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Segment information | 9 Months Ended
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Sep. 30, 2024
Segment Reporting [Abstract] |
Segment information | Segment information In the fourth quarter of 2023, the Company realigned its reportable operating segments to reflect recent changes in the Company’s internal operating and reporting process. The revised reporting structure reflects the internal reporting and review process used by the Company’s CODM for making decisions and assessing performance and is consistent with how the Company currently manages the business. The Company now manages its business with a focus on three reportable segments. The Commercial Products segment, which includes NARCAN® products and other commercial products that were sold as part of the travel health business in the second quarter of 2023 (see Note 3, “Divestitures” for more information on the sale of the travel health business); the MCM Products segment, which includes the Anthrax - MCM products, Smallpox - MCM products and Other Products; and the Services segment, consisting of the Company’s Bioservices offerings. The Company evaluates the performance of these reportable segments based on revenue and segment adjusted gross margin, which is a non-GAAP financial measure. Segment revenue includes external customer sales, but it does not include inter-segment services. The Company defines segment adjusted gross margin, as segment gross margin excluding the impact of restructuring costs, changes in fair value of financial instruments, settlement charges, net and inventory step-up provision. We define total segment adjusted gross margin, which is a non-GAAP financial measure, as total segment gross margin, excluding the impact of restructuring costs, settlement charge, net, changes in fair value of financial instruments and inventory step-up provision. The Company does not allocate research and development expenses, selling, general and administrative costs, amortization of intangibles assets, interest and other income (expense) or taxes to operating segments in the management reporting reviewed by the CODM. The accounting policies for segment reporting are the same as for the Company as a whole. The Company manages its assets on a total company basis, not by operating segment, as the Company's operating assets are shared or commingled. Therefore, the Company’s CODM does not regularly review any asset information by operating segment and, accordingly, the Company does not report asset information by operating segment. For all tables presented below, the prior period disclosures have been recast to conform to the current period segment presentation. The following table presents segment revenues, segment cost of sales or services, segment gross margin, segment gross margin percentage and segment adjusted gross margin for each of the Company’s reportable segments for the three and nine months ended September 30, 2024 and 2023:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Revenues: |  |  |  |  |  |  |
Commercial Products | $ | 95.3 |  |  | $ | 142.1 |  |  | $ | 333.8 |  |  | $ | 386.2 |
MCM Products | 174.2 |  |  | 107.7 |  |  | 393.0 |  |  | 309.2 |
Services | 14.3 |  |  | 14.2 |  |  | 97.5 |  |  | 57.7 |
Segment revenues | 283.8 |  |  | 264.0 |  |  | 824.3 |  |  | 753.1 |
Contracts and grants revenue | 10.0 |  |  | 6.5 |  |  | 24.6 |  |  | 19.6 |
Total revenues | $ | 293.8 |  |  | $ | 270.5 |  |  | $ | 848.9 |  |  | $ | 772.7 |
Cost of sales or services: |  |  |  |  |  |  |
Cost of Commercial Product sales | $ | 47.2 |  |  | $ | 60.0 |  |  | $ | 152.7 |  |  | 160.2 |
Cost of MCM Product sales | 54.0 |  |  | 72.5 |  |  | 147.3 |  |  | 208.4 |
Cost of Services | 21.4 |  |  | 44.3 |  |  | 263.3 |  |  | 151.7 |
Total cost of sales or services | $ | 122.6 |  |  | $ | 176.8 |  |  | $ | 563.3 |  |  | $ | 520.3 |
Gross margin |  |  |  |  |  |  |
Commercial Products | $ | 48.1 |  |  | $ | 82.1 |  |  | $ | 181.1 |  |  | $ | 226.0 |
MCM Products | 120.2 |  |  | 35.2 |  |  | 245.7 |  |  | 100.8 |
Services | (7.1) |  |  | (30.1) |  |  | (165.8) |  |  | (94.0) |
Total segment gross margin (1) | $ | 161.2 |  |  | $ | 87.2 |  |  | $ | 261.0 |  |  | $ | 232.8 |
Gross margin % |  |  |  |  |  |  |
Commercial Products | 50 | % |  | 58 | % |  | 54 | % |  | 59 | %
MCM Products | 69 | % |  | 33 | % |  | 63 | % |  | 33 | %
Services | (50) | % |  | (212) | % |  | (170) | % |  | (163) | %
Total Segment | 57 | % |  | 33 | % |  | 32 | % |  | 31 | %
Segment adjusted gross margin |  |  |  |  |  |  |
Commercial Products | $ | 48.1 |  |  | $ | 82.1 |  |  | $ | 181.1 |  |  | $ | 226.0 |
MCM Products | 126.3 |  |  | 39.1 |  |  | 255.0 |  |  | 109.3 |
Services | (7.0) |  |  | (22.0) |  |  | (55.3) |  |  | (85.9) |
Total segment adjusted gross margin | $ | 167.4 |  |  | $ | 99.2 |  |  | $ | 380.8 |  |  | $ | 249.4 |
(1) Segment revenues less total cost of sales or services.
The following table provides a reconciliation of the Company’s total segment adjusted gross margin to the Condensed Consolidated Statement of Operations:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Total segment adjusted gross margin | $ | 167.4 |  |  | $ | 99.2 |  |  | $ | 380.8 |  |  | $ | 249.4 |
Reconciling items: |  |  |  |  |  |  |
Contracts and grants revenue | $ | 10.0 |  |  | $ | 6.5 |  |  | $ | 24.6 |  |  | $ | 19.6 |
Segment restructuring costs | (5.0) |  |  | (13.1) |  |  | (7.8) |  |  | (15.1) |
Segment inventory step-up provision | (1.2) |  |  | — |  |  | (1.2) |  |  | (1.9) |
Segment changes in fair value of financial instruments | — |  |  | 1.1 |  |  | (0.6) |  |  | 0.4 |
Segment settlement charge, net | — |  |  | — |  |  | (110.2) |  |  | — |
Goodwill impairment | — |  |  | (218.2) |  |  | — |  |  | (218.2) |
Impairment of long-lived assets | — |  |  | — |  |  | (27.2) |  |  | (306.7) |
Research and development | (13.8) |  |  | (15.3) |  |  | (61.6) |  |  | (82.0) |
Selling, general and administrative | (76.6) |  |  | (86.0) |  |  | (247.2) |  |  | (278.7) |
Amortization of intangible assets | (16.3) |  |  | (16.3) |  |  | (48.8) |  |  | (49.4) |
Interest expense | (8.3) |  |  | (19.7) |  |  | (56.2) |  |  | (66.2) |
Gain (loss) on sale of business | 64.3 |  |  | (0.7) |  |  | 24.3 |  |  | 74.2 |
Other, net | 21.9 |  |  | (3.4) |  |  | 15.8 |  |  | (2.1) |
Income (loss) before income taxes | $ | 142.4 |  |  | $ | (265.9) |  |  | $ | (115.3) |  |  | $ | (676.7) |
The following table includes depreciation expense for each segment:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Depreciation: |  |  |  |  |  |  |
Commercial Products | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 0.3 |
MCM Products | 4.7 |  |  | 7.4 |  |  | $ | 16.0 |  |  | $ | 22.6 |
Services | 2.3 |  |  | 3.4 |  |  | 7.4 |  |  | 19.7 |
Other | 3.1 |  |  | 0.9 |  |  | 10.6 |  |  | 3.5
Total | $ | 10.1 |  |  | $ | 11.7 |  |  | $ | 34.0 |  |  | $ | 46.1 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 48 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482785/280-10-55-48 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards 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