What happened

Shares of Emergent Biosolutions (EBS 5.31%) have crashed 41.1% as of 11:44 a.m. EDT on Friday. The huge decline came after the company revealed on Thursday that a multimillion-dollar agreement with the U.S. Department of Health and Human Services (HHS) had been canceled.

So what

Emergent Biosolutions CEO Robert Kramer seemed to attempt to play down the termination of the HHS contract. He said in the company's third-quarter conference call that Emergent and HHS "mutually agreed to end our partnership" in preparing for pandemics.

Vaccine vials.

Image source: Getty Images.

Kramer noted that the public-private partnership with HHS, which involved the Center for Innovation in Advanced Development and Manufacturing (CIADM), was initiated in 2012. He stated that Emergent had been "just one of two original partners remaining in the program." Kramer also pointed out that the company's COVID-19 work with HHS "was always expected to end this year." He added that Emergent's production of Johnson & Johnson's COVID-19 vaccine won't be affected by the HHS contract termination.

However, investors didn't care about all of that. They were focused on the $180 million hit that Emergent will take as a result of losing the deal. The sell-off of the healthcare stock might be overdone, though, since that amount represents only around 10% of the company's annual revenue.

Now what

Emergent narrowed its full-year 2021 revenue guidance. The company now expects revenue of between $1.7 billion and $1.8 billion. It previously forecast the upper end of the range would be $1.9 billion.