Amneal Reports Second Quarter 2023 Financial Results

August 4, 2023

‒ Q2 2023 Net Revenue of $599 million; GAAP Net Income of $12 million; Diluted EPS of $0.08 ‒
‒ Q2 2023 Adjusted Net Income(1) of $57 million; Adjusted EBITDA (1) of $146 million; Adjusted Diluted EPS (1) of $0.19 ‒
‒ Raising 2023 Full Year Guidance ‒

Amneal Pharmaceuticals, Inc. (NYSE: AMRX) (“Amneal” or the “Company”) announced its results today for the second quarter ended June 30, 2023.

“We are pleased to raise our full year 2023 guidance following another strong quarter. Our momentum in the first half of the year underscores the solid execution of our strategy and ability to drive continued growth across our diversified portfolio. We expect many key catalysts ahead, including complex generics launches, an expanded injectables portfolio, strong biosimilars uptake, continued specialty growth, expansion across AvKARE distribution channels, and an emerging presence internationally. As one of the largest domestic pharmaceutical manufacturers, we are focused on doing our part in addressing the ongoing drug shortages in the U.S. market. As we accelerate growth and profitability, we are also extending the reach and impact of Amneal in making essential medicines more accessible for patients around the world,” said Chirag and Chintu Patel, Co-Chief Executive Officers.

Net revenue in the second quarter of 2023 was $599 million, an increase of 7% compared to $559 million in the second quarter of 2022. The increase was driven by Generics growth due to the durability of our diversified, complex portfolio and new product launches, including biosimilars, as well as continued expansion across AvKARE, with solid Specialty revenue performance.

Net income attributable to Amneal Pharmaceuticals, Inc. was $12 million in the second quarter of 2023 compared to a net loss of $121 million in the second quarter of 2022. Adjusted EBITDA(1) in the second quarter of 2023 was $146 million, an increase of 9% compared to the second quarter of 2022, reflective of strong revenue performance, durable adjusted gross margins and operating expense leverage. Diluted EPS in the second quarter of 2023 was $0.08 compared to a loss of $0.80 for the second quarter of 2022. Adjusted diluted EPS(1) in the second quarter of 2023 was $0.19, in line with the second quarter of 2022.

(1)

 

See “Non-GAAP Financial Measures” below.

Raising Full Year 2023 Guidance

The Company is raising its previously provided full year 2023 guidance.

 

Updated 2023 Guidance

Prior Full Year 2023 Guidance

Net revenue

$2.30 billion - $2.40 billion

$2.25 billion - $2.35 billion

Adjusted EBITDA (1)

$525 million - $540 million

$500 million - $530 million

Adjusted diluted EPS (2)

$0.45 - $0.55

$0.40 - $0.50

Operating cash flow (3)

$220 million - $250 million

$200 million - $230 million

Capital expenditures

$50 million - $60 million

$50 million - $60 million

Weighted average diluted shares outstanding (4)

Approximately 307 million

Approximately 307 million

(1)

 

Includes 100% of EBITDA from the AvKARE acquisition. See also “Non-GAAP Financial Measures” below.

(2)

 

Accounts for 35% non-controlling interest in AvKARE. See also “Non-GAAP Financial Measures” below.

(3)

 

Represents cash provided by operating activities. Guidance does not contemplate one time and non-recurring items such as  legal settlements and other discrete items. 

(4)

 

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

Amneal’s 2023 estimates are based on management’s current expectations, including with respect to prescription trends, pricing levels, the timing of future product launches, the costs incurred and benefits realized of restructuring activities, and our long-term strategy. The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company cannot provide a reconciliation between non-GAAP projections and the most directly comparable measures in accordance with GAAP 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, legal settlements, and other gains and losses. These items are uncertain, depend on various factors, and could have a material impact on GAAP reported results.

Conference Call Information

Amneal will host a conference call and live webcast at 8:30 am Eastern Time on August 4, 2023 to discuss its results. The live webcast and presentation will be accessible through the Investor Relations section of the Company’s website at https://investors.amneal.com. To access the call through a conference line, dial 1 (833) 470-1428 (in the U.S.) with access code 977620. A replay of the conference call will be posted shortly after the call and will be available for seven days. To access the replay, dial 1 (866) 813-9403 (in the U.S.) with access code 301025. For a list of toll-free international numbers, visit this website: https://www.netroadshow.com/events/global-numbers?confId=52762.

About Amneal

Amneal Pharmaceuticals, Inc. (NYSE: AMRX), headquartered in Bridgewater, NJ, is a fully integrated global pharmaceuticals company. We make healthy possible through the development, manufacturing, and distribution of a diverse portfolio of approximately 270 generic and specialty pharmaceuticals, primarily within the United States. In its Generics segment, the Company is expanding across a broad range of complex product categories and therapeutic areas, including injectables and biosimilars. In its Specialty segment, Amneal has a growing portfolio of branded pharmaceuticals focused primarily on central nervous system and endocrine disorders, with a pipeline focused on unmet needs. Through its AvKARE segment, the Company is a distributor of pharmaceuticals and other products for the U.S. federal government, retail, and institutional markets. For more information, please visit www.amneal.com.

Cautionary Statement on Forward-Looking Statements

Certain statements contained herein, regarding matters that are not historical facts, may be forward-looking statements (as defined in the U.S. Private Securities Litigation Reform Act of 1995). Such forward-looking statements include statements regarding management’s intentions, plans, beliefs, expectations, financial results, or forecasts for the future, including among other things: discussions of future operations, including international expansion; expected or estimated operating results and financial performance; the Company’s growth prospects and opportunities as well as its strategy for growth; product development and launches; the successful commercialization and market acceptance of new products, and other non-historical statements. Words such as “plans,” “expects,” “will,” “anticipates,” “estimates,” and similar words, or the negatives thereof, 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, including with respect to future market conditions, company performance and financial results, operational investments, business prospects, new strategies and growth initiatives, the competitive environment, and other 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 the Company.

Such risks and uncertainties include, but are not limited to: our ability to successfully develop, license, acquire and commercialize new products on a timely basis; 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 obtain exclusive marketing rights for our products; our ability to manage our growth through acquisitions and otherwise; our revenues are derived from the sales of a limited number of products, a substantial portion of which are through a limited number of customers; the continuing trend of consolidation of certain customer groups; our dependence on third-party suppliers and distributors for raw materials for our products and certain finished goods; 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; our ability to secure satisfactory terms when negotiating a refinancing or other new indebtedness; our dependence on third-party agreements for a portion of our product offerings; legal, regulatory and legislative efforts by our brand competitors to deter competition from our generic alternatives; risks related to federal regulation of arrangements between manufacturers of branded and generic products; our reliance on certain licenses to proprietary technologies from time to time; the significant amount of resources we expend on research and development; 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 U.S. federal and state laws related to healthcare fraud abuse and health information privacy and security and changes in such laws; changes to Food and Drug Administration product approval requirements; the impact of healthcare reform and changes in coverage and reimbursement levels by governmental authorities and other third-party payers; our potential expansion into additional international markets subjecting us to increased regulatory, economic, social and political uncertainties, including recent events affecting the financial services industry; our ability to identify, make and integrate acquisitions or investments in complementary businesses and products on advantageous terms; the impact of global economic, political or other catastrophic events; our ability to attract, hire and retain highly skilled personnel; our obligations under a tax receivable agreement may be significant; and the high concentration of ownership of our Class A Common Stock and the fact that we are controlled by the Amneal Group. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the Company’s filings with the Securities and Exchange Commission, including under Item 1A, “Risk Factors” in the Company’s most recent Annual Report on Form 10-K and in its subsequent reports on Forms 10-Q and 8-K. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. 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.

Non-GAAP Financial Measures

This release includes certain non-GAAP financial measures, including EBITDA, adjusted EBITDA, and adjusted diluted EPS, which are intended as supplemental measures of the Company’s performance that are not required by or presented in accordance with GAAP. Adjusted diluted EPS reflects diluted earnings per share based on adjusted net income, which is net income (loss) adjusted to (A) exclude (i) non-cash interest, (ii) GAAP (benefit from) provision for income taxes, (iii) amortization, (iv) stock-based compensation, (v) acquisition, site closure expenses, and idle facility expenses, (vi) restructuring and other charges, (vii) loss on refinancing, (viii) charges related to legal matters, including interest, net, (ix) asset impairment charges, (x) regulatory approval milestone, (xi) change in fair value of contingent consideration, (xii) insurance recoveries for property losses and associated expenses (xiii) other and (xiv) net income attributable to non-controlling interests not associated with class B common stock, and (B) include non-GAAP provision for income taxes. Non-GAAP adjusted EPS is calculated assuming the weighted average diluted shares outstanding of class A and class B common stock under the if-converted method.

Management uses these non-GAAP 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 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 operations 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, our historical adjusted results are not intended to project our adjusted 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 any 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 historical non-GAAP measure to the most directly comparable GAAP measure is set forth below. 

 

Amneal Pharmaceuticals, Inc.

Consolidated Statements of Operations

(Unaudited; In thousands, except per share amounts)

 

 

Three Months Ended
June 30,

 

Six Months
Ended June 30,

 

2023

 

2022

 

2023

 

2022

Net revenue

$

599,046

 

 

$

559,355

 

 

$

1,156,586

 

 

$

1,056,988

 

Cost of goods sold

 

379,025

 

 

 

358,836

 

 

 

758,379

 

 

 

681,898

 

Gross profit

 

220,021

 

 

 

200,519

 

 

 

398,207

 

 

 

375,090

 

Selling, general and administrative

 

105,570

 

 

 

98,806

 

 

 

207,666

 

 

 

197,471

 

Research and development

 

37,799

 

 

 

50,748

 

 

 

76,489

 

 

 

103,546

 

Intellectual property legal development expenses

 

820

 

 

 

821

 

 

 

2,464

 

 

 

1,585

 

Acquisition, transaction-related and integration expenses

 

 

 

 

241

 

 

 

 

 

 

675

 

Restructuring and other charges

 

82

 

 

 

 

 

 

592

 

 

 

731

 

Change in fair value of contingent consideration

 

(6,364

)

 

 

(270

)

 

 

(3,907

)

 

 

(70

)

Insurance recoveries for property losses and associated expenses

 

 

 

 

(1,911

)

 

 

 

 

 

(1,911

)

Charges related to legal matters, net

 

2,017

 

 

 

251,877

 

 

 

1,581

 

 

 

249,551

 

Other operating expense (income)

 

13

 

 

 

(1,175

)

 

 

(1,211

)

 

 

(1,175

)

Operating income (loss)

 

80,084

 

 

 

(198,618

)

 

 

114,533

 

 

 

(175,313

)

Other (expense) income:

 

 

 

 

 

 

 

Interest expense, net

 

(50,857

)

 

 

(35,623

)

 

 

(100,172

)

 

 

(68,958

)

Foreign exchange gain (loss), net

 

421

 

 

 

(5,429

)

 

 

2,322

 

 

 

(7,442

)

Other income, net

 

12

 

 

 

6,939

 

 

 

3,551

 

 

 

9,061

 

Total other expense, net

 

(50,424

)

 

 

(34,113

)

 

 

(94,299

)

 

 

(67,339

)

Income (loss) before income taxes

 

29,660

 

 

 

(232,731

)

 

 

20,234

 

 

 

(242,652

)

(Benefit from) provision for income taxes

 

(23

)

 

 

7,350

 

 

 

645

 

 

 

3,889

 

Net income (loss)

 

29,683

 

 

 

(240,081

)

 

 

19,589

 

 

 

(246,541

)

Less: Net (income) loss attributable to non-controlling interests

 

(17,766

)

 

 

119,273

 

 

 

(14,615

)

 

 

124,015

 

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

 

11,917

 

 

 

(120,808

)

 

 

4,974

 

 

 

(122,526

)

Accretion of redeemable non-controlling interest

 

 

 

 

 

 

 

 

 

 

(438

)

Net income (loss) attributable to Amneal Pharmaceuticals, Inc.

$

11,917

 

 

$

(120,808

)

 

$

4,974

 

 

$

(122,964

)

 

 

 

 

 

 

 

 

Net income (loss) per share attributable to Amneal Pharmaceuticals, Inc.'s class A common stockholders:

 

 

 

 

 

 

 

Basic

$

0.08

 

 

$

(0.80

)

 

$

0.03

 

 

$

(0.82

)

Diluted

$

0.08

 

 

$

(0.80

)

 

$

0.03

 

 

$

(0.82

)

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

153,738

 

 

 

150,993

 

 

 

152,928

 

 

 

150,445

 

Diluted

 

154,887

 

 

 

150,993

 

 

 

154,575

 

 

 

150,445

 

 

Amneal Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(Unaudited; In thousands)

 

 

June 30, 2023

 

December 31, 2022

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

109,284

 

$

25,976

Restricted cash

 

5,298

 

 

9,251

Trade accounts receivable, net

 

674,736

 

 

741,791

Inventories

 

550,558

 

 

530,735

Prepaid expenses and other current assets

 

81,764

 

 

103,565

Related party receivables

 

149

 

 

500

Total current assets

 

1,421,789

 

 

1,411,818

Property, plant and equipment, net

 

459,108

 

 

469,815

Goodwill

 

599,206

 

 

598,853

Intangible assets, net

 

1,015,376

 

 

1,096,093

Operating lease right-of-use assets

 

34,031

 

 

38,211

Operating lease right-of-use assets - related party

 

16,566

 

 

17,910

Financing lease right-of-use assets

 

61,570

 

 

63,424

Other assets

 

93,240

 

 

103,217

Total assets

$

3,700,886

 

$

3,799,341

Liabilities and Stockholders' Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued expenses

$

512,719

 

$

538,199

Current portion of liabilities for legal matters

 

77,011

 

 

107,483

Revolving credit facilities

 

120,000

 

 

60,000

Current portion of long-term debt, net

 

30,405

 

 

29,961

Current portion of operating lease liabilities

 

9,861

 

 

8,321

Current portion of operating lease liabilities - related party

 

2,992

 

 

2,869

Current portion of financing lease liabilities

 

3,219

 

 

3,488

Related party payables - short term

 

21,143

 

 

2,479

Total current liabilities

 

777,350

 

 

752,800

Long-term debt, net

 

2,549,177

 

 

2,591,981

Note payable - related party

 

40,560

 

 

39,706

Operating lease liabilities

 

28,296

 

 

32,126

Operating lease liabilities - related party

 

14,388

 

 

15,914

Financing lease liabilities

 

59,836

 

 

60,769

Related party payables - long term

 

9,123

 

 

9,649

Other long-term liabilities

 

39,282

 

 

87,468

Total long-term liabilities

 

2,740,662

 

 

2,837,613

Redeemable non-controlling interests

 

32,106

 

 

24,949

Total stockholders' equity

 

150,768

 

 

183,979

Total liabilities and stockholders' equity

$

3,700,886

 

$

3,799,341

 

Amneal Pharmaceuticals, Inc.

Consolidated Statements of Cash Flows

(Unaudited; In thousands)

 

 

Six Months Ended June 30,

 

2023

 

2022

Cash flows from operating activities:

 

 

 

Net income (loss)

$

19,589

 

 

$

(246,541

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

Depreciation and amortization

 

115,261

 

 

 

117,511

 

Unrealized foreign currency (gain) loss

 

(1,561

)

 

 

8,014

 

Amortization of debt issuance costs and discount

 

4,523

 

 

 

4,388

 

Loss on refinancing - revolving credit facility

 

 

 

 

291

 

Intangible asset impairment charges

 

1,283

 

 

 

5,112

 

Change in fair value of contingent consideration

 

(3,907

)

 

 

(70

)

Stock-based compensation

 

14,157

 

 

 

16,327

 

Inventory provision

 

41,806

 

 

 

17,748

 

Insurance recoveries for property and equipment losses

 

 

 

 

(1,000

)

Other operating charges and credits, net

 

3,364

 

 

 

3,449

 

Changes in assets and liabilities:

 

 

 

Trade accounts receivable, net

 

66,976

 

 

 

(26,561

)

Inventories

 

(60,526

)

 

 

(65,395

)

Prepaid expenses, other current assets and other assets

 

31,898

 

 

 

(119,747

)

Related party receivables

 

351

 

 

 

(159

)

Accounts payable, accrued expenses and other liabilities

 

(107,760

)

 

 

273,947

 

Related party payables

 

2,913

 

 

 

7,508

 

Net cash provided by (used in) operating activities

 

128,367

 

 

 

(5,178

)

Cash flows from investing activities:

 

 

 

Purchases of property, plant and equipment

 

(21,691

)

 

 

(15,842

)

Saol Acquisition

 

 

 

 

(84,714

)

Acquisition of intangible assets

 

(1,488

)

 

 

(10,000

)

Deposits for future acquisition of property, plant and equipment

 

(842

)

 

 

(3,955

)

Proceeds from insurance recoveries for property and equipment losses

 

 

 

 

1,000

 

Net cash used in investing activities

 

(24,021

)

 

 

(113,511

)

Cash flows from financing activities:

 

 

 

Payments of deferred financing and refinancing costs

 

 

 

 

(1,622

)

Payments of principal on debt, revolving credit facilities, financing leases and other

 

(87,566

)

 

 

(63,010

)

Borrowings on revolving credit facilities

 

100,000

 

 

 

85,000

 

Proceeds from exercise of stock options

 

 

 

 

239

 

Employee payroll tax withholding on restricted stock unit vesting

 

(2,033

)

 

 

(3,291

)

Payments of deferred consideration for acquisitions - related party

 

 

 

 

(43,998

)

Acquisition of redeemable non-controlling interest

 

 

 

 

(1,722

)

Tax distributions to non-controlling interests

 

(35,557

)

 

 

(9,917

)

Net cash used in financing activities

 

(25,156

)

 

 

(38,321

)

Effect of foreign exchange rate on cash

 

165

 

 

 

(1,547

)

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

 

79,355

 

 

 

(158,557

)

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

 

35,227

 

 

 

256,739

 

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

$

114,582

 

 

$

98,182

 

Cash and cash equivalents - end of period

$

109,284

 

 

$

91,979

 

Restricted cash - end of period

 

5,298

 

 

 

6,203

 

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

$

114,582

 

 

$

98,182

 

 

Amneal Pharmaceuticals, Inc.

Non-GAAP Reconciliations

(Unaudited, In thousands)

Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2023

 

2022

 

2023

 

2022

Net income (loss)

$

29,683

 

 

$

(240,081

)

 

$

19,589

 

 

$

(246,541

)

Adjusted to add:

 

 

 

 

 

 

 

Interest expense, net

 

50,857

 

 

 

35,623

 

 

 

100,172

 

 

 

68,958

 

(Benefit from) provision for income taxes

 

(23

)

 

 

7,350

 

 

 

645

 

 

 

3,889

 

Depreciation and amortization

 

57,111

 

 

 

59,696

 

 

 

115,261

 

 

 

117,511

 

EBITDA (Non-GAAP)

$

137,628

 

 

$

(137,412

)

 

$

235,667

 

 

$

(56,183

)

Adjusted to add (deduct):

 

 

 

 

 

 

 

Stock-based compensation expense

 

6,561

 

 

 

8,262

 

 

 

14,157

 

 

 

16,327

 

Acquisition, site closure, and idle facility expenses (1)

 

1,579

 

 

 

3,173

 

 

 

4,280

 

 

 

8,762

 

Restructuring and other charges

 

82

 

 

 

 

 

 

493

 

 

 

731

 

Loss on refinancing

 

 

 

 

291

 

 

 

 

 

 

291

 

Charges related to legal matters, net (2)

 

2,017

 

 

 

251,877

 

 

 

6,081

 

 

 

249,551

 

Asset impairment charges

 

1,338

 

 

 

5,250

 

 

 

2,071

 

 

 

5,250

 

Foreign exchange (gain) loss

 

(421

)

 

 

5,429

 

 

 

(2,322

)

 

 

7,442

 

Change in fair value of contingent consideration

 

(6,364

)

 

 

(270

)

 

 

(3,907

)

 

 

(70

)

Insurance recoveries for property losses and

associated expenses

 

 

 

 

(1,911

)

 

 

 

 

 

(1,911

)

Regulatory approval milestone

 

 

 

 

 

 

 

 

 

 

5,000

 

Increase in tax receivable agreement liability

 

405

 

 

 

 

 

 

1,231

 

 

 

 

Other

 

3,263

 

 

 

(104

)

 

 

4,517

 

 

 

(745

)

Adjusted EBITDA (Non-GAAP)

$

146,088

 

 

$

134,585

 

 

$

262,268

 

 

$

234,445

 

 

Amneal Pharmaceuticals, Inc.

Non-GAAP Reconciliations

(Unaudited; In thousands, except per share amounts)

 

Reconciliation of Net Income (Loss) to Adjusted Net Income and Calculation of Adjusted Diluted Earnings Per Share

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2023

 

2022

 

2023

 

2022

Net income (loss)

$

29,683

 

 

$

(240,081

)

 

$

19,589

 

 

$

(246,541

)

Adjusted to add (deduct):

 

 

 

 

 

 

 

Non-cash interest

 

2,112

 

 

 

1,966

 

 

 

3,953

 

 

 

3,948

 

GAAP (benefit from) provision for income taxes

 

(23

)

 

 

7,350

 

 

 

645

 

 

 

3,889

 

Amortization

 

39,309

 

 

 

40,216

 

 

 

78,920

 

 

 

79,368

 

Stock-based compensation expense

 

6,561

 

 

 

8,262

 

 

 

14,157

 

 

 

16,327

 

Acquisition, site closure expenses, and idle facility expenses (1)

 

1,579

 

 

 

3,173

 

 

 

4,280

 

 

 

8,762

 

Restructuring and other charges

 

82

 

 

 

 

 

 

493

 

 

 

731

 

Loss on refinancing

 

 

 

 

291

 

 

 

 

 

 

291

 

Charges related to legal matters, including interest, net (2)

 

2,725

 

 

 

252,230

 

 

 

7,607

 

 

 

249,904

 

Asset impairment charges

 

1,331

 

 

 

5,250

 

 

 

2,064

 

 

 

5,250

 

Regulatory approval milestone

 

 

 

 

 

 

 

 

 

 

5,000

 

Change in fair value of contingent consideration

 

(6,364

)

 

 

(270

)

 

 

(3,907

)

 

 

(70

)

Insurance recoveries for property losses and associated expenses

 

 

 

 

(1,911

)

 

 

 

 

 

(1,911

)

Increase in tax receivable agreement liability

 

405

 

 

 

 

 

 

1,231

 

 

 

 

Other

 

3,261

 

 

 

(103

)

 

 

4,664

 

 

 

(603

)

Provision for income taxes (3)

 

(16,495

)

 

 

(17,451

)

 

 

(27,324

)

 

 

(27,659

)

Net income attributable to non-controlling interests not associated with our class B common stock

 

(7,292

)

 

 

(1,889

)

 

 

(12,687

)

 

 

(4,088

)

Adjusted net income (Non-GAAP)

$

56,874

 

 

$

57,033

 

 

$

93,685

 

 

$

92,598

 

Weighted average diluted shares outstanding (Non-GAAP) (4)

 

307,004

 

 

 

304,278

 

 

 

306,691

 

 

 

304,456

 

Adjusted diluted earnings per share (Non-GAAP)

$

0.19

 

 

$

0.19

 

 

$

0.31

 

 

$

0.30

 

 Amneal Pharmaceuticals, Inc.

 Non-GAAP Reconciliations

 (Unaudited; In thousands)

 

 

 

 

 

 

 Explanations for Reconciliations of Net Income (Loss) to EBITDA and Adjusted EBITDA and

 Net Income (Loss) to Adjusted Net Income and Calculation of Adjusted Diluted Earnings per Share

 

(1)

 

Acquisition, site closure, and idle facility expenses for the three and six months ended June 30, 2023 primarily included site closure costs associated with the planned cessation of manufacturing at our Hauppauge, NY facility. Acquisition, site closure, and idle facility expenses for the three months ended June 30, 2022 primarily included: (i) integration costs associated with the acquisition of the baclofen franchise from certain entities affiliated with Saol International Limited which closed on February 9, 2022 (the “Saol Acquisition”) and (ii) site closure costs associated with the planned cessation of manufacturing at our Hauppauge, NY facility. Acquisition, site closure, and idle facility expenses for the six months ended June 30, 2022 primarily included: (i) transaction and integration costs associated with the Saol Acquisition; (ii) integration costs associated with the acquisition of Puniska Healthcare Pvt. Ltd. which closed on November 2, 2021; and (iii) site closure costs associated with the planned cessation of manufacturing at our Hauppauge, NY facility.

 
(2)  

For the three months ended June 30, 2023, charges related to legal matters, net primarily related to civil prescription opioid litigation. For the six months ended June 30, 2023, charges related to legal matters, net primarily related to civil prescription opioid litigation and other legal proceedings. For the three and six months ended June 30, 2022, charges related to legal matters, net, primarily included charges for the preliminary settlement of the Opana ER® antitrust litigation, net of insurance recoveries associated with class action shareholder lawsuits.

 
(3)  

The non-GAAP effective tax rates for the three and six months ended June 30, 2023 were 22.5% and 22.6%, respectively. The non-GAAP effective tax rates for the three and six months ended June 30, 2022 were 23.4% and 23.0%, respectively.

 
(4)  

Weighted average diluted shares outstanding consisted of class A common stock and class B common stock under the if-converted method.

 

Amneal Pharmaceuticals, Inc.

Generics Segment

Reconciliation of GAAP to Non-GAAP Operating Results (1)

(Unaudited; In thousands)

 

 

 

Three Months Ended June 30, 2023

 

Three Months Ended June 30, 2022

 

As Reported

 

Adjustments

 

Non-GAAP

 

As Reported

 

Adjustments

 

Non-GAAP

Net revenue

$

373,701

 

 

$

 

 

$

373,701

 

 

$

364,895

 

 

$

 

 

$

364,895

 

Cost of goods sold (2)

 

225,189

 

 

 

(13,404

)

 

 

211,785

 

 

 

228,535

 

 

 

(19,073

)

 

 

209,462

 

Gross profit

 

148,512

 

 

 

13,404

 

 

 

161,916

 

 

 

136,360

 

 

 

19,073

 

 

 

155,433

 

Gross margin %

 

39.7

%

 

 

 

 

43.3

%

 

 

37.4

%

 

 

 

 

42.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative (3)

 

28,040

 

 

 

(2,597

)

 

 

25,443

 

 

 

26,558

 

 

 

(1,200

)

 

 

25,358

 

Research and development (4)

 

31,108

 

 

 

(325

)

 

 

30,783

 

 

 

44,174

 

 

 

(1,406

)

 

 

42,768

 

Intellectual property legal development expenses

 

801

 

 

 

 

 

 

801

 

 

 

778

 

 

 

 

 

 

778

 

Acquisition, transaction-related and integration expenses

 

 

 

 

 

 

 

 

 

 

8

 

 

 

(8

)

 

 

 

Insurance recoveries for property losses and associated expenses

 

 

 

 

 

 

 

 

 

 

(1,911

)

 

 

1,911

 

 

 

 

Charges related to legal matters, net

 

2,017

 

 

 

(2,017

)

 

 

 

 

 

483

 

 

 

(483

)

 

 

 

Other operating loss (income)

 

13

 

 

 

 

 

 

13

 

 

 

(1,175

)

 

 

 

 

 

(1,175

)

Operating income

$

86,533

 

 

$

18,343

 

 

$

104,876

 

 

$

67,445

 

 

$

20,259

 

 

$

87,704

 

(1)  

Operating results for the sale of Amneal products by AvKARE were included in our Generics segment.

(2)  

Adjustments for the three months ended June 30, 2023 and 2022, respectively, were comprised of stock-based compensation expense ($0.3 million and $1.3 million), amortization expense ($10.8 million and $10.2 million), site closure and idle facility expenses ($1.0 million and $2.4 million), and asset impairment charges ($1.3 million and $5.2 million).

(3)  

Adjustments for the three months ended June 30, 2023 and 2022, respectively, were comprised of stock-based compensation expense ($2.0 million and $0.6 million) and site closure costs ($0.6 million in each period).

(4)  

Adjustments for the three months ended June 30, 2023 and 2022, respectively, were comprised of stock-based compensation expense

 

Amneal Pharmaceuticals, Inc.

Generics Segment

Reconciliation of GAAP to Non-GAAP Operating Results (1)

(Unaudited; In thousands)

 

 

Six Months Ended June 30, 2023

 

Six Months Ended June 30, 2022

 

As Reported

 

Adjustments

 

Non-GAAP

 

As Reported

 

Adjustments

 

Non-GAAP

Net revenue

$

717,507

 

 

$

 

 

$

717,507

 

 

$

682,642

 

 

$

 

 

$

682,642

 

Cost of goods sold (2)

 

455,740

 

 

 

(28,846

)

 

 

426,894

 

 

 

427,565

 

 

 

(34,164

)

 

 

393,401

 

Gross profit

 

261,767

 

 

 

28,846

 

 

 

290,613

 

 

 

255,077

 

 

 

34,164

 

 

 

289,241

 

Gross margin %

 

36.5

%

 

 

 

 

40.5

%

 

 

37.4

%

 

 

 

 

42.4

%

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative (3)

 

55,640

 

 

 

(3,876

)

 

 

51,764

 

 

 

54,151

 

 

 

(7,450

)

 

 

46,701

 

Research and development (4)

 

63,467

 

 

 

(1,268

)

 

 

62,199

 

 

 

87,395

 

 

 

(2,565

)

 

 

84,830

 

Intellectual property legal development expenses

 

2,425

 

 

 

 

 

 

2,425

 

 

 

1,550

 

 

 

 

 

 

1,550

 

Acquisition, transaction-related and integration expenses

 

 

 

 

 

 

 

 

 

 

8

 

 

 

(8

)

 

 

 

Restructuring and other charges

 

99

 

 

 

 

 

 

99

 

 

 

206

 

 

 

(206

)

 

 

 

Insurance recoveries for property losses and associated expenses

 

 

 

 

 

 

 

 

 

 

(1,911

)

 

 

1,911

 

 

 

 

(Credits) charges related to legal matters, net

 

(427

)

 

 

(4,073

)

 

 

(4,500

)

 

 

2,157

 

 

 

(2,157

)

 

 

 

Other operating income

 

(1,211

)

 

 

 

 

 

(1,211

)

 

 

(1,175

)

 

 

 

 

 

(1,175

)

Operating income

$

141,774

 

 

$

38,063

 

 

$

179,837

 

 

$

112,696

 

 

$

44,639

 

 

$

157,335

(1)  

Operating results for the sale of Amneal products by AvKARE were included in our Generics segment.

(2)  

Adjustments for the six months ended June 30, 2023 and 2022, respectively, were comprised of stock-based compensation expense ($2.0 million and $2.8 million), amortization expense ($21.6 million and $19.5 million), site closure and idle facility expenses ($3.1 million and $7.0 million), asset impairment charges ($2.0 million and $5.2 million), and other ($0.1 million and $(0.3) million).

(3)  

Adjustments for the six months ended June 30, 2023 and 2022, respectively, were comprised of stock-based compensation expense ($2.7 million and $1.3 million), a regulatory approval milestone (none and $5.0 million), and site closure costs ($1.2 million and $1.1 million).

(4)  

Adjustments for the six months ended June 30, 2023 and 2022, respectively, were comprised of stock-based compensation expense.

 

Amneal Pharmaceuticals, Inc.

Specialty Segment

Reconciliation of GAAP to Non-GAAP Operating Results

(Unaudited; In thousands)

 

 

Three Months Ended June 30, 2023

 

Three Months Ended June 30, 2022

 

As Reported

 

Adjustments

 

Non-GAAP

 

As Reported

 

Adjustments

 

Non-GAAP

Net revenue

$

96,994

 

 

$

 

 

$

96,994

 

 

$

97,001

 

 

$

 

 

$

97,001

 

Cost of goods sold (1)

 

46,512

 

 

 

(25,844

)

 

 

20,668

 

 

 

42,791

 

 

 

(26,878

)

 

 

15,913

 

Gross profit

 

50,482

 

 

 

25,844

 

 

 

76,326

 

 

 

54,210

 

 

 

26,878

 

 

 

81,088

 

Gross margin %

 

52.0

%

 

 

 

 

78.7

%

 

 

55.9

%

 

 

 

 

83.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative (2)

 

22,759

 

 

 

(228

)

 

 

22,531

 

 

 

23,171

 

 

 

199

 

 

 

23,370

 

Research and development (2)

 

6,691

 

 

 

(487

)

 

 

6,204

 

 

 

6,574

 

 

 

(403

)

 

 

6,171

 

Intellectual property legal development expenses

 

19

 

 

 

 

 

 

19

 

 

 

43

 

 

 

 

 

 

43

 

Acquisition, transaction-related and integration expenses

 

 

 

 

 

 

 

 

 

 

32

 

 

 

(32

)

 

 

 

Restructuring and other charges

 

82

 

 

 

(82

)

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of contingent consideration (3)

 

(6,364

)

 

 

6,364

 

 

 

 

 

 

(270

)

 

 

270

 

 

 

 

Operating income

$

27,295

 

 

$

20,277

 

 

$

47,572

 

 

$

24,660

 

 

$

26,844

 

 

$

51,504

 

(1)  

Adjustments for the three months ended June 30, 2023 and 2022 were comprised of amortization expense.

(2)  

Adjustments for the three months ended June 30, 2023 and 2022 were comprised of stock-based compensation expense.

(3)  

Change in fair value of contingent consideration for the three months ended June 30, 2023 was associated with the Saol Acquisition and the acquisition of Kashiv Specialty Pharmaceuticals, LLC.

 

Amneal Pharmaceuticals, Inc.

Specialty Segment

Reconciliation of GAAP to Non-GAAP Operating Results

(Unaudited; In thousands)

 

 

Six Months Ended June 30, 2023

 

Six Months Ended June 30, 2022

 

As Reported

 

Adjustments

 

Non-GAAP

 

As Reported

 

Adjustments

 

Non-GAAP

Net revenue

$

188,672

 

 

$

 

 

$

188,672

 

 

$

182,087

 

 

$

 

 

$

182,087

 

Cost of goods sold (1)

 

89,703

 

 

 

(52,027

)

 

 

37,676

 

 

 

86,644

 

 

 

(53,532

)

 

 

33,112

 

Gross profit

 

98,969

 

 

 

52,027

 

 

 

150,996

 

 

 

95,443

 

 

 

53,532

 

 

 

148,975

 

Gross margin %

 

52.5

%

 

 

 

 

80.0

%

 

 

52.4

%

 

 

 

 

81.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative (2)

 

45,138

 

 

 

(414

)

 

 

44,724

 

 

 

47,571

 

 

 

(414

)

 

 

47,157

 

Research and development (2)

 

13,022

 

 

 

(876

)

 

 

12,146

 

 

 

16,151

 

 

 

(729

)

 

 

15,422

 

Intellectual property legal development expenses

 

39

 

 

 

 

 

 

39

 

 

 

35

 

 

 

 

 

 

35

 

Acquisition, transaction-related and integration expenses

 

 

 

 

 

 

 

 

 

 

32

 

 

 

(32

)

 

 

 

Restructuring and other charges

 

82

 

 

 

(82

)

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of contingent consideration (3)

 

(3,907

)

 

 

3,907

 

 

 

 

 

 

(70

)

 

 

70

 

 

 

 

Operating income

$

44,595

 

 

$

49,492

 

 

$

94,087

 

 

$

31,724

 

 

$

54,637

 

 

$

86,361

 

(1)  

Adjustments for the six months ended June 30, 2023 and 2022 were comprised of amortization expense.

(2)  

Adjustments for the six months ended June 30, 2023 and 2022 were comprised of stock-based compensation expense.

(3)  

Change in fair value of contingent consideration for the six months ended June 30, 2023 was associated with the Saol Acquisition and the acquisition of Kashiv Specialty Pharmaceuticals, LLC.

 

Amneal Pharmaceuticals, Inc.

AvKARE Segment

Reconciliation of GAAP to Non-GAAP Operating Results (1)

(Unaudited; In thousands)

 

 

Three Months Ended June 30, 2023

 

Three Months Ended June 30, 2022

 

As Reported

 

Adjustments

 

Non-GAAP

 

As Reported

 

Adjustments

 

Non-GAAP

Net revenue

$

128,351

 

 

$

 

 

$

128,351

 

 

$

97,459

 

 

$

 

 

$

97,459

 

Cost of goods sold

 

107,324

 

 

 

 

 

 

107,324

 

 

 

87,510

 

 

 

 

 

 

87,510

 

Gross profit

 

21,027

 

 

 

 

 

 

21,027

 

 

 

9,949

 

 

 

 

 

 

9,949

 

Gross margin %

 

16.4

%

 

 

 

 

16.4

%

 

 

10.2

%

 

 

 

 

10.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative (2)

 

14,015

 

 

 

(4,188

)

 

 

9,827

 

 

 

12,735

 

 

 

(4,933

)

 

 

7,802

 

Operating income (loss)

$

7,012

 

 

$

4,188

 

 

$

11,200

 

 

$

(2,786

)

 

$

4,933

 

 

$

2,147

 

(1)  

Operating results for the sale of Amneal products by AvKARE were included in our Generics segment.

(2)  

Adjustments for the three months ended June 30, 2023 and 2022 were comprised of amortization expense.

 

Amneal Pharmaceuticals, Inc.

AvKARE Segment

Reconciliation of GAAP to Non-GAAP Operating Results (1)

(Unaudited; In thousands)

 

 

Six Months Ended June 30, 2023

 

Six Months Ended June 30, 2022

 

As Reported

 

Adjustments

 

Non-GAAP

 

As Reported

 

Adjustments

 

Non-GAAP

Net revenue

$

250,407

 

 

$

 

 

$

250,407

 

 

$

192,259

 

 

$

 

 

$

192,259

 

Cost of goods sold

 

212,936

 

 

 

 

 

 

212,936

 

 

 

167,689

 

 

 

 

 

 

167,689

 

Gross profit

 

37,471

 

 

 

 

 

 

37,471

 

 

 

24,570

 

 

 

 

 

 

24,570

 

Gross margin %

 

15.0

%

 

 

 

 

15.0

%

 

 

12.8

%

 

 

 

 

12.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative (2)

 

26,955

 

 

 

(7,952

)

 

 

19,003

 

 

 

26,145

 

 

 

(9,459

)

 

 

16,686

 

Operating income (loss)

$

10,516

 

 

$

7,952

 

 

$

18,468

 

 

$

(1,575

)

 

$

9,459

 

 

$

7,884

(1)  

Operating results for the sale of Amneal products by AvKARE were included in our Generics segment.

(2)  

Adjustments for the six months ended June 30, 2023 and 2022, respectively, were comprised of amortization expense ($8.4 million and $9.9 million), and other (($0.4) million in each period).

 

Anthony DiMeo
Head of Investor Relations
anthony.dimeo@amneal.com

Source: Amneal Pharmaceuticals, Inc.
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