise Price | ||
Outstanding, beginning of period (in dollars per share) | $ 32.59 | |
Stock options grant price (in dollars per share) | 60.16 | |
Exercised (in dollars per share) | 25.98 | |
Forfeited (in dollars per share) | 52.26 | |
Outstanding, end of period (in dollars per share) | 36.74 | |
Exercisable, end of period (in dollars per share) | $ 29.46 | |
Aggregate Intrinsic Value | ||
Outstanding | $ 34.5 | $ 50.1 |
Exercisable | $ 30.8 | |
Performance Shares | ||
Number of Shares | ||
Restricted stock units granted (in shares) | 100,000 | |
Outstanding, end of period (in shares) | 100,000 | |
Restricted Stock Units (RSUs) | ||
Number of Shares | ||
Outstanding, beginning of period (in shares) | 921,093 | |
Restricted stock units granted (in shares) | 594,752 | |
Vested (in shares) | (434,629) | |
Forfeited (in shares) | (128,364) | |
Outstanding, end of period (in shares) | 952,852 | |
Weighted-Average Grant Price | ||
Outstanding, beginning of period (in dollars per share) | $ 42.82 | |
Restricted stock units grant price (in dollars per share) | 57.94 | |
Vested (in dollars per share) | 38.81 | |
Forfeited (in dollars per share) | 53.17 | |
Outstanding, end of period (in dollars per share) | $ 52.77 | |
Aggregate Intrinsic Value | ||
Outstanding | $ 51.5 | $ 54.6 |
Stockholders' equity - Stock-ba
Stockholders' equity - Stock-based Compensation Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total stock-based compensation expense | $ 26.7 | $ 23.2 | $ 15.2 |
Cost of product sales | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total stock-based compensation expense | 3.1 | 1.7 | 1.1 |
Research and development | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total stock-based compensation expense | 4 | 3.1 | 2.5 |
Selling, general and administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total stock-based compensation expense | $ 19.6 | $ 18.4 | $ 11.6 |
Stockholders' equity - Changes
Stockholders' equity - Changes in Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | $ 1,010.9 | $ 912.3 | $ 596.2 |
Other comprehensive income (loss) | (5) | ||
Amounts reclassified from accumulated other comprehensive income | 0.6 | ||
Total other comprehensive income (loss), net of tax | (4.4) | (1.8) | 0.6 |
Ending balance | 1,088.5 | 1,010.9 | 912.3 |
Total | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | (5.5) | (3.7) | (4.3) |
Total other comprehensive income (loss), net of tax | (4.4) | (1.8) | 0.6 |
Ending balance | (9.9) | (5.5) | (3.7) |
Defined Benefit Pension Plan | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | (0.2) | 0 | |
Other comprehensive income (loss) | (3.2) | ||
Amounts reclassified from accumulated other comprehensive income | 0 | ||
Total other comprehensive income (loss), net of tax | (3.2) | (0.2) | |
Ending balance | (3.4) | (0.2) | 0 |
Derivative Instruments | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | 0 | 0 | |
Total other comprehensive income (loss), net of tax | 0 | ||
Ending balance | 0 | 0 | |
Derivative Instruments | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Other comprehensive income (loss) | (2.2) | ||
Amounts reclassified from accumulated other comprehensive income | 0.6 | ||
Total other comprehensive income (loss), net of tax | (1.6) | ||
Ending balance | (1.6) | ||
Foreign Currency Translation Losses | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | (5.3) | (3.7) | |
Other comprehensive income (loss) | 0.4 | ||
Amounts reclassified from accumulated other comprehensive income | 0 | ||
Total other comprehensive income (loss), net of tax | 0.4 | (1.6) | |
Ending balance | $ (4.9) | $ (5.3) | $ (3.7) |
Income taxes - Narrative (Detai
Income taxes - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Contingency [Line Items] | ||||
Federal corporate tax rate | 21.00% | 35.00% | ||
Provisional tax benefit | $ 17.9 | $ 13.4 | ||
Provisional tax benefit, adjustment | 4.5 | |||
Estimated undistributed foreign E&P | 95.4 | |||
Provisional tax expense | 13.3 | 13.6 | $ 13.6 | |
Provisional transition tax amount reduction | 0.3 | |||
Deferred tax liabilities, net | 50.5 | 54.1 | ||
Foreign NOLs | 36.9 | 35.4 | ||
Federal losses carryforward | 8.5 | 10.7 | ||
Valuation allowance | 64.5 | 66.4 | ||
State losses carryforward | $ 17.4 | $ 18.1 | ||
Effective income tax rate reconciliation, percent | 30.00% | 23.00% | 30.00% | |
Unrecognized tax benefits, current | $ 0 | $ 0.4 | ||
Unrecognized tax benefits, noncurrent | 10.4 | 8.4 | ||
Gross unrecognized tax benefits | 10.4 | 8.8 | $ 2 | $ 1.8 |
Unrecognized tax benefits acquired in business combinations | 0 | 6.5 | ||
Research Tax Credit Carryforward | ||||
Income Tax Contingency [Line Items] | ||||
Tax credit carryforward, amount | 14 | |||
Tax credit carryforward, valuation allowance | 9.1 | |||
Manitoba Scientific Research and Experimental Development | ||||
Income Tax Contingency [Line Items] | ||||
Tax credit carryforward, amount | 11 | |||
Domestic Tax Authority | ||||
Income Tax Contingency [Line Items] | ||||
Deferred tax liabilities, net | 7.7 | 4.8 | ||
Operating loss carryforwards | 40.5 | |||
Federal losses carryforward | 8.5 | |||
Valuation allowance | 4.7 | |||
State and Local Jurisdiction | ||||
Income Tax Contingency [Line Items] | ||||
Operating loss carryforwards | 280.7 | |||
Valuation allowance | 16.4 | |||
State losses carryforward | 17.4 | |||
Operating loss carryforwards, valuation allowance | 245 | |||
Foreign Tax Authority | ||||
Income Tax Contingency [Line Items] | ||||
Deferred tax liabilities, net | 42.8 | |||
Deferred tax assets | $ 49.3 | |||
Operating loss carryforwards | 199 | |||
Foreign NOLs | 37 | |||
Valuation allowance | 34.3 | |||
PaxVax | ||||
Income Tax Contingency [Line Items] | ||||
Unrecognized tax benefits acquired in business combinations | $ 7 |
Income taxes - Components of th
Income taxes - Components of the Provisions for Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Current | |||
Federal | $ 1.4 | $ 1.8 | $ 29.4 |
State | 11.6 | 2.4 | 3 |
International | 11 | 6 | 0.3 |
Total current | 24 | 10.2 | 32.7 |
Deferred | |||
Federal | 1.9 | 7.5 | (6) |
State | 1.1 | 3 | (0.6) |
International | (4.1) | (1.9) | 9.9 |
Total deferred | (1.1) | 8.6 | 3.3 |
Total provision for income taxes | $ 22.9 | $ 18.8 | $ 36 |
Income taxes - Net Deferred Tax
Income taxes - Net Deferred Tax Asset (Liability) (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Tax Credit Carryforward [Line Items] | ||
Federal losses carryforward | $ 8.5 | $ 10.7 |
State losses carryforward | 17.4 | 18.1 |
Scientific research and experimental development credit carryforward | 11 | 13.1 |
Stock compensation | 7.6 | 7.5 |
Foreign NOLs | 36.9 | 35.4 |
Deferred revenue | 18.1 | 11.6 |
Inventory reserves | 1.8 | 3.4 |
Lease liability | 6 | |
Other | 7.5 | 4.9 |
Deferred tax asset | 128.8 | 119.8 |
Fixed assets | (51.2) | (46.4) |
Intangible assets | (54.5) | (60.4) |
Right-of-use asset | (5.9) | |
Other | (3.2) | (0.7) |
Deferred tax liability | (114.8) | (107.5) |
Valuation allowance | (64.5) | (66.4) |
Net deferred tax asset (liability) | (50.5) | (54.1) |
Domestic Tax Authority | ||
Tax Credit Carryforward [Line Items] | ||
Federal losses carryforward | 8.5 | |
Research and development carryforward | 9 | 10.1 |
Valuation allowance | (4.7) | |
Net deferred tax asset (liability) | (7.7) | (4.8) |
State and Local Jurisdiction | ||
Tax Credit Carryforward [Line Items] | ||
State losses carryforward | 17.4 | |
Research and development carryforward | 5 | $ 5 |
Valuation allowance | $ (16.4) |
Income taxes - Reconciliation (
Income taxes - Reconciliation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
US | $ 63.9 | $ 71 | $ 80.7 |
International | 13.5 | 10.5 | 37.9 |
Earnings before taxes on income | 77.4 | 81.5 | 118.6 |
Federal tax at statutory rates | 16.3 | 17.1 | 41.5 |
State taxes, net of federal benefit | 10.3 | 4.3 | 1.3 |
Impact of foreign operations | (6.9) | 2.8 | (2.2) |
Change in valuation allowance | (1) | (0.1) | 0.3 |
Tax credits | (3.6) | (1.8) | (1.9) |
Transition tax | 0 | (0.2) | 13.6 |
Change in U.S. tax rate | 0 | (4.5) | (13.4) |
Stock compensation | (2.4) | (5.8) | (4) |
Other differences | 0 | (1.3) | (0.7) |
Return to provision true-ups | (2.3) | 1.1 | 0 |
Transaction costs | 0 | 5.4 | 0 |
Contingent consideration | 4.7 | 0 | 0 |
Compensation limitation | 1.3 | 1.1 | 1.3 |
FIN 48 | 1.1 | 0.3 | 0.5 |
GILTI, net | 3.6 | 0.4 | 0 |
Permanent differences | 1.8 | 0 | (0.3) |
Total provision for income taxes | $ 22.9 | $ 18.8 | $ 36 |
Income taxes - Unrecognized Tax
Income taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Gross unrecognized tax benefits, beginning balance | $ 8.8 | $ 2 | $ 1.8 |
Increases for tax positions for prior years | 0.5 | 0 | 0 |
Unrecognized tax benefits acquired in business combinations | 0 | 6.5 | |
Decreases for tax positions for prior years | 0 | 0 | 0 |
Increases for tax positions for current year | 1.5 | 0.3 | 0.5 |
Settlements | (0.4) | 0 | (0.3) |
Lapse of statute of limitations | 0 | 0 | 0 |
Gross unrecognized tax benefits, ending balance | $ 10.4 | $ 8.8 | $ 2 |
Defined benefit and 401(k) sa_3
Defined benefit and 401(k) savings plan - Swiss Plan Funded Status (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Retirement Benefits [Abstract] | ||
Pension expense | $ 1 | |
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||
Fair value of plan assets, beginning of year | 18.2 | $ 0 |
Acquisitions | 0 | 18.2 |
Employer contributions | 1 | 0.2 |
Employee contributions | 0.7 | 0.1 |
Net benefits received (paid) | 1.7 | 0.3 |
Actual return on plan assets | 1.7 | 0 |
Settlements | (3) | (0.6) |
Currency impact | 0.3 | 0 |
Fair value of plan assets, end of year | 20.6 | 18.2 |
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | ||
Projected benefit obligation, beginning of year | 28.6 | 0 |
Acquisitions | 0 | 28.3 |
Service cost | 1.3 | 0.3 |
Interest Cost | 0.2 | 0.1 |
Employee contributions | 0.7 | 0.1 |
Actuarial loss | 7 | 0.3 |
Net benefits received (paid) | 1.7 | (0.1) |
Plan amendment | (1.7) | 0.1 |
Settlements | (3) | (0.6) |
Currency impact | 0.4 | 0.1 |
Projected benefit obligation, end of year | 35.3 | 28.6 |
Funded status, end of year | (14.7) | (10.4) |
Accumulated benefit obligation, end of year | $ 31 | $ 25.6 |
Defined benefit and 401(k) sa_4
Defined benefit and 401(k) savings plan - Components of Net Periodic Pension Cost (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Retirement Benefits [Abstract] | ||
Service cost | $ 1.3 | $ 0.3 |
Interest cost | 0.2 | 0.1 |
Expected return on plan assets | (0.5) | (0.1) |
Net periodic benefit cost | $ 1 | $ 0.3 |
Defined benefit and 401(k) sa_5
Defined benefit and 401(k) savings plan - Weighted Average Assumptions (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Retirement Benefits [Abstract] | ||
Discount rate | 0.20% | 0.90% |
Expected rate of return | 3.00% | 3.00% |
Rate of future compensation increases | 1.50% | 1.50% |
Total contributions expected | $ 1.1 |
Defined benefit and 401(k) sa_6
Defined benefit and 401(k) savings plan - Accumulated Other Comprehensive Loss Before Income Tax (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Retirement Benefits [Abstract] | ||
Net actuarial loss | $ 5.4 | $ 0.1 |
Prior service cost | (1.7) | 0.1 |
Total recognized in accumulated other comprehensive loss | $ 3.7 | $ 0.2 |
Defined benefit and 401(k) sa_7
Defined benefit and 401(k) savings plan - Expected Future Benefits Payments (Details) $ in Millions | Dec. 31, 2019USD ($) |
Retirement Benefits [Abstract] | |
2020 | $ 1 |
2021 | 1 |
2022 | 1.5 |
2023 | 1 |
2024 | 1 |
Thereafter | 6.6 |
Total | $ 12.1 |
Defined benefit and 401(k) sa_8
Defined benefit and 401(k) savings plan - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |||
Matching contributions made by employer | $ 5.1 | $ 3.1 | $ 2.7 |
Leases - Narrative (Details)
Leases - Narrative (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Lessee, Lease, Description [Line Items] | |
Operating lease, renewal term | 5 years |
Operating lease, termination period | 1 year |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Operating lease, term of contract | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Operating lease, term of contract | 14 years |
Leases - Components of Lease Ex
Leases - Components of Lease Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating lease cost: | |||
Amortization of right-of-use assets | $ 2.7 | ||
Interest on lease liabilities | 0.6 | ||
Total operating lease cost | $ 3.3 | ||
Operating lease cost | $ 3.3 | $ 1.6 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information (Details) $ in Millions | Dec. 31, 2019USD ($) |
Lessee, Lease, Description [Line Items] | |
Total operating lease liabilities | $ 25.7 |
Operating leases: | |
Weighted average remaining lease term (years) | 8 years |
Weighted average discount rate | 4.20% |
Other Assets | |
Lessee, Lease, Description [Line Items] | |
Operating lease right-of-use assets | $ 24.7 |
Other current liabilities | |
Lessee, Lease, Description [Line Items] | |
Operating lease liabilities, current portion | 3.6 |
Other Liabilities | |
Lessee, Lease, Description [Line Items] | |
Operating lease liabilities | $ 22.1 |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Numerator: | |||||||||||
Net income | $ 46.9 | $ 43.2 | $ (9.5) | $ (26.1) | $ (3.4) | $ 20.9 | $ 50.1 | $ (4.9) | $ 54.5 | $ 62.7 | $ 82.6 |
Interest expense, net of tax | 0 | 0 | 2.6 | ||||||||
Amortization of debt issuance costs, net of tax | 0 | 0 | 0.7 | ||||||||
Net income, adjusted | $ 54.5 | $ 62.7 | $ 85.9 | ||||||||
Denominator: | |||||||||||
Weighted-average number of shares - basic (in shares) | 51.5 | 50.1 | 41.8 | ||||||||
Dilutive securities-equity awards (in shares) | 0.9 | 1.3 | 1.1 | ||||||||
Dilutive securities-convertible debt (in shares) | 0 | 0 | 7.4 | ||||||||
Weighted-average number of shares-diluted (in shares) | 52.4 | 51.4 | 50.3 | ||||||||
Net income per share-basic (in dollars per share) | $ 0.91 | $ 0.84 | $ (0.18) | $ (0.51) | $ (0.07) | $ 0.42 | $ 1 | $ (0.10) | $ 1.06 | $ 1.25 | $ 1.98 |
Net income per share-diluted (in dollars per share) | $ 0.90 | $ 0.83 | $ (0.18) | $ (0.51) | $ (0.07) | $ 0.41 | $ 0.98 | $ (0.10) | $ 1.04 | $ 1.22 | $ 1.71 |
Antidilutive shares excluded from calculation (in shares) | 0.9 |
Purchase commitments (Details)
Purchase commitments (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Purchase Obligation, Fiscal Year Maturity [Abstract] | |||
Total purchase commitment | $ 59.7 | ||
Purchase commitment period | 3 years | ||
Materials purchased under commitment, amount | $ 51.3 | $ 12.1 | $ 3 |
Segment information - Narrative
Segment information - Narrative (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019USD ($)segment | Dec. 31, 2018USD ($) | Dec. 31, 2017 | |
Segment Reporting Information [Line Items] | |||
Number of reportable segments | segment | 1 | ||
Product Concentration Risk | BioThrax | Revenue from Contract with Customer | |||
Segment Reporting Information [Line Items] | |||
Concentration risk percentage | 45.97676% | 65.00% | 68.00% |
United States | Geographic Concentration Risk | Revenue from Contract with Customer | |||
Segment Reporting Information [Line Items] | |||
Concentration risk percentage | 90.00% | 91.00% | 89.00% |
Non-US | |||
Segment Reporting Information [Line Items] | |||
Assets | $ | $ 90.6 | $ 82.9 |
Segment information - Product S
Segment information - Product Sales (Details) - Sales Revenue, Product Line | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Anthrax Vaccines | |||
Segment Reporting Information [Line Items] | |||
Concentration risk percentage | 19.00% | 46.00% | 68.00% |
ACAM2000 | |||
Segment Reporting Information [Line Items] | |||
Concentration risk percentage | 27.00% | 19.00% | 0.00% |
NARCAN Nasal Spray | |||
Segment Reporting Information [Line Items] | |||
Concentration risk percentage | 31.00% | 7.00% | 0.00% |
Other | |||
Segment Reporting Information [Line Items] | |||
Concentration risk percentage | 23.00% | 28.00% | 32.00% |
Quarterly financial data (una_3
Quarterly financial data (unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenue | $ 360.4 | $ 311.8 | $ 243.2 | $ 190.6 | $ 270.7 | $ 173.7 | $ 220.2 | $ 117.8 | $ 1,106 | $ 782.4 | $ 560.9 |
Income (loss) from operations | 77.8 | 70.7 | (7) | (27.4) | 11.2 | 21.3 | 66.8 | (9.5) | |||
Net income | $ 46.9 | $ 43.2 | $ (9.5) | $ (26.1) | $ (3.4) | $ 20.9 | $ 50.1 | $ (4.9) | $ 54.5 | $ 62.7 | $ 82.6 |
Net income per share-basic (in dollars per share) | $ 0.91 | $ 0.84 | $ (0.18) | $ (0.51) | $ (0.07) | $ 0.42 | $ 1 | $ (0.10) | $ 1.06 | $ 1.25 | $ 1.98 |
Net income (loss) per share-diluted (in dollar per share) | $ 0.90 | $ 0.83 | $ (0.18) | $ (0.51) | $ (0.07) | $ 0.41 | $ 0.98 | $ (0.10) | $ 1.04 | $ 1.22 | $ 1.71 |
Schedule II - Valuation and Q_2
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Inventory allowance | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Beginning Balance | $ 14 | $ 3.8 | $ 3.5 |
Additions from Acquisition | 0 | 4.4 | 0 |
Charged to costs and expenses | 23 | 14.6 | 8.8 |
Deductions | (19.1) | (8.8) | (8.5) |
Ending Balance | 17.9 | 14 | 3.8 |
Prepaid expenses and other current assets allowance | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Beginning Balance | 4.3 | 5.3 | 4.9 |
Additions from Acquisition | 0 | 0 | 0 |
Charged to costs and expenses | 0 | 0 | 0.4 |
Deductions | (0.3) | (1) | 0 |
Ending Balance | $ 4 | $ 4.3 | $ 5.3 |
Uncategorized Items - ebs-20191
Label | Element | Value |
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | $ 879,800,000 |
AOCI Attributable to Parent [Member] | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | $ (3,700,000) |
Common Stock [Member] | ||
Common Stock, Shares, Issued | us-gaap_CommonStockSharesIssued | 50,600,000 |
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | $ 100,000 |
Additional Paid-in Capital [Member] | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | $ 618,300,000 |
Treasury Stock [Member] | ||
Common Stock, Shares, Issued | us-gaap_CommonStockSharesIssued | 1,200,000 |
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | $ (39,500,000) |
Retained Earnings [Member] | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | $ 304,600,000 |