Levi & Korsinsky is investigating whether Emergent BioSolutions and certain officers violated federal securities laws after the company reported $97 million in adjusted EBITDA while recording a $191.3 million non-cash NARCAN impairment. The impairment, nearly twice the EBITDA figure, was tied to naloxone competition and pricing pressure. Shares sold off following the Q2 results.
Levi & Korsinsky is probing Emergent BioSolutions after a $191.3 million NARCAN impairment overshadowed $97 million in adjusted EBITDA.
The firm is investigating whether Emergent and certain officers violated federal securities laws tied to the company's reported results and the carrying value of its naloxone franchise, Levi & Korsinsky said in a statement.
Emergent reported roughly $234 million in revenue for the second quarter, with adjusted EBITDA of about $97 million, up sequentially. The same period under GAAP included the $191.3 million non-cash impairment charge on NARCAN, attributed to increased competition and pricing pressure in naloxone. The single-quarter charge was nearly twice the adjusted EBITDA figure highlighted to investors.
Shares sold off after the results. The stock opened at $4.58, near its 52-week low of $4.36, giving the Gaithersburg, Maryland-based biopharmaceutical company a market capitalization of about $235 million. Emergent posted earnings per share of $0.60 for the quarter, beating the consensus estimate of a loss of $0.08, on revenue that topped the $177.5 million analysts expected.
The investigation adds legal exposure to a company already navigating product write-downs. Analysts on average rate the stock a "hold," with a 12-month price target of $10.00, according to MarketBeat. HC Wainwright lowered its price objective to $10 from $12 while keeping a "buy" rating, while Weiss Ratings reissued a "sell" rating in early August.
Emergent, a key U.S. government biodefense contractor with ties to the Biomedical Advanced Research and Development Authority, has seen its shares climb 93 percent over the past year, helped by demand for its anthrax, smallpox and mpox countermeasures. The NARCAN franchise faces intensifying generic competition in the opioid-overdose reversal market.
Investors who bought EBS securities and suffered losses may be eligible to participate in the investigation, which is being handled on a contingency basis with no upfront cost. The firm said eligibility depends on purchase date and documented losses, not on whether shares are still held.
The impairment shows the naloxone franchise's carrying value may not recover as competition intensifies. Investors will watch for any restatement or further write-downs in upcoming filings.
