Emergent BioSolutions Inc.EBS
Emergent BioSolutions Inc. Fair Value Disclosure
Fair value measurements
The table below presents information about the Company’s assets and liabilities that are regularly measured and carried at fair value and indicates the level within the fair value hierarchy of the valuation techniques the Company utilized to determine fair value:
December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||
| Money market accounts | $ | 162.0 | $ | 162.0 | $ | — | $ | — | $ | 45.7 | $ | 45.7 | $ | — | $ | — | |||||||||||||
| Total | $ | 162.0 | $ | 162.0 | $ | — | $ | — | $ | 45.7 | $ | 45.7 | $ | — | $ | — | |||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||
| Warrant liability | $ | 21.7 | $ | — | $ | — | $ | 21.7 | $ | 16.2 | $ | — | $ | — | $ | 16.2 | |||||||||||||
| Total | $ | 21.7 | $ | — | $ | — | $ | 21.7 | $ | 16.2 | $ | — | $ | — | $ | 16.2 | |||||||||||||
2024 Warrant liability
In connection with the Term Loan Agreement between the Company, OHA Agency LLC, as administrative agent, and the lenders from time to time party thereto (the “Term Loan Agreement”), the Company issued to the lenders warrants to purchase 1.0 million shares of the Company’s common stock at an exercise price of $9.8802 per share (the “Series I Warrants”) and warrants to purchase 1.5 million shares at an exercise price of $15.7185 per share (the “Series II Warrants” and, together with the Series I Warrants, the “Warrants”). The Warrants are currently exercisable and will expire on August 30, 2029. Because the Warrants could be cash settled based on events that are outside the control of the Company, it precludes the Warrants from applying the equity contract scope exception, and so are classified as a liability. As a result, the fair value of the Warrants will be remeasured each period with the gain or loss on the warrant liability included in “Other, net” on the Consolidated Statement of Operations. As of December 31, 2025 and December 31, 2024, the fair value of the warrant liability was $21.7 million and $16.2 million, respectively, and was included within “Other liabilities” on the Consolidated Balance Sheets, as determined using the Black-Scholes method.
The Company uses the Black-Scholes option pricing model to calculate the fair value of the Warrants at each reporting period. Assumptions used in the Black-Scholes option pricing model take into account the agreement terms as well as the quoted price of the Company’s common stock in an active market. The volatility is based on the average historical volatility of the common stock. The expected life is based on the remaining contractual term of the Warrants, and the risk free interest rate is based on the implied yield available on U.S. Treasury securities with a maturity equivalent to the Warrants’ expected life.
The table below is a reconciliation of the beginning and ending balance of the Company’s Level 3 warrant liability as of December 31, 2025 and 2024:
Warrant Liability | ||||||||
| Balance at December 31, 2023 | $ | — | ||||||
| Issuance of Warrants | 13.4 | |||||||
| Change in fair value | 2.8 | |||||||
| Balance at December 31, 2024 | $ | 16.2 | ||||||
| Change in fair value | 5.5 | |||||||
| Balance at December 31, 2025 | $ | 21.7 | ||||||
The recurring Level 3 fair value measurement for the Company’s warrant liability used the following significant unobservable inputs:
Warrant Liability | Valuation Technique | Unobservable Input | Range | ||||||||
2024 Warrants | Black-Scholes Method | Term (in years) | 3.7 | ||||||||
| Risk free interest rate | 3.6% | ||||||||||
| Volatility | 107% | ||||||||||
Contingent consideration
Contingent consideration liabilities associated with business combinations required to be accounted for as derivatives are measured at fair value. The liabilities represent an obligation of the Company to transfer additional assets to the selling shareholders and owners if future events occur or conditions are met. These liabilities associated with business combinations are measured at fair value at inception and at each subsequent reporting date. The changes in the fair value are primarily due to the expected amount and timing of future net sales, which are inputs that have no observable market. Any change in fair value for the contingent consideration liabilities related to the Company’s products is classified on the Company's Consolidated Statements of Operations as “Cost of product and services sales, net.”
The following table is a reconciliation of the beginning and ending balance of the Company’s Level 3 contingent consideration liability measured at fair value as of December 31, 2024 and 2023. The Company had no Level 3 contingent consideration liabilities during 2025:
Contingent Consideration | |||||
| Balance at December 31, 2023 | $ | 5.6 | |||
| Change in fair value | 0.6 | ||||
| Settlements | (2.3) | ||||
Sales(1) | (3.9) | ||||
| Balance at December 31, 2024 | $ | — | |||
Non-variable rate debt
As of December 31, 2025 and 2024, the fair value of the Company's 3.875% Senior Unsecured Notes (the “Senior Unsecured Notes”) was $389.7 million and $369.1 million, respectively. The fair value was determined through market sources, which are Level 2 inputs and directly observable. The carrying amounts of the Company’s other long-term variable interest rate debt arrangements approximate their fair values (see Note 11, “Debt” for more information regarding the Company’s repurchase of a portion of the Senior Unsecured Notes during the year ended December 31, 2025).
Non-recurring fair value measurements
Separate disclosure is required for assets and liabilities measured at fair value on a recurring basis from those measured at fair value on a non-recurring basis. As of December 31, 2025 and 2024, other than those liabilities mentioned above and those assets outlined in Note 7, “Intangible assets and goodwill”, there were no material assets or liabilities measured at fair value on a non-recurring basis.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 4, 2025 | |
| 2023 | Mar 8, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 19, 2021 | |
| 2019 | Feb 25, 2020 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.