S&P downgrades Emergent BioSolutions outlook on competition

S&P Global Ratings has downgraded its outlook on Emergent BioSolutions Inc., shifting it from stable to negative. The company's credit rating and issue-level rating on its unsecured notes, due in August 2028, remain the same at 'B-' and 'CCC+', respectively. The downgrade is attributed to the company's lower revenue guidance, which is being pushed down by heightened competition in the naloxone market.

Emergent BioSolutions reduced its full-year 2026 revenue and adjusted EBITDA guidance by $80 million and $25 million, respectively, due to weaker-than-expected NARCAN sales. The ratings agency forecasts a 25% drop in the company's revenue in its commercial segment and a 2% decrease in Medical Countermeasures segment revenue for 2026.

This decline could hinder Emergent's ability to generate consistent positive free operating cash flow, heightening its refinancing risk as its August 2028 unsecured notes mature. With approximately $440 million in unsecured notes due in August 2028, S&P Global Ratings anticipates potential challenges in refinancing Emergent's capital structure under favorable conditions, considering the company's declining revenue, uncertainty surrounding government orders, and unclear long-term growth prospects.

Although Emergent holds about $280 million in cash as of July 2026, thanks to strong accounts-receivable collections, it has a $50 million asset-based lending facility available for use. The company plans to repurchase $75 million in debt, but S&P Global Ratings believes additional cash may be necessary to further reduce debt, facilitating refinancing if required.

The ratings agency predicts EBITDA margins will stay steady at around 18% in 2026 and 2027, lower than the peak of 32% in 2025, when Emergent benefited from a significant single ACAM2000 order. The agency believes workforce reductions will help mitigate the near-term effects of the revenue decline.