What happened
Shares of Emergent BioSolutions (EBS -10.55%) were slipping 3.8% as of 11:38 a.m. ET on Friday and fell as much as 7.7% earlier in the day. The decline came following the company's fourth-quarter update on Thursday after the market close.
Emergent reported fourth-quarter revenue of $723 million, up 24% year over year. It posted earnings of $189.3 million, or $4.50 per diluted share. The consensus estimate was for earnings of $4.27 per share.
With a solid earnings beat, why did the healthcare stock move lower? Emergent cut its full-year 2022 outlook. The company now expects revenue of between $1.3 billion and $1.4 billion. It previously projected 2022 revenue would be between $1.4 billion and $1.5 billion. Emergent also now anticipates adjusted earnings in 2022 of between $95 million and $140 million, down from its prior forecast of $135 million to $180 million.
So what
Emergent's reduced guidance is directly related to Johnson & Johnson. CFO Rich Lindahl said in the company's conference call that J&J is "evaluating their global supply chain as they assess demand for their COVID-19 vaccine."
Because of this, Lindahl stated that Emergent is beginning maintenance at its Bayview facility earlier than originally planned. This maintenance period will also be longer than initially scheduled.
J&J's decision was the primary reason for Emergent lowering its guidance, according to Lindahl. However, he noted that the company's "contract with J&J has not been changed."
Image source: Getty Images.
Now what
Emergent's tailwinds related to COVID-19 appear to be dying down considerably. However, the company expects that its contract development and manufacturing business will stabilize. It also has a potential growth driver on the way with the initiation of a rolling U.S. regulatory submission of anthrax vaccine AV7909.
Editor's note: A previous version of this article incorrectly stated Emergent BioSolutions' earnings per share at $3.50 instead of $4.50. The Fool regrets the error.
