Amneal Reports Fourth Quarter and Full Year 2019 Financial Results

February 26, 2020

‒ Q4 2019 Net Revenue of $397 million; GAAP Loss per share of ($0.23); Net Loss of ($32 million) ‒

‒ Q4 2019 Adjusted EBITDA(1) of $81 million; Adjusted Diluted EPS (1) of $0.08 ‒

‒ Full Year Net Revenue of $1.63 billion; GAAP Loss per share of ($2.74); Net Loss of ($362 million) ‒

‒ Full Year Adjusted EBITDA(1) of $356 million; Adjusted Diluted EPS (1) of $0.35 ‒

‒ Provides 2020 Financial Outlook ‒

BRIDGEWATER, N.J.--(BUSINESS WIRE)-- Amneal Pharmaceuticals, Inc. (NYSE: AMRX) (the “Company”) announced its results today for the fourth quarter and full year ended December 31, 2019.

Net revenue in the fourth quarter of 2019 was $397 million, a decrease of 20% compared to $498 million in the fourth quarter of 2018, primarily due to lower Generics business revenue. Net loss attributable to Amneal Pharmaceuticals, Inc. was $32 million in the fourth quarter of 2019 compared to a net loss of $9 million in the prior year period, due to lower revenue and lower gross margins partially offset by a decline in restructuring and intangible impairment charges. Diluted EPS in the fourth quarter of 2019 was a loss of $0.23 compared to a loss of $0.07 in the prior year period.

Adjusted net income(1) in the fourth quarter of 2019 was $23 million, a decrease of 77% compared to the prior year period. Adjusted EBITDA(1) in the fourth quarter of 2019 was $81 million, a decrease of 57% compared to the prior year period, due to lower revenue and lower gross margins, partially offset by lower operating expenses as a result of cost savings initiatives. Adjusted diluted EPS in the fourth quarter of 2019 was $0.08, compared to $0.33 for the prior year period.

“Since our return as Co-CEOs last August, we have made significant progress reinvigorating our business and taking the necessary actions to support growth in 2020 and beyond,” said Chirag and Chintu Patel, Co-Chief Executive Officers. “2019 was a transition year, but we entered 2020 with strong momentum driven by our team’s relentless focus on execution and addressing inefficiencies across the business. Our execution was highlighted by 30 new awards across our base Generics portfolio and 15 new product launches since August, including two key complex first-to-market launches. Our Specialty business drove impressive growth for our key marketed products, we continued work to expand our pipeline and launched an aggressive strategy to identify near-term opportunities to grow our franchises. We also delivered on our promise to diversify our business with the AvKARE transaction - enhancing our government distribution business and unit dose capabilities - and broadening our geographic reach with our license and supply agreement with Fosun Pharma to supply products for the growing Chinese market. These achievements are helping to propel our 2020 focus and we are confident Amneal is well-positioned to drive long-term growth and value for all our stakeholders in 2020 and beyond.”

(1) See “Non-GAAP Financial Measures” below.

2020 Financial Outlook

Amneal’s full year 2020 estimates, which include the impact of our January 31, 2020 transaction with AvKARE, Inc. and its related affiliate doing business as R&S Northeast LLC, are based on management's current expectations, including with respect to prescription trends, pricing levels, inventory levels, the costs incurred and benefits realized of restructuring activities and the anticipated timing of future product launches and events. The Company cannot provide a reconciliation between non-GAAP projections and the most directly comparable GAAP measures without unreasonable efforts because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items required for the reconciliation. The items include, but are not limited to, acquisition-related expenses, restructuring expenses and benefits, asset impairments and other gains and losses. These items are uncertain, depend on various factors, and could have a material impact on U.S. GAAP reported results for 2020.

 

 

Full Year 2020 Financial Guidance

Net revenue

$1,875 million - $1,975 million

Adjusted gross margin

44% - 46%

Adjusted EBITDA (14)

$400 million - $450 million

Adjusted diluted EPS (15)

$0.45 - $0.60

Operating cash flow

$150 million - $200 million

Capital expenditures

$60 million - $70 million

Weighted average diluted shares outstanding (16)

Approximately 300 million

(14)

Includes 100% of EBITDA from the AvKARE and R&S Northeast transaction.

(15)

Accounts for 35% non-controlling interest in AvKARE and R&S Northeast.

(16)

Assumes the weighted average diluted shares outstanding of Class A and Class B shares under the if-converted method.

Conference Call Information

Amneal will hold a conference call on February 26, 2020 at 8:30 a.m. Eastern Time to discuss its results. The call and presentation can also be accessed via a live Webcast through the Investors section of Amneal’s Web site at https://investors.amneal.com/investor-relations, or directly at https://event.on24.com/wcc/r/2151439/4C4EB837C71C6C5471232024C3FDFD00. The number to call from within the United States is (844) 746-0741 and (412) 317-5273 internationally. A replay of the conference call will be available shortly after the call for a period of seven days. To access the replay, dial (877) 344-7529 (in the U.S.) and (412) 317-0088 (international callers). The access code for the replay is 10138831.

 

Amneal Pharmaceuticals, Inc.

Consolidated Statements of Operations

(Unaudited; In thousands, except per share amounts)

 

 

Three Months Ended

 

 

Years Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net revenue

 

$

397,328

 

 

$

497,528

 

 

$

1,626,373

 

 

$

1,662,991

 

Cost of goods sold

 

 

273,373

 

 

 

304,120

 

 

 

1,147,214

 

 

 

938,773

 

Cost of goods sold impairment charges

 

 

13,721

 

 

 

 

 

 

126,162

 

 

 

7,815

 

Gross profit

 

 

110,234

 

 

 

193,408

 

 

 

352,997

 

 

 

716,403

 

Selling, general and administrative

 

 

74,084

 

 

 

71,236

 

 

 

289,598

 

 

 

227,846

 

Research and development

 

 

48,050

 

 

 

57,297

 

 

 

188,049

 

 

 

194,190

 

In-process research and development impairment charges

 

 

450

 

 

 

38,609

 

 

 

46,619

 

 

 

39,259

 

Acquisition, transaction-related and integration expenses

 

 

3,706

 

 

 

4,945

 

 

 

16,388

 

 

 

221,818

 

Restructuring and other charges

 

 

4,412

 

 

 

14,104

 

 

 

34,345

 

 

 

56,413

 

(Gains) charges related to legal matters, net

 

 

(2,308

)

 

 

(19,300

)

 

 

12,442

 

 

 

(19,711

)

Intellectual property legal development expenses

 

 

4,975

 

 

 

3,237

 

 

 

14,238

 

 

 

16,261

 

Operating (loss) income

 

 

(23,135

)

 

 

23,280

 

 

 

(248,682

)

 

 

(19,673

)

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(38,829

)

 

 

(42,880

)

 

 

(168,205

)

 

 

(143,571

)

Foreign exchange gain (loss)

 

 

4,722

 

 

 

2,817

 

 

 

(4,962

)

 

 

(19,701

)

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

 

 

 

(19,667

)

Gain (loss) on sale of international businesses

 

 

328

 

 

 

(146

)

 

 

7,258

 

 

 

(2,958

)

Gain from reduction of tax receivable agreement liability

 

 

 

 

 

1,665

 

 

 

192,884

 

 

 

1,665

 

Other (expense) income

 

 

(197

)

 

 

458

 

 

 

1,465

 

 

 

1,183

 

Total other (expense) income, net

 

 

(33,976

)

 

 

(38,086

)

 

 

28,440

 

 

 

(183,049

)

Loss before income taxes

 

 

(57,111

)

 

 

(14,806

)

 

 

(220,242

)

 

 

(202,722

)

Provision for (benefit from) income taxes

 

 

7,792

 

 

 

5,524

 

 

 

383,331

 

 

 

(1,419

)

Net loss

 

 

(64,903

)

 

 

(20,330

)

 

 

(603,573

)

 

 

(201,303

)

Less: Net loss attributable to Amneal Pharmaceuticals LLC pre-Combination

 

 

 

 

 

 

 

 

 

 

 

148,806

 

Less: Net loss attributable to non-controlling interests

 

 

32,775

 

 

 

11,562

 

 

 

241,656

 

 

 

32,753

 

Net loss attributable to Amneal Pharmaceuticals, Inc. before accretion of
redeemable non-controlling interest

 

 

(32,128

)

 

 

(8,768

)

 

 

(361,917

)

 

 

(19,744

)

Accretion of redeemable non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

(1,176

)

Net loss attributable to Amneal Pharmaceuticals, Inc.

 

$

(32,128

)

 

$

(8,768

)

 

$

(361,917

)

 

$

(20,920

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share attributable to Amneal Pharmaceuticals, Inc.'s common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A and Class B-1 basic and diluted

 

$

(0.23

)

 

$

(0.07

)

 

$

(2.74

)

 

$

(0.16

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A and Class B-1 basic and diluted

 

 

141,853

 

 

 

127,343

 

 

 

132,106

 

 

 

127,252

 

Amneal Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(Unaudited; In thousands)

 

 

December 31, 2019

 

 

December 31, 2018

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

151,197

 

 

$

213,394

 

Restricted cash

 

 

1,625

 

 

 

5,385

 

Trade accounts receivable, net

 

 

604,390

 

 

 

481,495

 

Inventories

 

 

381,067

 

 

 

457,219

 

Prepaid expenses and other current assets

 

 

70,164

 

 

 

128,321

 

Related party receivables

 

 

1,767

 

 

 

830

 

Total current assets

 

 

1,210,210

 

 

 

1,286,644

 

Property, plant and equipment, net

 

 

477,997

 

 

 

544,146

 

Goodwill

 

 

419,504

 

 

 

426,226

 

Intangible assets, net

 

 

1,382,753

 

 

 

1,654,969

 

Deferred tax asset, net

 

 

 

 

 

373,159

 

Operating lease right-of-use assets

 

 

53,344

 

 

 

 

Operating lease right-of-use assets - related party

 

 

16,528

 

 

 

 

Financing lease right-of-use assets - related party

 

 

61,284

 

 

 

 

Other assets

 

 

44,270

 

 

 

67,592

 

Total assets

 

$

3,665,890

 

 

$

4,352,736

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

507,483

 

 

$

514,440

 

Current portion of long-term debt, net

 

 

21,479

 

 

 

21,449

 

Current portion of operating lease liabilities

 

 

11,874

 

 

 

 

Current portion of operating and financing lease liabilities - related party

 

 

3,601

 

 

 

 

Current portion of financing obligation - related party

 

 

 

 

 

266

 

Related party payables

 

 

5,969

 

 

 

17,695

 

Total current liabilities

 

 

550,406

 

 

 

553,850

 

Long-term debt, net

 

 

2,609,046

 

 

 

2,630,598

 

Financing obligations - related party

 

 

 

 

 

39,083

 

Deferred income taxes

 

 

 

 

 

1,178

 

Liabilities under tax receivable agreement

 

 

 

 

 

192,884

 

Operating lease liabilities

 

 

43,135

 

 

 

 

Operating lease liabilities - related party

 

 

15,469

 

 

 

 

Financing lease liabilities - related party

 

 

61,463

 

 

 

 

Other long-term liabilities

 

 

39,583

 

 

 

38,780

 

Total long-term liabilities

 

 

2,768,696

 

 

 

2,902,523

 

Total stockholders' equity

 

 

346,788

 

 

 

896,363

 

Total liabilities and stockholders' equity

 

$

3,665,890

 

 

$

4,352,736

 

Amneal Pharmaceuticals, Inc.

Consolidated Statements of Cash Flows

(Unaudited; In thousands)

 

 

Twelve Months Ended December 31,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(603,573

)

 

$

(201,303

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Gain from reduction of tax receivable agreement liability

 

 

(192,884

)

 

 

(1,665

)

Depreciation and amortization

 

 

207,235

 

 

 

137,403

 

Amortization of Levothyroxine Transition Agreement asset

 

 

36,393

 

 

 

10,423

 

Unrealized foreign currency loss

 

 

7,342

 

 

 

18,582

 

Amortization of debt issuance costs

 

 

6,478

 

 

 

5,859

 

Loss on extinguishment of debt

 

 

 

 

 

19,667

 

(Gain) loss on sale of international businesses, net

 

 

(7,258

)

 

 

2,958

 

Intangible asset impairment charges

 

 

172,781

 

 

 

47,074

 

Non-cash restructuring and asset-related charges

 

 

12,459

 

 

 

11,295

 

Deferred tax provision (benefit)

 

 

371,716

 

 

 

(9,439

)

Stock-based compensation and PPU expense

 

 

21,679

 

 

 

167,597

 

Inventory provision

 

 

82,245

 

 

 

44,539

 

Other operating charges and credits, net

 

 

7,309

 

 

 

(1,866

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Trade accounts receivable, net

 

 

(132,726

)

 

 

89,084

 

Inventories

 

 

(20,393

)

 

 

(42,021

)

Prepaid expenses, other current assets and other assets

 

 

38,870

 

 

 

8,775

 

Related party receivables

 

 

(939

)

 

 

10,928

 

Accounts payable, accrued expenses and other liabilities

 

 

(10,257

)

 

 

(53,547

)

Related party payables

 

 

5,228

 

 

 

(14,113

)

Net cash provided by operating activities

 

 

1,705

 

 

 

250,230

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(47,181

)

 

 

(83,088

)

Acquisition of product rights and licenses

 

 

(50,250

)

 

 

(14,000

)

Acquisitions, net of cash acquired

 

 

 

 

 

(324,634

)

Proceeds from surrender of corporate owned life insurance

 

 

43,017

 

 

 

 

Proceeds from sales of property, plant and equipment

 

 

 

 

 

25,344

 

Proceeds from sale of international businesses, net of cash sold

 

 

34,834

 

 

 

 

Net cash used in investing activities

 

 

(19,580

)

 

 

(396,378

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Payments of deferred financing costs and debt extinguishment costs

 

 

 

 

 

(54,955

)

Proceeds from issuance of debt

 

 

 

 

 

1,325,383

 

Payments of principal on debt and capital leases

 

 

(27,000

)

 

 

(617,051

)

Net payments on revolving credit line

 

 

 

 

 

(75,000

)

Payments of principal on financing obligation - related party

 

 

 

 

 

(243

)

Proceeds from exercise of stock options

 

 

1,400

 

 

 

3,797

 

Employee payroll tax withholding on restricted stock unit vesting

 

 

(926

)

 

 

 

Equity contributions

 

 

 

 

 

27,742

 

Capital contribution from non-controlling interest

 

 

 

 

 

360

 

Acquisition of redeemable non-controlling interest

 

 

 

 

 

(11,775

)

Acquisition of non-controlling interest

 

 

(3,543

)

 

 

 

Tax distribution to non-controlling interest

 

 

(13,494

)

 

 

(35,543

)

Distributions to members

 

 

 

 

 

(182,998

)

Payments of principal on financing lease - related party

 

 

(2,270

)

 

 

 

Repayment of related party notes

 

 

 

 

 

(92,042

)

Net cash (used in) provided by financing activities

 

 

(45,833

)

 

 

287,675

 

Effect of foreign exchange rate on cash

 

 

(2,249

)

 

 

(670

)

Net (decrease) increase in cash, cash equivalents, and restricted cash

 

 

(65,957

)

 

 

140,857

 

Cash, cash equivalents, and restricted cash - beginning of period

 

 

218,779

 

 

 

77,922

 

Cash, cash equivalents, and restricted cash - end of period

 

$

152,822

 

 

$

218,779

 

Cash and cash equivalents - end of period

 

$

151,197

 

 

$

213,394

 

Restricted cash - end of period

 

 

1,625

 

 

 

5,385

 

Cash, cash equivalents, and restricted cash - end of period

 

$

152,822

 

 

$

218,779

 

Amneal Pharmaceuticals, Inc.

Generics Operating Results

(Unaudited; In thousands)

Generics

 

Three Months Ended December 31,

 

 

 

2019

 

 

2018

 

Net revenue - Generics

 

$

300,281

 

 

$

410,897

 

Cost of goods sold

 

 

224,708

 

 

 

263,002

 

Cost of goods sold impairment charges

 

 

13,721

 

 

 

 

Gross profit

 

 

61,852

 

 

 

147,895

 

Selling, general, and administrative

 

 

16,100

 

 

 

16,572

 

Research and development

 

 

42,281

 

 

 

53,650

 

In-process research and development impairment charges

 

 

450

 

 

 

38,609

 

Restructuring and other charges

 

 

2,900

 

 

 

12,031

 

Gains related to legal matters, net

 

 

(2,308

)

 

 

(19,300

)

Intellectual property legal development expenses

 

 

4,975

 

 

 

3,263

 

Acquisition, integration and transaction related expenses

 

 

547

 

 

 

 

Operating (loss) income

 

$

(3,093

)

 

$

43,070

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

20.6

%

 

 

36.0

%

Adjusted gross profit (Non-GAAP) (2)

 

$

99,770

 

 

$

185,268

 

Adjusted gross margin (Non-GAAP) (3)

 

 

33.2

%

 

 

45.1

%

Adjusted operating income (Non-GAAP)

 

$

48,740

 

 

$

150,166

 

(1)

 

See “Non-GAAP Financial Measures” below.

(2)

 

Adjusted gross profit is calculated as net revenue less adjusted cost of goods sold. See Non-GAAP reconciliations below for calculation of adjusted cost of goods sold.

(3)

 

Adjusted gross margin is calculated as adjusted gross profit divided by net revenue. See “Non-GAAP Financial Measures” below.

Amneal Pharmaceuticals, Inc.

Reconciliation of Generics Operating (Loss) Income to Generics Combined Operating (Loss) Income

(Unaudited; In thousands)

Generics

 

Year Ended December 31, 2019

 

 

Year Ended December 31, 2018

 

 

 

 

 

 

 

Add:

 

 

(Non-GAAP)

 

 

 

 

 

 

Add:

 

 

(Non-GAAP)

 

 

 

Actual

 

 

Impax/ Gemini

 

 

Combined

 

 

Actual

 

 

Impax/ Gemini

 

 

Combined

 

Net revenue - Generics

 

$

1,308,843

 

 

$

 

 

$

1,308,843

 

 

$

1,439,031

 

 

$

102,237

 

 

$

1,541,268

 

Cost of goods sold

 

 

984,782

 

 

 

 

 

 

984,782

 

 

 

835,181

 

 

 

122,761

 

 

 

957,942

 

Cost of goods sold impairment charges

 

 

119,145

 

 

 

 

 

 

119,145

 

 

 

7,815

 

 

 

 

 

 

7,815

 

Gross profit

 

 

204,916

 

 

 

 

 

 

204,916

 

 

 

596,035

 

 

 

(20,524

)

 

 

575,511

 

Selling, general, and administrative

 

 

68,883

 

 

 

 

 

 

68,883

 

 

 

68,426

 

 

 

7,334

 

 

 

75,760

 

Research and development

 

 

172,196

 

 

 

 

 

 

172,196

 

 

 

183,412

 

 

 

13,623

 

 

 

197,035

 

In-process research and development impairment charges

 

 

46,619

 

 

 

 

 

 

46,619

 

 

 

39,259

 

 

 

 

 

 

39,259

 

Restructuring and other charges

 

 

20,101

 

 

 

 

 

 

20,101

 

 

 

33,943

 

 

 

 

 

 

33,943

 

Charges (gains) related to legal matters, net

 

 

12,442

 

 

 

 

 

 

12,442

 

 

 

(22,300

)

 

 

89,159

 

 

 

66,859

 

Intellectual property legal development expenses

 

 

13,193

 

 

 

 

 

 

13,193

 

 

 

15,772

 

 

 

23

 

 

 

15,795

 

Acquisition, integration and transaction related expenses

 

 

4,633

 

 

 

 

 

 

4,633

 

 

 

114,622

 

 

 

 

 

 

114,622

 

Operating (loss) income

 

$

(133,151

)

 

$

 

 

$

(133,151

)

 

$

162,901

 

 

$

(130,663

)

 

$

32,238

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

15.7

%

 

 

%

 

 

15.7

%

 

 

41.4

%

 

 

(20.1

)%

 

 

37.3

%

Adjusted gross profit (Non-GAAP) (2)

 

$

464,270

 

 

$

 

 

$

464,270

 

 

$

712,839

 

 

$

3,246

 

 

$

716,085

 

Adjusted gross margin (Non-GAAP) (3)

 

 

35.5

%

 

 

%

 

 

35.5

%

 

 

49.5

%

 

 

3.2

%

 

 

46.5

%

Adjusted operating income (Non-GAAP)

 

$

250,000

 

 

$

 

 

$

250,000

 

 

$

489,740

 

 

$

(16,752

)

 

$

472,988

 

(1)  

See “Non-GAAP Financial Measures” below.

(2)

 

Adjusted gross profit is calculated as net revenue less adjusted cost of goods sold or combined net revenue less adjusted combined cost of goods sold, as applicable. See Non-GAAP reconciliations below for calculation of adjusted cost of goods sold.

(3)

 

Adjusted gross margin is calculated as adjusted gross profit divided by net revenue or adjusted combined gross profit divided by combined net revenue, as applicable. See “Non-GAAP Financial Measures” below.

Generics net revenue was $300 million in the fourth quarter of 2019 compared to $411 million for the prior year period. The decrease is primarily attributable to price erosion due to additional competition on our existing portfolio, the reclassification of Oxymorphone HCI to the Specialty segment in the third quarter of 2019 and the divestiture of international businesses in the U.K. and Germany. The decrease was partially offset by new product launches in 2019, which included EluRyng (Generic NuvaRing) and Sucralfate.

Generics gross margin for the fourth quarter of 2019 was 21% compared to 36% for the prior year period. The decrease is primarily related to impairment and inventory obsolescence charges, and the impact of price erosion. Generics adjusted gross margin(1) for the fourth quarter of 2019 was 33% compared to 45% for the prior year period primarily due to price erosion, product sales mix, an increase in inventory obsolescence charges and the impact of volume declines period over period leading to underutilization of manufacturing facilities.

Generics operating loss for the fourth quarter of 2019 was $3 million compared to operating income of $43 million for the prior year period. The decrease is primarily due to lower revenue and gross profit as noted above, and an increase in impairment charges. Generics adjusted operating income(1) for the fourth quarter of 2019 was $49 million compared to $150 million for the prior year period primarily due to lower revenue and lower gross profit, partially offset by lower operating expenses as a result of cost savings initiatives.

 

Amneal Pharmaceuticals, Inc.

Specialty Operating Results

(Unaudited; In thousands)

Specialty

 

Three Months Ended December 31,

 

 

 

2019

 

 

2018

 

Net revenue - Specialty:

 

 

 

 

 

 

 

 

Rytary®

 

$

39,235

 

 

$

42,680

 

Unithroid®

 

 

12,309

 

 

 

10,758

 

Zomig®

 

 

15,458

 

 

 

18,308

 

All other specialty products

 

 

30,045

 

 

 

14,885

 

Total net revenue - Specialty

 

 

97,047

 

 

 

86,631

 

Cost of goods sold

 

 

48,665

 

 

 

41,118

 

Gross profit

 

 

48,382

 

 

 

45,513

 

Selling, general, and administrative

 

 

21,960

 

 

 

16,200

 

Research and development

 

 

5,769

 

 

 

3,647

 

Intellectual property legal development expenses

 

 

 

 

 

(26

)

Restructuring and other charges

 

 

 

 

 

1,682

 

Acquisition, integration and transaction related expenses

 

 

2,641

 

 

 

 

Operating income

 

$

18,012

 

 

$

24,010

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

49.9

%

 

 

52.5

%

Adjusted gross profit (Non-GAAP) (2)

 

$

73,077

 

 

$

70,058

 

Adjusted gross margin (Non-GAAP) (3)

 

 

75.3

%

 

 

80.9

%

Adjusted operating income (Non-GAAP)

 

$

45,880

 

 

$

50,600

 

(1)

See “Non-GAAP Financial Measures” below.

(2)

Adjusted gross profit is calculated as net revenue less adjusted cost of goods sold. See Non-GAAP reconciliations below for calculation of adjusted cost of goods sold.

(3)

Adjusted gross margin is calculated as adjusted gross profit divided by net revenue. See “Non-GAAP Financial Measures” below.

Amneal Pharmaceuticals, Inc.

Reconciliation of Specialty Operating Income to Specialty Combined Operating Income

(Unaudited; In thousands)

Specialty

 

Year Ended December 31, 2019

 

 

Year Ended December 31, 2018

 

 

 

 

 

 

 

Add:

 

 

(Non-GAAP)

 

 

 

 

 

 

Add:

 

 

(Non-GAAP)

 

 

 

Actual

 

 

Impax/ Gemini

 

 

Combined

 

 

Actual

 

 

Impax/ Gemini

 

 

Combined

 

Net revenue - Specialty:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rytary®

 

$

134,773

 

 

$

 

 

$

134,773

 

 

$

95,541

 

 

$

35,086

 

 

$

130,627

 

Unithroid®

 

 

41,089

 

 

 

 

 

 

41,089

 

 

 

23,011

 

 

 

9,716

 

 

 

32,727

 

Zomig®

 

 

54,980

 

 

 

 

 

 

54,980

 

 

 

43,111

 

 

 

14,411

 

 

 

57,522

 

All other specialty products

 

 

86,688

 

 

 

 

 

 

86,688

 

 

 

62,297

 

 

 

37,032

 

 

 

99,329

 

Total net revenue - Specialty

 

 

317,530

 

 

 

 

 

 

317,530

 

 

 

223,960

 

 

 

96,245

 

 

 

320,205

 

Cost of goods sold

 

 

162,432

 

 

 

 

 

 

162,432

 

 

 

103,592

 

 

 

26,731

 

 

 

130,323

 

Cost of goods sold impairment charges

 

 

7,017

 

 

 

 

 

 

7,017

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

148,081

 

 

 

 

 

 

148,081

 

 

 

120,368

 

 

 

69,514

 

 

 

189,882

 

Selling, general, and administrative

 

 

79,665

 

 

 

 

 

 

79,665

 

 

 

49,465

 

 

 

27,942

 

 

 

77,407

 

Research and development

 

 

15,853

 

 

 

 

 

 

15,853

 

 

 

10,778

 

 

 

3,664

 

 

 

14,442

 

Intellectual property legal development expenses

 

 

1,045

 

 

 

 

 

 

1,045

 

 

 

489

 

 

 

 

 

 

489

 

Restructuring and other charges

 

 

391

 

 

 

 

 

 

391

 

 

 

4,076

 

 

 

 

 

 

4,076

 

Charges related to legal matters, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

940

 

 

 

940

 

Acquisition, integration and transaction related expenses

 

 

8,346

 

 

 

 

 

 

8,346

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

42,781

 

 

$

 

 

$

42,781

 

 

$

55,560

 

 

$

36,968

 

 

$

92,528

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

46.6

%

 

 

%

 

 

46.6

%

 

 

53.7

%

 

 

72.2

%

 

 

59.3

%

Adjusted gross profit (Non-GAAP) (2)

 

$

247,267

 

 

$

 

 

$

247,267

 

 

$

178,022

 

 

$

75,626

 

 

$

253,648

 

Adjusted gross margin (Non-GAAP) (3)

 

 

77.9

%

 

 

%

 

 

77.9

%

 

 

79.5

%

 

 

78.6

%

 

 

79.2

%

Adjusted operating income (Non-GAAP)

 

$

154,825

 

 

$

 

 

$

154,825

 

 

$

118,127

 

 

$

45,144

 

 

$

163,271

 

(1)

 

See “Non-GAAP Financial Measures” below.

(2)

 

Adjusted gross profit is calculated as net revenue less adjusted cost of goods sold or combined net revenue less adjusted combined cost of goods sold, as applicable. See Non-GAAP reconciliations below for calculation of adjusted cost of goods sold.

(3)

 

Adjusted gross margin is calculated as adjusted gross profit divided by net revenue or adjusted combined gross profit divided by combined net revenue, as applicable. See “Non-GAAP Financial Measures” below.

Specialty net revenue was $97 million in the fourth quarter of 2019 compared to $87 million for the prior year period, primarily due to the reclassification of Oxymorphone HCI to the Specialty segment during the third quarter of 2019, and higher revenue from Unithroid®.

Specialty gross margin for the fourth quarter of 2019 was 50% compared to 53% for the prior year period primarily due to product sales mix. Specialty adjusted gross margin(1) for the fourth quarter of 2019 was 75% compared to 81% for the prior year period primarily due to the addition of lower margin Oxymorphone HCI as noted above.

Specialty operating income for the fourth quarter of 2019 was $18 million compared to $24 million for the prior year period, primarily due to higher cost of goods sold and operating expenses. Specialty adjusted operating income(1) for the fourth quarter of 2019 was $46 million compared to $51 million for the prior year period primarily due to the higher cost of goods sold and selling, general and administrative expenses.

 

Corporate and Other Information

(Unaudited; In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

 

2018

 

General and administrative expense

 

 

 

 

 

 

 

 

 

 

 $

 

 

 

36,024

 

 

 $

 

 

 

38,464

 

Acquisition, transaction-related and integration expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

518

 

 

 

 

 

 

 

4,945

 

Restructuring and other charges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,512

 

 

 

 

 

 

 

391

 

Total general, administrative and other operating expenses

 

 

 

 

 

 

 

 

 

 

 $

 

 

 

38,054

 

 

 $

 

 

 

43,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2019

 

 

Year Ended December 31, 2018

 

 

 

 

 

 

 

Add:

 

 

(Non-GAAP)

 

 

 

 

 

 

Add:

 

 

(Non-GAAP)

 

 

 

Actual

 

 

Impax/ Gemini

 

 

Combined

 

 

Actual

 

 

Impax/ Gemini

 

 

Combined

 

General and administrative expense

 

$

141,050

 

 

$

 

 

$

141,050

 

 

$

109,955

 

 

 $

 

 

 

28,737

 

 

$

138,692

 

Acquisition, transaction-related and integration expenses

 

 

3,409

 

 

 

 

 

 

3,409

 

 

 

107,196

 

 

 

 

 

 

 

10,925

 

 

 

118,121

 

Restructuring and other charges

 

 

13,853

 

 

 

 

 

 

13,853

 

 

 

18,394

 

 

 

 

 

 

 

5,123

 

 

 

23,517

 

Charges related to legal matters, net

 

 

 

 

 

 

 

 

 

 

 

2,589

 

 

 

 

 

 

 

 

 

 

2,589

 

Total general, administrative and other operating expenses

 

$

158,312

 

 

$

 

 

$

158,312

 

 

$

238,134

 

 

 $

 

 

$

44,785

 

 

$

282,919

 

General and administrative and other operating expenses in the fourth quarter of 2019 decreased to $38 million compared to $44 million in the prior year period. The decrease is primarily due to synergies associated with the combination with Impax and the Gemini acquisition including lower acquisition, transaction-related and integration expenses, partially offset by restructuring and other charges relating to recent cost savings initiatives.

About Amneal

Amneal Pharmaceuticals, Inc. (NYSE: AMRX), headquartered in Bridgewater, NJ, is a fully-integrated pharmaceutical company focused on the development, manufacturing and distribution of generic and specialty drug products. The Company has manufacturing operations in North America, Asia, and Europe, working together to bring high-quality medicines to patients primarily within the United States.

Amneal has an extensive portfolio of more than 225 marketed commercial products and is expanding its portfolio to include complex dosage forms, including biosimilars, in a broad range of therapeutic areas. The Company also markets a portfolio of branded pharmaceutical products through its Specialty segment focused principally on central nervous system and endocrine disorders. For more information, visit https://www.amneal.com.

Non-GAAP Financial Measures

This release includes certain non-GAAP financial measures, including adjusted EBITDA, adjusted net income, adjusted net income per diluted share, adjusted gross profit, adjusted gross margin and adjusted operating income, which are intended as supplemental measures of the Company’s performance that are not required by or presented in accordance with GAAP. In addition, this release includes these non-GAAP measures and our reported results on a non-GAAP combined basis to include the historical results of Impax and Gemini, not adjusted for financing and acquisition accounting impacts of the combination with Impax, as if the transaction closing dates had occurred on the first day of all periods presented herein. All combined business results presented in this release are not prepared in accordance with Article 11 of Regulation S-X. The calculation of non-GAAP adjusted diluted earnings per share assumes the conversion of all outstanding shares of Class B Common Stock to shares of Class A Common Stock.

Management uses these non-GAAP historical and combined measures internally to evaluate and manage the Company’s operations and to better understand its business because they facilitate a comparative assessment of the Company's operating performance relative to its performance based on results calculated under GAAP. These non-GAAP measures also isolate the effects of some items that vary from period to period without any correlation to core operating performance and eliminate certain charges that management believes do not reflect the Company's operations and underlying operational performance. The compensation committee of the Company’s board of directors also uses certain of these measures to evaluate management's performance and set its compensation. The Company believes that these non-GAAP measures also provide useful information to investors regarding certain financial and business trends relating to the Company’s financial condition and operating results, and doing so on a combined basis facilitates an evaluation of the financial performance of the Company and its operations on a consistent basis. Providing this information therefore allows investors to make independent assessments of the Company’s financial performance, results of operation and trends while viewing the information through the eyes of management.

These non-GAAP measures are subject to limitations. The non-GAAP measures presented in this release may not be comparable to similarly titled measures used by other companies because other companies may not calculate one or more in the same manner. Additionally, the non-GAAP performance measures exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements; do not reflect changes in, or cash requirements for, working capital needs; and do not reflect interest expense, or the requirements necessary to service interest or principal payments on debt. Further, the combined results may not represent what our combined results of operations and financial position would have been had the transactions occurred on the dates indicated, nor are they intended to project our combined results of operations or financial position for any future period. To compensate for these limitations, management presents and considers these non-GAAP measures in conjunction with the Company’s GAAP results; no non-GAAP measure should be considered in isolation from or as alternatives to net income, diluted earnings per share or any other measure determined in accordance with GAAP. Readers should review the reconciliations included below, and should not rely on any single financial measure to evaluate the Company’s business.

A reconciliation of each non-GAAP measure to the most directly comparable GAAP measure is set forth below.

Safe Harbor Statement

Certain statements contained herein, regarding matters that are not historical facts, may be forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). Such forward-looking statements include statements regarding management’s intentions, plans, beliefs, expectations or forecasts for the future, including, among other things, future operating results and financial performance, product development and launches, integration strategies and resulting cost reduction, market position and business strategy. Words such as “may,” “will,” “could,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “assume,” “continue,” and similar words are intended to identify estimates and forward-looking statements.

The reader is cautioned not to rely on these forward-looking statements. These forward-looking statements are based on current expectations of future events. If the underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the expectations and projections of Amneal Pharmaceuticals, Inc. (the “Company”). Such risks and uncertainties include, but are not limited to: the risk that our goodwill may become impaired, which could adversely affect our financial condition and results of operations, our ability to integrate the operations of Amneal Pharmaceuticals LLC and Impax Laboratories, LLC pursuant to the business combination completed on May 4, 2018, and our ability to realize the anticipated synergies and other benefits of the combination with Impax; the impact of global economic conditions; our ability to successfully develop, license, acquire and commercialize new products on a timely basis; our ability to obtain exclusive marketing rights for our products; the competition we face in the pharmaceutical industry from brand and generic drug product companies, and the impact of that competition on our ability to set prices; our ability to manage our growth through acquisitions and otherwise; our dependence on the sales of a limited number of products for a substantial portion of our total revenues; the risk of product liability and other claims against us by consumers and other third parties; risks related to changes in the regulatory environment, including United States federal and state laws related to healthcare fraud abuse and health information privacy and security and changes in such laws; changes to FDA product approval requirements; risks related to federal regulation of arrangements between manufacturers of branded and generic products; the impact of healthcare reform and changes in coverage and reimbursement levels by governmental authorities and other third-party payers; the continuing trend of consolidation of certain customer groups; our reliance on certain licenses to proprietary technologies from time to time; our dependence on third-party suppliers and distributors for raw materials for our products and certain finished goods; our dependence on third-party agreements for a portion of our product offerings; our ability to identify and make acquisitions of or investments in complementary businesses and products on advantageous terms; legal, regulatory and legislative efforts by our brand competitors to deter competition from our generic alternatives; the significant amount of resources we expend on research and development; our substantial amount of indebtedness and our ability to generate sufficient cash to service our indebtedness in the future, and the impact of interest rate fluctuations on such indebtedness; and the high concentration of ownership of our Class A Common Stock and the fact that we are controlled by the Amneal Group. A further list and descriptions of these risks, uncertainties and other factors can be found in the Company’s most recently filed Annual Report on Form 10-K, as supplemented by any subsequently filed Quarterly Reports on Form 10-Q. Copies of these filings are available online at www.sec.gov, www.amneal.com or on request from the Company.

Forward-looking statements included herein speak only as of the date hereof and we undertake no obligation to revise or update such statements to reflect the occurrence of events or circumstances after the date hereof.

 

Amneal Pharmaceuticals, Inc.

Reconciliation of Non-GAAP Combined Results of Operations

(Unaudited; In thousands)

 

 

Year Ended December 31, 2019

 

 

Year Ended December 31, 2018

 

 

 

 

 

 

 

Add:

 

 

(Non-GAAP)

 

 

 

 

 

 

Add:

 

 

(Non-GAAP)

 

 

 

Actual

 

 

Impax/ Gemini

 

 

Combined

 

 

Actual

 

 

Impax/ Gemini

 

 

Combined

 

Net revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Generics

 

$

1,308,843

 

 

$

 

 

$

1,308,843

 

 

$

1,439,031

 

 

$

102,237

 

 

$

1,541,268

 

Specialty

 

 

317,530

 

 

 

 

 

 

317,530

 

 

 

223,960

 

 

 

96,245

 

 

 

320,205

 

Total net revenue

 

 

1,626,373

 

 

 

 

 

 

1,626,373

 

 

 

1,662,991

 

 

 

198,482

 

 

 

1,861,473

 

Cost of goods sold

 

 

1,147,214

 

 

 

 

 

 

1,147,214

 

 

 

938,773

 

 

 

149,492

 

 

 

1,088,265

 

Cost of goods sold impairment charges

 

 

126,162

 

 

 

 

 

 

126,162

 

 

 

7,815

 

 

 

 

 

 

7,815

 

Gross profit

 

 

352,997

 

 

 

 

 

 

352,997

 

 

 

716,403

 

 

 

48,990

 

 

 

765,393

 

Selling, general and administrative

 

 

289,598

 

 

 

 

 

 

289,598

 

 

 

227,846

 

 

 

64,013

 

 

 

291,859

 

Research and development

 

 

188,049

 

 

 

 

 

 

188,049

 

 

 

194,190

 

 

 

17,287

 

 

 

211,477

 

In-process research and development impairment charges

 

 

46,619

 

 

 

 

 

 

46,619

 

 

 

39,259

 

 

 

 

 

 

39,259

 

Acquisition, transaction-related and integration expenses

 

 

16,388

 

 

 

 

 

 

16,388

 

 

 

221,818

 

 

 

10,925

 

 

 

232,743

 

Restructuring and other charges

 

 

34,345

 

 

 

 

 

 

34,345

 

 

 

56,413

 

 

 

5,123

 

 

 

61,536

 

Charges (gains) related to legal matters, net

 

 

12,442

 

 

 

 

 

 

 

12,442

 

 

 

(19,711

)

 

 

90,099

 

 

 

70,388

 

Intellectual property legal development expenses

 

 

14,238

 

 

 

 

 

 

14,238

 

 

 

16,261

 

 

 

23

 

 

 

16,284

 

Operating loss

 

 

(248,682

)

 

 

 

 

 

(248,682

)

 

 

(19,673

)

 

 

(138,480

)

 

 

(158,153

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(168,205

)

 

 

 

 

 

(168,205

)

 

 

(143,571

)

 

 

(18,231

)

 

 

(161,802

)

Foreign exchange (loss) gain, net

 

 

(4,962

)

 

 

 

 

 

(4,962

)

 

 

(19,701

)

 

 

921

 

 

 

(18,780

)

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

 

 

 

(19,667

)

 

 

 

 

 

(19,667

)

Gain (loss) on sale of international businesses

 

 

7,258

 

 

 

 

 

 

7,258

 

 

 

(2,958

)

 

 

 

 

 

(2,958

)

Gain from reduction of tax receivable agreement liability

 

 

192,884

 

 

 

 

 

 

192,884

 

 

 

1,665

 

 

 

 

 

 

1,665

 

Other income (expense)

 

 

1,465

 

 

 

 

 

 

1,465

 

 

 

1,183

 

 

 

(638

)

 

 

545

 

Total other income (expense), net

 

 

28,440

 

 

 

 

 

 

28,440

 

 

 

(183,049

)

 

 

(17,948

)

 

 

(200,997

)

Loss before income taxes

 

 

(220,242

)

 

 

 

 

 

(220,242

)

 

 

(202,722

)

 

 

(156,428

)

 

 

(359,150

)

Provision for (benefit from) income taxes

 

 

383,331

 

 

 

 

 

 

383,331

 

 

 

(1,419

)

 

 

(6,273

)

 

 

(7,692

)

Net loss

 

 

(603,573

)

 

 

 

 

 

(603,573

)

 

 

(201,303

)

 

$

(150,155

)

 

$

(351,458

)

Less: Net loss attributable to Amneal Pharmaceuticals LLC pre-Combination

 

 

 

 

 

 

 

 

 

 

 

148,806

 

 

 

 

 

 

 

 

 

Less: Net loss attributable to non-controlling interests

 

 

241,656

 

 

 

 

 

 

241,656

 

 

 

32,753

 

 

 

 

 

 

 

 

 

Accretion of redeemable non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

(1,176

)

 

 

 

 

 

 

 

 

Net loss attributable to Amneal Pharmaceuticals, Inc.

 

$

(361,917

)

 

$

 

 

$

(361,917

)

 

$

(20,920

)

 

 

 

 

 

 

 

 

 

 

Amneal Pharmaceuticals, Inc.

Non-GAAP Reconciliations

(Unaudited; In thousands)

Reconciliations of Cost of Goods Sold to Adjusted Cost of Goods Sold

Generics

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

 

2018

 

Cost of goods sold

 

 

 

 

 

 

 

 

 

 

 

 

 

 $

 

 

 

224,708

 

 

$

 

 

263,002

 

Cost of goods sold impairment charges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,721

 

 

 

 

 

 

Adjusted to deduct:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,483

 

 

 

 

 

10,030

 

Inventory related charges (5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,089

 

 

 

 

 

3,620

 

Acquisition and site closure expenses (6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,715

 

 

 

 

 

12,384

 

Asset impairment charges (7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,721

 

 

 

 

 

510

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

910

 

 

 

 

 

406

 

Amortization of upfront payment (9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,423

 

Adjusted cost of goods sold (Non-GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

 

 $

 

200,511

 

 

$

 

 

225,629

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Generics

 

Year Ended December 31, 2019

 

 

Year Ended December 31, 2018

 

 

 

 

 

 

 

Add:

 

 

(Non-GAAP)

 

 

 

 

 

 

Add:

 

(Non-GAAP)

 

 

 

Actual

 

 

Impax/ Gemini

 

 

Combined

 

 

Actual

 

 

Impax/ Gemini

 

Combined

 

Cost of goods sold

 

$

984,782

 

 

$

 

 

$

984,782

 

 

$

835,181

 

 

$

 

122,761

 

$

957,942

 

Cost of goods sold impairment charges

 

 

119,145

 

 

 

 

 

 

119,145

 

 

 

7,815

 

 

 

 

7,815

 

Adjusted to deduct:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization

 

 

51,783

 

 

 

 

 

 

51,783

 

 

 

23,940

 

 

13,823

 

 

37,763

 

Inventory related charges (5)

 

 

22,828

 

 

 

 

 

 

22,828

 

 

 

45,615

 

 

9,894

 

 

55,509

 

Acquisition and site closure expenses (6)

 

 

25,151

 

 

 

 

 

 

25,151

 

 

 

27,619

 

 

 

 

27,619

 

Asset impairment charges (7)

 

 

119,145

 

 

 

 

 

 

119,145

 

 

 

8,401

 

 

53

 

 

8,454

 

Stock-based compensation expense

 

 

3,030

 

 

 

 

 

 

3,030

 

 

 

806

 

 

 

 

806

 

Amortization of upfront payment (9)

 

 

36,393

 

 

 

 

 

 

36,393

 

 

 

10,423

 

 

 

 

10,423

 

Other

 

 

1,024

 

 

 

 

 

 

1,024

 

 

 

 

 

 

 

 

Adjusted cost of goods sold (Non-GAAP)

 

$

844,573

 

 

$

 

 

$

844,573

 

 

$

726,192

 

 

$

 

98,991

 

$

825,183

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Specialty

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

 

2018

 

Cost of goods sold

 

 

 

 

 

 

 

 

 

 

 

 

 

 $

 

 

 

48,665

 

 

 $

 

 

41,118

 

Adjusted to deduct:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,695

 

 

 

 

 

18,848

 

Inventory related charges (5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,697

 

Adjusted cost of goods sold (Non-GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

 

 $

 

 

 

23,970

 

 

 $

 

 

16,573

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Specialty

 

Year Ended December 31, 2019

 

 

Year Ended December 31, 2018

 

 

 

 

 

 

 

Add:

 

 

(Non-GAAP)

 

 

 

 

 

 

Add:

 

(Non-GAAP)

 

 

 

Actual

 

 

Impax/ Gemini

 

 

Combined

 

 

Actual

 

 

Impax/ Gemini

 

Combined

 

Cost of goods sold

 

$

162,432

 

 

$

 

 

$

162,432

 

 

$

103,592

 

 

$

 

26,731

 

$

130,323

 

Cost of goods sold impairment charges

 

 

7,017

 

 

 

 

 

 

7,017

 

 

 

 

 

 

 

 

Adjusted to deduct:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization

 

 

92,169

 

 

 

 

 

 

92,169

 

 

 

49,047

 

 

6,112

 

 

55,159

 

Asset impairment charges (7)

 

 

7,017

 

 

 

 

 

 

7,017

 

 

 

 

 

 

 

 

Inventory related charges (5)

 

 

 

 

 

 

 

 

 

 

 

8,607

 

 

 

 

8,607

 

Adjusted cost of goods sold (Non-GAAP)

 

$

70,263

 

 

$

 

 

$

70,263

 

 

$

45,938

 

 

$

 

20,619

 

$

66,557

 

 

Amneal Pharmaceuticals, Inc.

Non-GAAP Reconciliations

(Unaudited; In thousands)

Reconciliations of Generics Operating (Loss) Income to Adjusted Operating Income

Generics

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

 

2018

 

Operating (loss) income

 

 

 

 

 

 

 

 

 

 

 

 

 

 $

 

 

 

(3,093

)

 

 $

 

 

 

43,070

 

Adjusted to add (deduct):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition and site closure expenses (6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,028

 

 

 

 

 

 

 

20,905

 

Amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,483

 

 

 

 

 

 

 

10,030

 

Inventory related charges (5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,938

 

 

 

 

 

 

 

3,620

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,588

 

 

 

 

 

 

 

1,926

 

Asset impairment charges (7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,655

 

 

 

 

 

 

 

39,119

 

Restructuring and other charges (8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,900

 

 

 

 

 

 

 

12,031

 

Gains related to legal matters, net (10)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,409

)

 

 

 

 

 

 

(97

)

Amortization of upfront payment (9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,423

 

R&D milestone payment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,650

 

 

 

 

 

 

 

5,300

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,839

 

Adjusted operating income (Non-GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

 

 $

 

 

 

48,740

 

 

 $

 

 

 

150,166

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Generics

 

Year Ended December 31, 2019

 

 

Year Ended December 31, 2018

 

 

 

 

 

 

 

Add:

 

 

(Non-GAAP)

 

 

 

 

 

 

Add:

 

 

(Non-GAAP)

 

 

 

Actual

 

 

Impax/ Gemini

 

 

Combined

 

 

Actual

 

 

Impax/ Gemini

 

 

Combined

 

Operating (loss) income

 

$

(133,151

)

 

$

 

 

$

(133,151

)

 

$

162,901

 

 

$

 

 

 

(130,663

)

 

$

32,238

 

Adjusted to add (deduct):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition and site closure expenses (6)

 

 

41,639

 

 

 

 

 

 

41,639

 

 

 

150,762

 

 

 

 

 

 

 

 

 

 

150,762

 

Amortization

 

 

51,783

 

 

 

 

 

 

51,783

 

 

 

23,940

 

 

 

 

 

 

 

13,823

 

 

 

37,763

 

Inventory related charges (5)

 

 

25,677

 

 

 

 

 

 

25,677

 

 

 

45,615

 

 

 

 

 

 

 

9,894

 

 

 

55,509

 

Stock-based compensation expense

 

 

11,943

 

 

 

 

 

 

11,943

 

 

 

3,348

 

 

 

 

 

 

 

982

 

 

 

4,330

 

Asset impairment charges (7)

 

 

166,396

 

 

 

 

 

 

166,396

 

 

 

47,660

 

 

 

 

 

 

 

53

 

 

 

47,713

 

Restructuring and other charges (8)

 

 

20,101

 

 

 

 

 

 

20,101

 

 

 

33,943

 

 

 

 

 

 

 

 

 

 

33,943

 

Charges (gains) related to legal matters, net (10)

 

 

12,591

 

 

 

 

 

 

12,591

 

 

 

(97

)

 

 

 

 

 

 

89,159

 

 

 

89,062

 

Amortization of upfront payment (9)

 

 

36,393

 

 

 

 

 

 

36,393

 

 

 

10,423

 

 

 

 

 

 

 

 

 

 

10,423

 

R&D milestone payment

 

 

16,579

 

 

 

 

 

 

16,579

 

 

 

8,000

 

 

 

 

 

 

 

 

 

 

8,000

 

Other

 

 

49

 

 

 

 

 

 

49

 

 

 

3,245

 

 

 

 

 

 

 

 

 

 

3,245

 

Adjusted operating income (Non-GAAP)

 

$

250,000

 

 

$

 

 

$

250,000

 

 

$

489,740

 

 

$

 

 

 

(16,752

)

 

$

472,988

 

 

Amneal Pharmaceuticals, Inc.

Non-GAAP Reconciliations

(Unaudited; In thousands)

Reconciliations of Specialty Operating Income to Adjusted Operating Income

Specialty

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

 

2018

 

Operating income

 

 

 

 

 

 

 

 

 

 

 

 

 

 $

 

 

 

18,012

 

 

 $

 

 

 

24,010

 

Adjusted to add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,695

 

 

 

 

 

 

 

18,848

 

Inventory related charges (5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,697

 

Acquisition and site closure expenses (6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,641

 

 

 

 

 

 

 

189

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

532

 

 

 

 

 

 

 

11

 

Restructuring and other charges (8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,682

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

163

 

Adjusted operating income (Non-GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

 

 $

 

 

 

45,880

 

 

 $

 

 

 

50,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Specialty

 

Year Ended December 31, 2019

 

 

Year Ended December 31, 2018

 

 

 

 

 

 

 

Add:

 

 

(Non-GAAP)

 

 

 

 

 

 

Add:

 

 

(Non-GAAP)

 

 

 

Actual

 

 

Impax/ Gemini

 

 

Combined

 

 

Actual

 

 

Impax/ Gemini

 

 

Combined

 

Operating income

 

$

42,781

 

 

$

 

 

$

42,781

 

 

$

55,560

 

 

$

 

 

 

36,968

 

 

$

92,528

 

Adjusted to add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization

 

 

92,169

 

 

 

 

 

 

92,169

 

 

 

49,047

 

 

 

 

 

 

 

6,112

 

 

 

55,159

 

Inventory related charges (5)

 

 

 

 

 

 

 

 

 

 

 

8,607

 

 

 

 

 

 

 

 

 

 

8,607

 

Acquisition and site closure expenses (6)

 

 

10,969

 

 

 

 

 

 

10,969

 

 

 

189

 

 

 

 

 

 

 

 

 

 

189

 

Stock-based compensation expense

 

 

1,498

 

 

 

 

 

 

1,498

 

 

 

11

 

 

 

 

 

 

 

1,124

 

 

 

1,135

 

Restructuring and other charges (8)

 

 

391

 

 

 

 

 

 

391

 

 

 

4,076

 

 

 

 

 

 

 

 

 

 

4,076

 

Charges related to legal matters, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

940

 

 

 

940

 

Asset impairment charges (7)

 

 

7,017

 

 

 

 

 

 

7,017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

637

 

 

 

 

 

 

 

 

 

 

637

 

Adjusted operating income (Non-GAAP)

 

$

154,825

 

 

$

 

 

$

154,825

 

 

$

118,127

 

 

$

 

 

 

45,144

 

 

$

163,271

 

 

Amneal Pharmaceuticals, Inc.

Non-GAAP Reconciliations

(Unaudited; In thousands, except per share amounts)

Reconciliation of Net Loss to Adjusted Net Income and Calculation of Adjusted Diluted EPS

 

 

Three Months Ended December 31,

 

 

 

2019

 

 

2018

 

Net loss

 

$

(64,903

)

 

$

(20,330

)

Adjusted to add (deduct):

 

 

 

 

 

 

 

 

Non-cash interest

 

 

1,629

 

 

$

1,640

 

GAAP Income tax expense

 

 

7,792

 

 

$

5,524

 

Gain from reduction of tax receivable agreement liability (4)

 

 

 

 

$

(1,665

)

Amortization

 

 

40,178

 

 

$

28,878

 

Stock-based compensation expense

 

 

5,013

 

 

$

3,606

 

Acquisition and site closure expenses (6)

 

 

14,983

 

 

$

28,966

 

Restructuring and other charges (8)

 

 

4,412

 

 

$

14,104

 

Inventory related charges (5)

 

 

5,963

 

 

$

9,317

 

Gains related to legal matters, net (10)

 

 

(2,409

)

 

$

(497

)

Asset impairment charges (7)

 

 

14,655

 

 

$

39,119

 

Amortization of upfront payment (9)

 

 

 

 

$

10,423

 

Foreign exchange gain

 

 

(4,722

)

 

$

(2,817

)

(Gain) loss on sale of international business (11)

 

 

(328

)

 

$

146

 

R&D milestone payments

 

 

6,650

 

 

$

5,300

 

Other

 

 

342

 

 

$

5,077

 

Income tax at 21%

 

 

(6,138

)

 

$

(26,626

)

Net income attributable to NCI not associated with our Class B shares

 

 

(113

)

 

 

(189

)

Adjusted net income (Non-GAAP)

 

$

23,004

 

 

$

99,976

 

Adjusted diluted EPS (Non-GAAP) (12)

 

$

0.08

 

 

$

0.33

 

(12)

 

For the three months ended December 31, 2019, utilizes weighted average diluted shares outstanding of 299,298, which consists of Class A shares and Class B shares under the if-converted method. For the three months ended December 31, 2018, utilizes weighted average diluted shares outstanding of 299,345, which consists of Class A shares, Class B and Class B-1 shares under the if-converted method.

 

Amneal Pharmaceuticals, Inc.

Non-GAAP Reconciliations

(Unaudited; In thousands, except per share amounts)

Reconciliation of Net Loss to Combined Adjusted Net Income and Calculation of Adjusted Diluted EPS

 

 

Year Ended December 31, 2019

 

 

Year Ended December 31, 2018

 

 

 

 

 

 

 

Add:

 

 

(Non-GAAP)

 

 

 

 

 

 

Add:

 

 

(Non-GAAP)

 

 

 

Actual

 

 

Impax/ Gemini

 

 

Combined

 

 

Actual

 

 

Impax/ Gemini

 

 

Combined

 

Net loss

 

$

(603,573

)

 

$

 

 

$

(603,573

)

 

$

(201,303

)

 

$

(150,155

)

 

$

(351,458

)

Adjusted to add (deduct):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash interest

 

 

6,478

 

 

 

 

 

 

6,478

 

 

 

8,669

 

 

 

9,413

 

 

 

18,082

 

Gain from reduction of tax receivable agreement liability (4)

 

 

(192,884

)

 

 

 

 

 

(192,884

)

 

 

(1,665

)

 

 

 

 

 

(1,665

)

GAAP Income tax expense (benefit)

 

 

383,331

 

 

 

 

 

 

383,331

 

 

 

(1,419

)

 

 

(6,273

)

 

 

(7,692

)

Amortization

 

 

143,952

 

 

 

 

 

 

143,952

 

 

 

72,987

 

 

 

19,935

 

 

 

92,922

 

Stock-based compensation expense

 

 

21,679

 

 

 

 

 

 

21,679

 

 

 

8,840

 

 

 

4,816

 

 

 

13,656

 

Acquisition and site closure expenses (6)

 

 

73,471

 

 

 

 

 

 

73,471

 

 

 

264,424

 

 

 

10,925

 

 

 

275,349

 

Restructuring and other charges (8)

 

 

34,345

 

 

 

 

 

 

34,345

 

 

 

56,413

 

 

 

5,123

 

 

 

61,536

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

 

 

 

19,667

 

 

 

 

 

 

19,667

 

Inventory related charges (5)