Press Release Details

Amneal Reports Third Quarter 2023 Financial Results

11/07/2023

‒ Q3 2023 Net Revenue of $620 million; GAAP Net Income of $10 million; Diluted EPS of $0.06 ‒

‒ Q3 2023 Adjusted Net Income(1) of $60 million; Adjusted EBITDA (1) of $154 million; Adjusted Diluted EPS (1) of $0.19 ‒

‒ Affirmed Previously Announced Increased 2023 Full Year Guidance ‒

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

“We are pleased to report strong double-digit revenue and adjusted EBITDA growth for the third quarter and raise our full year guidance. The acceleration in our growth is a testament to the strong execution of our strategy, the success of our new launches and the continued diversification of our portfolio. We are on-track to launch more than 40 new generic products in 2023, our new biosimilars are outperforming, and IPX203 for Parkinson’s remains on-track to launch in 2024. Looking ahead, we expect continued strong growth and momentum across our business. With the organic growth engine set, we are focused on further deleveraging and driving value creation for shareholders,” said Chirag and Chintu Patel, Co-Chief Executive Officers.

Net revenue in the third quarter of 2023 was $620 million, an increase of 14% compared to $546 million in the third quarter of 2022. Revenue growth was driven by growth across all three business segments with Generics growing 12% due to strong performance of our complex portfolio, biosimilar uptake and new product launches, AvKARE growing 25% due to new product introductions, and Specialty growing 9% due to strong performance of key branded products.

Net income attributable to Amneal Pharmaceuticals, Inc. was $10 million in the third quarter of 2023 compared to a net loss of $3 million in the third quarter of 2022. Adjusted EBITDA(1) in the third quarter of 2023 was $154 million, an increase of 22% compared to the third quarter of 2022, reflective of strong revenue performance, durable adjusted gross margins and continued operating expense leverage. Diluted EPS in the third quarter of 2023 was $0.06 compared to a loss of $0.02 for the third quarter of 2022. Adjusted diluted EPS(1) in the third quarter of 2023 was $0.19 compared to $0.14 for the third quarter of 2022.

(1)

See “Non-GAAP Financial Measures” below.

Affirmed Previously Announced Increased 2023 Full Year Guidance

 

Current Guidance

Prior Guidance

Net revenue

$2.37 billion - $2.42 billion

$2.30 billion - $2.40 billion

Adjusted EBITDA (1)

$540 million - $550 million

$525 million - $540 million

Adjusted diluted EPS (2)

$0.51 - $0.58

$0.45 - $0.55

Operating cash flow (3)

$250 million - $280 million

$220 million - $250 million

Capital expenditures

$50 million - $60 million

$50 million - $60 million

Weighted average diluted shares outstanding (4)

Approximately 310 million

Approximately 307 million

(1)

Includes 100% of Adjusted 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)

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 November 7, 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 605508. 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 ability to complete the proposed holding company reorganization on the anticipated timeline or at all and to realize the expected benefits of such reorganization; 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) increase in tax receivable agreement liability, (xiv) system implementation expense, (xv) other and (xvi) 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
September 30,

 

Nine Months Ended
September 30,

 

2023

 

2022

 

2023

 

2022

Net revenue

$

620,040

 

 

$

545,557

 

 

$

1,776,626

 

 

$

1,602,545

 

Cost of goods sold

 

387,509

 

 

 

351,327

 

 

 

1,145,888

 

 

 

1,033,225

 

Gross profit

 

232,531

 

 

 

194,230

 

 

 

630,738

 

 

 

569,320

 

Selling, general and administrative

 

113,006

 

 

 

100,071

 

 

 

320,672

 

 

 

297,542

 

Research and development

 

41,375

 

 

 

50,235

 

 

 

117,864

 

 

 

153,781

 

Intellectual property legal development expenses

 

886

 

 

 

1,411

 

 

 

3,350

 

 

 

2,996

 

Acquisition, transaction-related and integration expenses

 

 

 

 

39

 

 

 

 

 

 

714

 

Restructuring and other charges

 

1,043

 

 

 

581

 

 

 

1,635

 

 

 

1,312

 

Change in fair value of contingent consideration

 

3,120

 

 

 

(1,425

)

 

 

(787

)

 

 

(1,495

)

Insurance recoveries for property losses and associated expenses

 

 

 

 

 

 

 

 

 

 

(1,911

)

(Credit) charges related to legal matters, net

 

(2,620

)

 

 

285

 

 

 

(1,039

)

 

 

249,836

 

Other operating expense (income)

 

73

 

 

 

(1,320

)

 

 

(1,138

)

 

 

(2,495

)

Operating income (loss)

 

75,648

 

 

 

44,353

 

 

 

190,181

 

 

 

(130,960

)

Other (expense) income:

 

 

 

 

 

 

 

Interest expense, net

 

(50,909

)

 

 

(42,391

)

 

 

(151,081

)

 

 

(111,349

)

Foreign exchange loss, net

 

(2,939

)

 

 

(5,491

)

 

 

(617

)

 

 

(12,933

)

Other income, net

 

1,157

 

 

 

5,709

 

 

 

4,708

 

 

 

14,770

 

Total other expense, net

 

(52,691

)

 

 

(42,173

)

 

 

(146,990

)

 

 

(109,512

)

Income (loss) before income taxes

 

22,957

 

 

 

2,180

 

 

 

43,191

 

 

 

(240,472

)

(Benefit from) provision for income taxes

 

(2,076

)

 

 

4,570

 

 

 

(1,431

)

 

 

8,459

 

Net income (loss)

 

25,033

 

 

 

(2,390

)

 

 

44,622

 

 

 

(248,931

)

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

 

(15,351

)

 

 

(299

)

 

 

(29,966

)

 

 

123,716

 

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

 

9,682

 

 

 

(2,689

)

 

 

14,656

 

 

 

(125,215

)

Accretion of redeemable non-controlling interest

 

 

 

 

 

 

 

 

 

 

(438

)

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

$

9,682

 

 

$

(2,689

)

 

$

14,656

 

 

$

(125,653

)

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Basic

$

0.06

 

 

$

(0.02

)

 

$

0.10

 

 

$

(0.83

)

Diluted

$

0.06

 

 

$

(0.02

)

 

$

0.09

 

 

$

(0.83

)

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

154,219

 

 

 

151,393

 

 

 

153,363

 

 

 

150,765

 

Diluted

 

159,691

 

 

 

151,393

 

 

 

156,284

 

 

 

150,765

 

Amneal Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(unaudited; $ in thousands)

 

 

September 30, 2023

 

December 31, 2022

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

86,929

 

$

25,976

Restricted cash

 

8,678

 

 

9,251

Trade accounts receivable, net

 

690,947

 

 

741,791

Inventories

 

576,474

 

 

530,735

Prepaid expenses and other current assets

 

91,444

 

 

103,565

Related party receivables

 

1,603

 

 

500

Total current assets

 

1,456,075

 

 

1,411,818

Property, plant and equipment, net

 

451,852

 

 

469,815

Goodwill

 

598,631

 

 

598,853

Intangible assets, net

 

982,531

 

 

1,096,093

Operating lease right-of-use assets

 

32,523

 

 

38,211

Operating lease right-of-use assets - related party

 

15,876

 

 

17,910

Financing lease right-of-use assets

 

60,548

 

 

63,424

Other assets

 

89,043

 

 

103,217

Total assets

$

3,687,079

 

$

3,799,341

Liabilities and Stockholders' Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued expenses

$

557,761

 

$

538,199

Current portion of liabilities for legal matters

 

76,828

 

 

107,483

Revolving credit facilities

 

76,000

 

 

60,000

Current portion of long-term debt, net

 

30,533

 

 

29,961

Current portion of operating lease liabilities

 

9,826

 

 

8,321

Current portion of operating lease liabilities - related party

 

3,055

 

 

2,869

Current portion of financing lease liabilities

 

3,098

 

 

3,488

Related party payables - short term

 

3,500

 

 

2,479

Total current liabilities

 

760,601

 

 

752,800

Long-term debt, net

 

2,541,814

 

 

2,591,981

Note payable - related party

 

41,001

 

 

39,706

Operating lease liabilities

 

26,412

 

 

32,126

Operating lease liabilities - related party

 

13,598

 

 

15,914

Financing lease liabilities

 

59,351

 

 

60,769

Related party payables - long term

 

11,534

 

 

9,649

Other long-term liabilities

 

41,388

 

 

87,468

Total long-term liabilities

 

2,735,098

 

 

2,837,613

Redeemable non-controlling interests

 

37,144

 

 

24,949

Total stockholders' equity

 

154,236

 

 

183,979

Total liabilities and stockholders' equity

$

3,687,079

 

$

3,799,341

Amneal Pharmaceuticals, Inc.

Consolidated Statements of Cash Flows

(unaudited; $ in thousands)

 

 

Nine Months Ended September 30,

 

2023

 

2022

Cash flows from operating activities:

 

 

 

Net income (loss)

$

44,622

 

 

$

(248,931

)

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

 

 

 

Depreciation and amortization

 

172,467

 

 

 

179,119

 

Unrealized foreign currency loss

 

1,563

 

 

 

12,893

 

Amortization of debt issuance costs and discount

 

6,884

 

 

 

6,489

 

Loss on refinancing - revolving credit facility

 

 

 

 

291

 

Intangible asset impairment charges

 

2,036

 

 

 

5,786

 

Change in fair value of contingent consideration

 

(787

)

 

 

(1,495

)

Stock-based compensation

 

20,848

 

 

 

24,016

 

Inventory provision

 

56,637

 

 

 

28,884

 

Insurance recoveries for property and equipment losses

 

 

 

 

(1,000

)

Other operating charges and credits, net

 

6,370

 

 

 

7,077

 

Changes in assets and liabilities:

 

 

 

Trade accounts receivable, net

 

49,055

 

 

 

33,570

 

Inventories

 

(103,092

)

 

 

(91,326

)

Prepaid expenses, other current assets and other assets

 

24,810

 

 

 

(34,380

)

Related party receivables

 

(1,131

)

 

 

(517

)

Accounts payable, accrued expenses and other liabilities

 

(74,685

)

 

 

165,437

 

Related party payables

 

4,157

 

 

 

2,479

 

Net cash provided by operating activities

 

209,754

 

 

 

88,392

 

Cash flows from investing activities:

 

 

 

Purchases of property, plant and equipment

 

(33,351

)

 

 

(34,941

)

Saol Acquisition

 

 

 

 

(84,714

)

Acquisition of intangible assets

 

(2,488

)

 

 

(41,800

)

Deposits for future acquisition of property, plant and equipment

 

(1,658

)

 

 

(2,388

)

Proceeds from insurance recoveries for property and equipment losses

 

 

 

 

1,000

 

Net cash used in investing activities

 

(37,497

)

 

 

(162,843

)

Cash flows from financing activities:

 

 

 

Payments of deferred financing and refinancing costs

 

(542

)

 

 

(1,663

)

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

 

(151,510

)

 

 

(105,618

)

Borrowings on revolving credit facilities

 

110,000

 

 

 

85,000

 

Proceeds from exercise of stock options

 

408

 

 

 

662

 

Employee payroll tax withholding on restricted stock unit vesting

 

(2,222

)

 

 

(3,483

)

Payments of deferred consideration for acquisitions - related party

 

 

 

 

(44,498

)

Acquisition of redeemable non-controlling interest

 

 

 

 

(1,722

)

Tax distributions to non-controlling interests

 

(67,875

)

 

 

(13,131

)

Net cash used in financing activities

 

(111,741

)

 

 

(84,453

)

Effect of foreign exchange rate on cash

 

(136

)

 

 

(1,944

)

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

 

60,380

 

 

 

(160,848

)

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

 

35,227

 

 

 

256,739

 

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

$

95,607

 

 

$

95,891

 

Cash and cash equivalents - end of period

$

86,929

 

 

$

87,335

 

Restricted cash - end of period

 

8,678

 

 

 

8,556

 

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

$

95,607

 

 

$

95,891

 

Amneal Pharmaceuticals, Inc.

Non-GAAP Reconciliations

(unaudited, $ in thousands)

 

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

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2023

 

2022

 

2023

 

2022

Net income (loss)

$

25,033

 

 

$

(2,390

)

 

$

44,622

 

 

$

(248,931

)

Adjusted to add:

 

 

 

 

 

 

 

Interest expense, net

 

50,909

 

 

 

42,391

 

 

 

151,081

 

 

 

111,349

 

(Benefit from) provision for income taxes

 

(2,076

)

 

 

4,570

 

 

 

(1,431

)

 

 

8,459

 

Depreciation and amortization

 

57,206

 

 

 

61,608

 

 

 

172,467

 

 

 

179,119

 

EBITDA (Non-GAAP)

$

131,072

 

 

$

106,179

 

 

$

366,739

 

 

$

49,996

 

Adjusted to add (deduct):

 

 

 

 

 

 

 

Stock-based compensation expense

 

6,691

 

 

 

7,689

 

 

 

20,848

 

 

 

24,016

 

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

 

1,551

 

 

 

3,468

 

 

 

5,831

 

 

 

12,230

 

Restructuring and other charges

 

1,043

 

 

 

538

 

 

 

1,536

 

 

 

1,269

 

Loss on refinancing

 

 

 

 

 

 

 

 

 

 

291

 

Charges related to legal matters, net (2)

 

2,880

 

 

 

285

 

 

 

8,961

 

 

 

249,836

 

Asset impairment charges

 

808

 

 

 

3,108

 

 

 

2,879

 

 

 

8,358

 

Foreign exchange loss

 

2,939

 

 

 

5,491

 

 

 

617

 

 

 

12,933

 

Change in fair value of contingent consideration

 

3,120

 

 

 

(1,425

)

 

 

(787

)

 

 

(1,495

)

Insurance recoveries for property losses and

associated expenses

 

 

 

 

 

 

 

 

 

 

(1,911

)

Regulatory approval milestone

 

 

 

 

 

 

 

 

 

 

5,000

 

Increase in tax receivable agreement liability

 

676

 

 

 

 

 

 

1,907

 

 

 

 

System implementation expense (3)

 

2,016

 

 

 

769

 

 

 

4,429

 

 

 

2,091

 

Other

 

1,002

 

 

 

(469

)

 

 

3,106

 

 

 

(2,536

)

Adjusted EBITDA (Non-GAAP)

$

153,798

 

 

$

125,633

 

 

$

416,066

 

 

$

360,078

 

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 September 30,

 

Nine Months Ended September 30,

 

2023

 

2022

 

2023

 

2022

Net income (loss)

$

25,033

 

 

$

(2,390

)

 

$

44,622

 

 

$

(248,931

)

Adjusted to add (deduct):

 

 

 

 

 

 

 

Non-cash interest

 

2,048

 

 

 

1,882

 

 

 

6,001

 

 

 

5,830

 

GAAP (benefit from) provision for income taxes

 

(2,076

)

 

 

4,570

 

 

 

(1,431

)

 

 

8,459

 

Amortization

 

39,091

 

 

 

42,778

 

 

 

118,011

 

 

 

122,146

 

Stock-based compensation expense

 

6,691

 

 

 

7,689

 

 

 

20,848

 

 

 

24,016

 

Acquisition, site closure expenses, and idle facility

expenses (1)

 

1,551

 

 

 

3,468

 

 

 

5,831

 

 

 

12,230

 

Restructuring and other charges

 

1,043

 

 

 

538

 

 

 

1,536

 

 

 

1,269

 

Loss on refinancing

 

 

 

 

 

 

 

 

 

 

291

 

Charges related to legal matters, including

interest, net (2)

 

3,597

 

 

 

1,758

 

 

 

11,204

 

 

 

251,662

 

Asset impairment charges

 

808

 

 

 

3,108

 

 

 

2,872

 

 

 

8,358

 

Regulatory approval milestone

 

 

 

 

 

 

 

 

 

 

5,000

 

Change in fair value of contingent consideration

 

3,120

 

 

 

(1,425

)

 

 

(787

)

 

 

(1,495

)

Insurance recoveries for property losses and

associated expenses

 

 

 

 

 

 

 

 

 

 

(1,911

)

Increase in tax receivable agreement liability

 

676

 

 

 

 

 

 

1,907

 

 

 

 

System implementation expense (3)

 

2,016

 

 

 

769

 

 

 

4,429

 

 

 

2,091

 

Other

 

1,189

 

 

 

(469

)

 

 

3,440

 

 

 

(2,394

)

Provision for income taxes (4)

 

(15,127

)

 

 

(13,494

)

 

 

(42,451

)

 

 

(41,153

)

Net income attributable to non-controlling interests

not associated with our class B common stock

 

(9,355

)

 

 

(5,075

)

 

 

(22,042

)

 

 

(9,163

)

Adjusted net income (Non-GAAP)

$

60,305

 

 

$

43,707

 

 

$

153,990

 

 

$

136,305

 

Weighted average diluted shares outstanding (Non-GAAP) (5)

 

311,808

 

 

 

304,319

 

 

 

308,402

 

 

 

304,415

 

Adjusted diluted earnings per share (Non-GAAP)

$

0.19

 

 

$

0.14

 

 

$

0.50

 

 

$

0.45

 

Amneal Pharmaceuticals, Inc.

Non-GAAP Reconciliations

(unaudited)

   

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 nine months ended September 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 September 30, 2022 primarily included integration costs associated with the acquisition of the baclofen franchise from certain entities affiliated with Saol International Limited (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 nine months ended September 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.; and (iii) site closure costs associated with the planned cessation of manufacturing at our Hauppauge, NY facility.

 

(2)

For the three months ended September 30, 2023, charges related to legal matters, net were primarily comprised of a charge for the settlement of a customer claim. For the nine months ended September 30, 2023, charges related to legal matters, net were primarily comprised of (i) charges for civil prescription opioid litigation; (ii) settlement of a customer claim; and (iii) settlement of a stockholder derivative lawsuit. For the three months ended September 30, 2022, charges related to legal matters, net were immaterial. For the nine months ended September 30, 2022, charges related to legal matters, net, were comprised of a charge for Opana ER® antitrust litigation, net of insurance recoveries associated with a securities class action settled during 2022.

 

(3)

System implementation expense for the three months ended September 30, 2023 and 2022 was primarily for the implementation of indirect procurement software to further integrate our acquired businesses. System implementation expense for the nine months ended September 30, 2023 and 2022 was primarily for the implementation of (i) indirect procurement software; (ii) sales deduction software; and (iii) financial statement consolidation software to further integrate our acquired businesses.

 

(4)

The non-GAAP effective tax rates for the three and nine months ended September 30, 2023 were 20.1% and 21.6%, respectively. The non-GAAP effective tax rates for the three and nine months ended September 30, 2022 were 23.6% and 23.2%, respectively.

 

(5)

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 September 30, 2023

 

Three Months Ended September 30, 2022

 

As Reported

 

Adjustments

 

Non-GAAP

 

As Reported

 

Adjustments

 

Non-GAAP

Net revenue

$

390,857

 

 

$

 

 

$

390,857

 

 

$

350,266

 

 

$

 

 

$

350,266

 

Cost of goods sold (2)

 

236,268

 

 

 

(13,437

)

 

 

222,831

 

 

 

218,671

 

 

 

(19,041

)

 

 

199,630

 

Gross profit

 

154,589

 

 

 

13,437

 

 

 

168,026

 

 

 

131,595

 

 

 

19,041

 

 

 

150,636

 

Gross margin %

 

39.6

%

 

 

 

 

43.0

%

 

 

37.6

%

 

 

 

 

43.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative (3)

 

33,538

 

 

 

(1,686

)

 

 

31,852

 

 

 

30,259

 

 

 

(1,191

)

 

 

29,068

 

Research and development (4)

 

35,103

 

 

 

(633

)

 

 

34,470

 

 

 

41,987

 

 

 

(1,142

)

 

 

40,845

 

Intellectual property legal development expenses

 

815

 

 

 

 

 

 

815

 

 

 

1,369

 

 

 

 

 

 

1,369

 

Acquisition, transaction-related and integration expenses

 

 

 

 

 

 

 

 

 

 

16

 

 

 

(16

)

 

 

 

Restructuring and other charges

 

112

 

 

 

(112

)

 

 

 

 

 

507

 

 

 

(507

)

 

 

 

(Credit) charges related to legal matters, net

 

(2,500

)

 

 

(3,000

)

 

 

(5,500

)

 

 

285

 

 

 

(285

)

 

 

 

Other operating loss (income)

 

73

 

 

 

 

 

 

73

 

 

 

(1,320

)

 

 

 

 

 

(1,320

)

Operating income

$

87,448

 

 

$

18,868

 

 

$

106,316

 

 

$

58,492

 

 

$

22,182

 

 

$

80,674

 

(1)

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

 
(2)

Adjustments for the three months ended September 30, 2023 and 2022, respectively, were comprised of stock-based compensation expense ($0.9 million and $0.8 million), amortization expense ($10.5 million and $12.3 million), site closure and idle facility expenses ($1.1 million and $2.8 million), and asset impairment charges ($0.9 million and $3.1 million).

 
(3)

Adjustments for the three months ended September 30, 2023 and 2022, respectively, were comprised of stock-based compensation expense ($1.3 million and $0.6 million) and site closure costs ($0.4 million and $0.6 million).

 
(4)

Adjustments for the three months ended September 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)

 

 

 

 

 

Nine Months Ended September 30, 2023

 

Nine Months Ended September 30, 2022

 

As Reported

 

Adjustments

 

Non-GAAP

 

As Reported

 

Adjustments

 

Non-GAAP

Net revenue

$

1,108,364

 

 

$

 

 

$

1,108,364

 

 

$

1,032,908

 

 

$

 

 

$

1,032,908

 

Cost of goods sold (2)

 

692,008

 

 

 

(42,283

)

 

 

649,725

 

 

 

646,236

 

 

 

(53,205

)

 

 

593,031

 

Gross profit

 

416,356

 

 

 

42,283

 

 

 

458,639

 

 

 

386,672

 

 

 

53,205

 

 

 

439,877

 

Gross margin %

 

37.6

%

 

 

 

 

41.4

%

 

 

37.4

%

 

 

 

 

42.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative (3)

 

89,178

 

 

 

(5,562

)

 

 

83,616

 

 

 

84,410

 

 

 

(8,641

)

 

 

75,769

 

Research and development (4)

 

98,570

 

 

 

(1,901

)

 

 

96,669

 

 

 

129,382

 

 

 

(3,707

)

 

 

125,675

 

Intellectual property legal development expenses

 

3,240

 

 

 

 

 

 

3,240

 

 

 

2,919

 

 

 

 

 

 

2,919

 

Acquisition, transaction-related and integration expenses

 

 

 

 

 

 

 

 

 

 

24

 

 

 

(24

)

 

 

 

Restructuring and other charges

 

211

 

 

 

(112

)

 

 

99

 

 

 

713

 

 

 

(713

)

 

 

 

Insurance recoveries for property losses and associated expenses

 

 

 

 

 

 

 

 

 

 

(1,911

)

 

 

1,911

 

 

 

 

(Credit) charges related to legal matters, net

 

(2,927

)

 

 

(7,073

)

 

 

(10,000

)

 

 

2,442

 

 

 

(2,442

)

 

 

 

Other operating income

 

(1,138

)

 

 

 

 

 

(1,138

)

 

 

(2,495

)

 

 

 

 

 

(2,495

)

Operating income

$

229,222

 

 

$

56,931

 

 

$

286,153

 

 

$

171,188

 

 

$

66,821

 

 

$

238,009

 

(1)

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

 
(2)

Adjustments for the nine months ended September 30, 2023 and 2022, respectively, were comprised of stock-based compensation expense ($2.9 million and $3.6 million), amortization expense ($32.1 million and $31.8 million), site closure and idle facility expenses ($4.2 million and $9.8 million), asset impairment charges ($2.9 million and $8.3 million), and other ($0.2 million and $(0.3) million).

 
(3)

Adjustments for the nine months ended September 30, 2023 and 2022, respectively, were comprised of stock-based compensation expense ($4.0 million and $1.9 million), a regulatory approval milestone (none and $5.0 million), and site closure costs ($1.6 million and $1.7 million).

 
(4)

Adjustments for the nine months ended September 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 September 30, 2023

 

Three Months Ended September 30, 2022

 

As Reported

 

Adjustments

 

Non-GAAP

 

As Reported

 

Adjustments

 

Non-GAAP

Net revenue

$

97,304

 

 

$

 

 

$

97,304

 

 

$

89,484

 

 

$

 

 

$

89,484

 

Cost of goods sold (1)

 

45,551

 

 

 

(25,844

)

 

 

19,707

 

 

 

43,719

 

 

 

(27,328

)

 

 

16,391

 

Gross profit

 

51,753

 

 

 

25,844

 

 

 

77,597

 

 

 

45,765

 

 

 

27,328

 

 

 

73,093

 

Gross margin %

 

53.2

%

 

 

 

 

79.7

%

 

 

51.1

%

 

 

 

 

81.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative (2)

 

22,756

 

 

 

(235

)

 

 

22,521

 

 

 

22,201

 

 

 

(380

)

 

 

21,821

 

Research and development (2)

 

6,272

 

 

 

(458

)

 

 

5,814

 

 

 

8,248

 

 

 

(370

)

 

 

7,878

 

Intellectual property legal development expenses

 

71

 

 

 

 

 

 

71

 

 

 

42

 

 

 

 

 

 

42

 

Acquisition, transaction-related and integration expenses

 

 

 

 

 

 

 

 

 

 

15

 

 

 

(15

)

 

 

 

Restructuring and other charges

 

931

 

 

 

(931

)

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of contingent consideration (3)

 

3,120

 

 

 

(3,120

)

 

 

 

 

 

(1,425

)

 

 

1,425

 

 

 

 

Operating income

$

18,603

 

 

$

30,588

 

 

$

49,191

 

 

$

16,684

 

 

$

26,668

 

 

$

43,352

(1)

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

 
(2)

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

 
(3)

Change in fair value of contingent consideration for the three months ended September 30, 2023 and 2022 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)

 

 

Nine Months Ended September 30, 2023

 

Nine Months Ended September 30, 2022

 

As Reported

 

Adjustments

 

Non-GAAP

 

As Reported

 

Adjustments

 

Non-GAAP

Net revenue

$

285,976

 

 

$

 

 

$

285,976

 

 

$

271,571

 

 

$

 

 

$

271,571

 

Cost of goods sold (1)

 

135,254

 

 

 

(77,871

)

 

 

57,383

 

 

 

130,363

 

 

 

(80,860

)

 

 

49,503

 

Gross profit

 

150,722

 

 

 

77,871

 

 

 

228,593

 

 

 

141,208

 

 

 

80,860

 

 

 

222,068

 

Gross margin %

 

52.7

%

 

 

 

 

79.9

%

 

 

52.0

%

 

 

 

 

81.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative (2)

 

67,894

 

 

 

(649

)

 

 

67,245

 

 

 

69,772

 

 

 

(794

)

 

 

68,978

 

Research and development (2)

 

19,294

 

 

 

(1,334

)

 

 

17,960

 

 

 

24,399

 

 

 

(1,099

)

 

 

23,300

 

Intellectual property legal development expenses

 

110

 

 

 

 

 

 

110

 

 

 

77

 

 

 

 

 

 

77

 

Acquisition, transaction-related and integration expenses

 

 

 

 

 

 

 

 

 

 

47

 

 

 

(47

)

 

 

 

Restructuring and other charges

 

1,013

 

 

 

(1,013

)

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of contingent consideration (3)

 

(787

)

 

 

787

 

 

 

 

 

 

(1,495

)

 

 

1,495

 

 

 

 

Operating income

$

63,198

 

 

$

80,080

 

 

$

143,278

 

 

$

48,408

 

 

$

81,305

 

 

$

129,713

 

(1)

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

 

(2)

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

 

(3)

Change in fair value of contingent consideration for the nine months ended September 30, 2023 and 2022 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 September 30, 2023

 

Three Months Ended September 30, 2022

 

As Reported

 

Adjustments

 

Non-GAAP

 

As Reported

 

Adjustments

 

Non-GAAP

Net revenue

$

131,879

 

 

$

 

 

$

131,879

 

 

$

105,807

 

 

$

 

 

$

105,807

 

Cost of goods sold

 

105,690

 

 

 

 

 

 

105,690

 

 

 

88,937

 

 

 

 

 

 

88,937

 

Gross profit

 

26,189

 

 

 

 

 

 

26,189

 

 

 

16,870

 

 

 

 

 

 

16,870

 

Gross margin %

 

19.9

%

 

 

 

 

19.9

%

 

 

15.9

%

 

 

 

 

15.9

%

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative (2)

 

14,313

 

 

 

(3,657

)

 

 

10,656

 

 

 

13,216

 

 

 

(4,933

)

 

 

8,283

 

Operating income

$

11,876

 

 

$

3,657

 

 

$

15,533

 

 

$

3,654

 

 

$

4,933

 

 

$

8,587

 

(1)

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

 
(2)

Adjustments for the three months ended September 30, 2023 and 2022 were comprised of amortization expense ($4.2 million and $4.9 million), and other (($0.5) million and none).

Amneal Pharmaceuticals, Inc.

AvKARE Segment

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

(unaudited; $ in thousands)

 

 

Nine Months Ended September 30, 2023

 

Nine Months Ended September 30, 2022

 

As Reported

 

Adjustments

 

Non-GAAP

 

As Reported

 

Adjustments

 

Non-GAAP

Net revenue

$

382,286

 

 

$

 

 

$

382,286

 

 

$

298,066

 

 

$

 

 

$

298,066

 

Cost of goods sold

 

318,626

 

 

 

 

 

 

318,626

 

 

 

256,626

 

 

 

 

 

 

256,626

 

Gross profit

 

63,660

 

 

 

 

 

 

63,660

 

 

 

41,440

 

 

 

 

 

 

41,440

 

Gross margin %

 

16.7

%

 

 

 

 

16.7

%

 

 

13.9

%

 

 

 

 

13.9

%

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative (2)

 

41,268

 

 

 

(11,609

)

 

 

29,659

 

 

 

39,361

 

 

 

(14,392

)

 

 

24,969

 

Operating income

$

22,392

 

 

$

11,609

 

 

$

34,001

 

 

$

2,079

 

 

$

14,392

 

 

$

16,471

(1)

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

 
(2)

Adjustments for the nine months ended September 30, 2023 and 2022, respectively, were comprised of amortization expense ($12.6 million and $14.8 million), and other (($1.0) million and ($0.4) million).

 

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

Source: Amneal Pharmaceuticals, Inc.