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First, I want to begin by addressing the announcement made earlier today to reduce our enterprise footprint, consolidate operations, and prioritize the capabilities most critical to executing Emergent's core business. When I stepped into the role of CEO in February, talk about a multiyear plan to stabilize, turn around, and transform our company. Also, we identified a near-term challenge surrounding our debt position as a critical component of our stabilization plan. We understood that reducing our total debt would require improving operating performance, reducing working capital, and evaluating product or asset sales.

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I've seen firsthand that our employees are inspired and driven by the company's mission to protect, enhance, and help save lives. And that is why any type of impact on our workforce is very difficult. However, after a careful review by our Board and management team, we need to restructure the way we operate, create a customer-focused, leaner, more flexible team and a streamlined manufacturing footprint that will still allow us to supply all the products needed by our customers. Beyond the business restructuring on Page 6, we highlight the plans in Q1 2024 achievements in our first phase or stabilization of our multiyear transformation plans.

Going forward, we will focus on key business areas and implement a simplified organization to improve our cost structure and enable key actions, including meeting the opioid crisis demand and exploring opportunities to grow NARCAN Nasal Spray, protecting our medical countermeasures business and identifying new growth opportunities, support our existing customers in our CDMO services business, and always ensuring patient safety and product quality underpin everything we do. An item that will not change is Emergent's focus on making challenging, difficult products that are needed by our customers. As I mentioned during our last earnings call, we reviewed the moat around our business, and we believe the unique products and capabilities we offer across significant public health threats, underscores the value we deliver. We'll continue to focus on executing our multiyear plan to bolster our position as a leader in global public health.

During the first quarter, we also achieved significant improvements in a number of business performance metrics, including revenue, which is ahead of internal and consensus expectations, adjusted gross margin, reduced operating expenses, and adjusted EBITDA. Overall, it was a great first quarter and a great start to 2024. As you know, last quarter, we entered into a forbearance agreement with our lenders through April 30. Our conversation with the bank group continued and just yesterday, we were delighted to announce a new bank amendment.

This amendment will extend our runway to execute on our go-forward business plan and stabilize our financial position. We also strengthened our relationship with key stakeholders during the quarter. Over the last three months, we've held over a dozen collaborative meetings with key stakeholders across the US and international government agencies, including BARDA, Department of Defense, Strategic National Stockpile, and the White House to gain clarity on their needs for medical countermeasures products. These meetings have been incredibly productive and the results are reflected in our improved revenue guidance.

These conversations also reflect a renewed willingness to engage with Emergent to improve planning and communications, which are critical to driving long-term success. Consistent with our comments in March, we also initiated efforts to divest products and/or sites. We've already received multiple orders for one of our sites, albeit one of our smaller sites. We hope to have more to say about this initiative in the near future.

Our prioritization commitment to instilling a culture of quality and compliance across the company was also evident in the first quarter as we announced our Baltimore Bayview manufacturing facility received No Action Indicated or NAI status classification from the FDA. We are proud of our colleagues who have worked relentlessly to achieve this status and will continue to hear the highest standard of quality and compliance across the organization. I'll now turn it over to Rich to review our Q1 2024 business and our revised 2024 full year guidance.

Rich Lindahl -- Executive Vice President and Chief Financial Officer

Thanks, Joe. Good afternoon, everyone, and thank you for joining the call. As Joe has just discussed, we're making significant progress against our near-term priorities of stabilizing the business and strengthening our financial foundation. Our report today reflects several key accomplishments.

We delivered strong first quarter results with all parts of the business delivering year-over-year growth. We're taking aggressive actions to further improve our operating performance as we seek to reduce our debt. We further amended our credit facility to support our ability to execute against our 2024 priorities, and we are significantly raising our profit outlook driven by increased clarity on near-term US government procurement combined with reduced operating expenses. Turning to our results.

We had strong revenue in the quarter, which exceeded our first quarter guidance. As indicated on Slide 8, highlights in the first quarter include total revenues of $300 million, an increase of 83% versus the prior year driven by NARCAN and Anthrax MCM, Smallpox MCM, and BAT. Total segment adjusted gross margin of 51% versus 5% in the prior year. Adjusted EBITDA in the quarter of $67 million, a material improvement over the negative $102 million reported last year, and adjusted net income of $31 million also materially improved compared to negative $163 million last year.

Diving deeper into quarterly revenues. Important items on Slide 9 include NARCAN sales of $118 million, up 18% year over year, demonstrating the continued strength and durability of this product driven by higher branded NARCAN sales to US public interest channels and sales of OTC NARCAN, partially offset by lower Canadian retail sales of branded NARCAN. Anthrax MCM sales of $56 million, an increase of 155% versus the prior year, driven by CYFENDUS deliveries to the US government's Strategic National Stockpile, including final shipments under the $75 million contract option provided by BARDA that we announced on November 28 of last year. Smallpox MCM sales of $50 million, up $43 million year over year, driven by ACAM2000 and VIGIV.

Other product sales of $49 million, an increase of $41 million versus the prior year, primarily related to BAT and RSDL. And total bioservices revenues of $18 million, reflecting our continued transition to focus on existing customers. Turning to operating expenses on Slide 10. Cost of commercial product sales in the quarter was $52 million, driven by strong sales of NARCAN.

Cost of MCM product sales in the quarter was $62 million, driven primarily by CYFENDUS sales volume and other medical countermeasure products, partially offset by a decrease in shutdown costs. Cost of bioservices of $30 million, reflecting actions taken to improve profitability. R&D expense of $15 million, reflecting the impact of the Travel Health divestiture to Bavarian Nordic, as well as the impact of cost management activities taken in 2023. And SG&A spend of $85 million, including expenses supporting key NARCAN initiatives, offset by reduced expenses related to restructuring initiatives.

Of note, total operating expenses were down 16% compared to the prior year as we focused on improving profitability and cash flow to manage our debt position. With that, let's move to Slide 11 and review segment performance during the quarter. In the commercial segment, revenues were $118 million, comprised entirely of NARCAN, and segment adjusted gross margin was $66 million or 56%. In the MCM segment, revenues were $155 million driven by anthrax, smallpox, and BAT.

The segment adjusted gross margin was $94 million or 60%. As for the services segment, revenues were $18 million, and segment adjusted gross margin was negative $12 million. I'll now turn to Slide 12 and touch on select balance sheet and cash flow highlights. We ended the first quarter with $78 million in cash and liquidity, including availability under our revolving credit facility.

The change in cash and liquidity versus the prior quarter was due to sales timing and collection of AR. Operating cash flow was negative $63 million, which improved significantly versus the prior year. Capital expenditures were $11 million in the first quarter, which is a 28% reduction versus the first quarter of 2023. And as of March 31st, 2023, our net debt position was $827 million.

Earlier today, we announced a set of strategic actions to improve our cost structure, enable turnaround efforts, and support our key priority to reduce our debt. These actions include the difficult decision to reduce our organization footprint effective July 1st, 2024, prioritizing only those capabilities most critical to executing our core MCM and NARCAN nasal spray businesses. We estimate that the changes we're making will result in annualized savings of approximately $80 million when fully implemented. The costs associated with these actions are estimated to be approximately $18 million to $21 million and are expected to be incurred in the third quarter of 2024.

We are confident that these efforts, let me amend that, they are expected to be incurred in the second quarter of 2024. We are confident that these efforts are an important step to achieving greater consistency in operating performance and improving future profitability. We also announced yesterday that we have entered into another amendment to our senior secured credit facilities. This amendment will support our ability to execute against our 2024 priorities by granting certain waivers [Technical difficulty]

Questions & Answers:

Operator

Ladies and gentlemen, please stand by.

Rich Lindahl -- Executive Vice President and Chief Financial Officer

Howard, can you hear us?

Operator

I can hear you, sir. I can hear you now.

Rich Lindahl -- Executive Vice President and Chief Financial Officer

I am going to start at the beginning of the guidance section. Is that where we dropped?

Operator

Yes.

Rich Lindahl -- Executive Vice President and Chief Financial Officer

So, turning to 2024 guidance, please see Slide 13. While our efforts to improve operating performance will not happen overnight, we're making significant progress toward those goals, which is giving us the confidence to raise our 2024 outlook at this time. As announced in our press release this evening, we're providing guidance for full year 2024 as follows. Total revenues of $1 billion to $1.1 billion.

We're forecasting commercial product sales of $460 million to $500 million as we expect continued strong demand for NARCAN in the US public interest channel and Canada, combined with further growth with OTC NARCAN in the retail channel. We're forecasting MCM product sales of $440 million to $490 million. Since our last report on March 6, we've continued to engage with our US government stakeholders to improve the procurement visibility for CYFENDUS and other medical countermeasure products. As a result of those conversations, we have a better understanding of the US government's intention for the near and medium term and are therefore narrowing the range of potential 2024 revenue outcomes in this segment.

We're forecasting services segment revenue of $70 million to $80 million, reflecting our commitment to serve our existing customers. Shifting to profitability metrics. We're forecasting adjusted EBITDA of $125 million to $175 million, reflecting the impact of our 2023 cost reduction actions, the additional organizational changes announced today, our capacity utilization profile, and the range of revenue expectations across our segments. For the full year of 2024, we're forecasting total segment adjusted gross margin of 44% to 47%, an increase over the 2023 level primarily reflecting the full year impact of our profitability improvement efforts.

Finally, we're forecasting Q2 revenue in a range of $160 million to $210 million. We've also included some additional assumptions around our full year guidance. Interest expense is forecasted to be $82 million, reflecting terms around our new credit agreements. Total R&D spend as a percentage of revenues is anticipated at approximately 6%.

Weighted average fully diluted shares of $52 million. Capex spend of approximately $32 million and $111 million on depreciation and amortization. That is all for the financial update. I'll now turn the call back over to Joe for some further thoughts.

Joe Papa -- President and Chief Executive Officer

Thank you, Rich. As I mentioned last quarter, another key element of our turnaround is driving long-term profitable growth. One of the first steps we announced earlier today is the initiation of a search to bring Emergent chief scientific officer reporting to me. This individual brings together all of our science innovation efforts, improving our long-term product pipeline.

This search will include both internal and external candidates. Let me now provide an update on our core products and future growth drivers, starting with NARCAN Nasal Spray. Turning to Slide 15, a vital way Emergent health saves lives is through our efforts to combat the opioid crisis by expanding access, awareness, and the availability of NARCAN Nasal Spray. The opioid epidemic continues to have a devastating impact across the world.

As the leader of opioid reversal space, we remain committed to getting NARCAN to everyone who needs it. To be clear, we do expect NARCAN share market will be impacted by generic competitors over time. However, we also expect market forces like opioid settlement funds, continuing opioid overdoses, and the need for increased NARCAN access will continue to expand total NARCAN demand. Year-to-date, NARCAN Nasal Spray is tracking to plan with strong performance driven by the US public interest channel, Canada.

Since the OTC launch, hundreds or thousands of NARCAN are made available to purchase at mass drug grocery online retailers and e-commerce sites. And we continue to be well prepared to meet anticipated demand from a supply and manufacturing perspective. This quarter, we also expanded access to NARCAN by creating a direct ordering platform called narcanworkplace.com. This facilitates getting the life-saving treatment directly into the workplace.

We have engaged with new partners like the National Safety Council to educate and reach businesses around the importance of workplace safety. In addition, the Emerson Group has been brought on to support penetration to a broader set of retailers. Sadly, there is still an immense need for NARCAN Nasal Spray to reduce the number of lives lost. The data from our recently completed survey that we just released today suggests the number of opioid deaths is unacceptable to Americans especially looking at the impact on younger adults.

We are seeing continued bipartisan support to address the opioid crisis and have ongoing engagement with leaders across government, retail, and advocacy groups to increase access and the availability of naloxone. On Page 16, we highlight several of the catalysts and future drivers of NARCAN growth. We continue to prioritize efforts to reduce barriers to access for NARCAN. This includes encouraging businesses and school districts to carry naloxone, supporting policy to ensure health spending accounts and flexible savings accounts are eligible for naloxone, and working with state Medicaid agencies prior to coverage.

We've been working closely with Health Canada with a goal to distribute naloxone convenience kits containing NARCAN. Finally, we're exploring opportunities to expand access internationally beyond the US and Canada, either internally or through partnerships that we believe will increase NARCAN growth. Turning to Slide 17 to review our MCM business. We continue to deliver on our commitments to the US and allied governments maintaining open lines of communication and engaging in discussions by how we can support their plans for long-term sustainable public health threat preparedness.

During the last few months, we also received clarity from the government regarding future purchase orders for CYFENDUS, our post-exposure anthrax vaccine. For the Strategic National Stockpile, we are finalizing a modification on our ACAM contract. In addition, we have received notices of intent to procure from the US government in 2024 for BAT, our botulism antitoxin product, and VIG, which is a treatment use following complications resulting from smallpox. This level of clarity demonstrates continuous US government support across our portfolio.

On Page 18, review MCM catalyst and growth drivers. As referenced on our last call, as a leading biodefense contractor, we're addressing the most pressing threats around the world, including anthrax, smallpox, botulism, Ebola, and chemical threats. We believe that our role in global public health preparedness remains vital. Finally, on Slide 19, I'd like to take a few moments to focus on future growth drivers for the organization based on the potential expansion of our in-line products.

First, we believe international expansion will be an important growth driver across our business. Global public health and preparedness have never been more vital in our collaboration with international partners is a key factor in improving global health security. We are seeing increased focus on public health preparedness and believe we're well-positioned to fulfill the needs of our international partners with our critical products. In the year ahead, we will continue building these partnerships to expand access to our products across the globe.

Our product portfolio today has significant impact to help protect, enhance, and saves lives against public health threats around the world. With a refreshed life cycle management initiative, we are well-positioned to fuel future growth drivers to meet customer and patient needs. In summary, although it's early in our transformation process, I'm encouraged by the progress we are making to execute our turnaround strategy. Importantly, we have more stability, clarity, and financial flexibility than just a few months ago.

This progress is reflected in our first quarter results and our full year 2024 guidance improvements. We believe there will be significant opportunities to partner with domestic and international partners to address the public health crisis with our important and innovative products. We look forward to continuing to work with key stakeholders to prepare for and respond to a range of public health threats while returning Emergent to greater profitability for our shareholders. With that, we'll open up the call for questions.

We also invited Paul Williams, our head of NARCAN and the medical countermeasures business to join us for the Q&A. Operator, let's open up the line for questions, please.

Operator

[Operator instructions] Please stand by while we compile the Q&A roster. Our first question or comment comes from the line of Jessica Fye from J.P. Morgan. Ms.

Fye, your line is open.

Unknown speaker -- J.P. Morgan -- Analyst

Hey, this is Nick on for Jess. Congrats on the quarter and thanks for taking our questions. First one on NARCAN. You guys are showing continued growth from that product kind of year over year, quarter over quarter.

But maybe can you provide some additional details on the breakdown of that 1Q sales by the PIP channel and OTC Narcan? And maybe also provide some color on how you're thinking about any generic competition that could come in to either of those two segments throughout the course of this year.

Rich Lindahl -- Executive Vice President and Chief Financial Officer

So, thanks, Nick. I'll take the first one. This is Rich. Yeah, I mean, certainly, the majority of the sales remain from the PIP channel.

We are still moving forward with our OTC rollout, and it's gaining traction, but the majority is coming from the PIP channel with some contribution from Canada as well.

Paul Williams -- Head of NARCAN and the Medical Countermeasures Business

And I think the question relative to generic entrants, I think we've anticipated and expect there'll be additional competitors entering the space this year. I think we continue to believe that our ability to service the PIP channel and the retail OTC channel uniquely with the specific capabilities that we have like NARCANDirect through the partnerships we're building on the retail side, we can support the forecast that we have for the rest of the year.

Joe Papa -- President and Chief Executive Officer

And finally, just to put a couple of other future-looking comments. I think what we look at NARCAN, we look at a couple of important points. Number one, the importance of the NARCAN brand. And obviously, that brand is very important when you're talking about the years of experience with NARCAN and importantly, you're dealing with life-threatening situations that NARCAN is used.

Number two, we have a strong distribution capability, and we believe that's an important part of what Paul and the team has built that allows us to make sure that we get to the thousands of customers around the United States and Canada, that order our products. And then finally, clearly, we've built up the manufacturing capabilities to be automated and able to compete with anybody in this space. So, yes, we may see some inroads over time. More importantly, we think the market growth is still going to be very significant that allow us to have long-term opportunities with our NARCAN business.

Unknown speaker -- J.P. Morgan -- Analyst

Great. And then maybe on the guidance, can you just provide a bit more color on the pushes and pulls that went in to raising the MCM product guidance to $440 million to $490 million, I believe, from the $340 million to $490. Is that just more clarity around anthrax or are there other assumptions baked in there?

Rich Lindahl -- Executive Vice President and Chief Financial Officer

That's really the primary driver as we commented back in -- on our March call. There was less clarity, we had less visibility at the time. So, we had a much wider range about potential outcomes there. Based on the conversations that we've had, we have a better visibility into where we see CYFENDUS procurement this year.

And as a result, we were able to narrow the range by raising the low end of the range.

Unknown speaker -- J.P. Morgan -- Analyst

Great. And maybe if I could just squeeze in one more. Understanding that this is not an easy decision around the two facilities. Can you maybe just provide some additional details on why you chose Rockville and Bayview as part of that restructuring announcement? And I know you said that there was some interest that you mentioned that you'll talk about later.

But of those two facilities, can you provide any color on which, if any, you're seeing maybe strategic interest to date?

Joe Papa -- President and Chief Executive Officer

Yeah. Let me start with maybe the big picture, and I'll get to your question. I think the big picture is, first and foremost, we made the decision to focus our future in the areas of Lansing and Winnipeg. We think that that's probably the most important thing that was our first decision on what sites have the most flexibility that we can run a leaner company with streamlined facilities and still make sure we can provide all of our products availability.

So, I think that was probably the first thing we went into our decision. Once we did that, we looked at the other sites and just made judgments as to -- based on what we saw in terms of the opportunity, what the expenses were, we made decisions to reduce our total operating expenses, but make sure that we can still provide access to the products that are so important to the US government, governments around the world and obviously to treat and be ready to be able to help the opioid crisis. And when we went through that, the sites that Bayview and Rockville came out as sites that we would close down, wind down, and close the site. And that was really the way we went through this process.

I will say that we did make mention that we had multiple offers on one site, albeit it was a small site, I wanted to be clear in saying that. I do hope though that we will continue this process and potentially have more to say about that in the future, but I'm going to probably restrict my comments to not going that far in terms of what we've had interest in so far. I think I've got all the parts of the question.

Unknown speaker -- J.P. Morgan -- Analyst

Yeah, thank you so much.

Operator

Thank you. [Operator instructions] I am showing no additional questions in the queue at this time. I'd like to turn the conference back over to Mr. Papa for any closing remarks.

Joe Papa -- President and Chief Executive Officer

Well, thank you very much, everyone, for your interest in Emergent. We look forward to having more to comment in the future as we make progress on our multiyear turnaround transformation. Obviously, the team has done a great job in this first quarter, and look forward to having more to say as we continue down the path for 2024 and beyond. But thank you, everyone, for joining us today.

Have a great day.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Joe Papa -- President and Chief Executive Officer

Rich Lindahl -- Executive Vice President and Chief Financial Officer

Unknown speaker -- J.P. Morgan -- Analyst

Paul Williams -- Head of NARCAN and the Medical Countermeasures Business

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Emergent BioSolutions (EBS) Q1 2024 Earnings Call Transcript was originally published by The Motley Fool