‒ Q3 2022 Net Revenue of $546 million; GAAP Net
Loss of $3 million; Diluted Loss per Share of $(0.02) ‒ ‒ Adjusted
EBITDA (1) of $126 million; Adjusted Diluted EPS (1) of $0.14 ‒ ‒
Maintaining 2022 Full Year Outlook ‒
Amneal Pharmaceuticals, Inc. (NYSE: AMRX) (“Amneal” or
the “Company”) announced its results today for the third quarter
ended September 30, 2022.
“Third quarter results reflect continued solid performance
across our diversified portfolio. Over the last several years, we
have driven our growth strategy through new product innovation,
leveraging key capabilities, and strong execution. We continued our
momentum this quarter with numerous new product approvals, scaling
of our injectables business, launching our first biosimilar, and
filing our IPX203 NDA in Specialty. As we successfully execute on
our strategic priorities, we see our momentum building,” said
Chirag and Chintu Patel, Co-Chief Executive Officers.
Net revenue in the third quarter of 2022 was $546 million, an
increase of 3.2% compared to $529 million in the third quarter of
2021. These results reflected consistent performance of Generics
and Specialty, and double-digit growth of AvKARE.
Net loss attributable to Amneal Pharmaceuticals, Inc. was $3
million in the third quarter of 2022 compared to a net loss of $4
million in the third quarter of 2021. Adjusted EBITDA(1) in the
third quarter of 2022 was $126 million, a decrease of 5.1% compared
to the third quarter of 2021, reflective of investments to drive
upcoming new product launches. Diluted loss per share and adjusted
diluted EPS(1) in the third quarter of 2022 were $(0.02) and $0.14,
respectively, compared to $(0.03) and $0.21, respectively, in the
third quarter of 2021.
(1)
See “Non-GAAP Financial Measures”
below.
Maintaining Full Year 2022 Guidance
The Company is maintaining its previously provided full year
2022 guidance.
Full
Year 2022 Guidance
Net revenue
$2.15 billion - $2.25 billion
Adjusted EBITDA (1)
$500 million - $520 million
Adjusted diluted EPS (2)
$0.65 - $0.70
Operating cash flow (3)
$200 million - $225 million
Capital expenditures
$65 million - $75 million
Weighted average diluted shares
outstanding (4)
Approximately 305 million
(1)
Includes 100% of EBITDA from the AvKARE
acquisition. Beginning in the first quarter of 2022, the Company no
longer excludes research and development (“R&D”) milestone
expense from its non-GAAP financial measures. In the third quarter
of 2022, R&D milestone expenses were $3 million.
(2)
Accounts for 35% non-controlling interest
in AvKARE. Beginning in the first quarter of 2022, the Company no
longer excludes R&D milestone expense from its non-GAAP
financial measures.
(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. These amounts exclude anticipated cash payments this year of
approximately $131 million related to the settlements and
preliminary settlements of the Opana ER® antitrust litigation.
(4)
Assumes the weighted average diluted
shares outstanding of class A and class B common stock under the
if-converted method.
Amneal’s 2022 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, legal settlements, 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 GAAP reported results.
Conference Call Information
Amneal will host a conference call and live webcast at 8:30 am
Eastern Time on November 4, 2022 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 (844) 200-6205 (in the U.S.) or (929)
526-1599 (international callers). The access code for the call is
585341. 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 (866) 813-9403 (in the U.S.) or +44 (204) 525-0658
(international callers). The access code for the replay is
049751.
About Amneal
Amneal Pharmaceuticals, Inc. (NYSE: AMRX), headquartered in
Bridgewater, NJ, is a fully-integrated essential medicines company.
We make healthy possible through the development, manufacturing,
and distribution of generic and specialty pharmaceuticals,
primarily within the United States. The Company has a diverse
portfolio of over 250 products in its Generics segment and is
expanding across a broad range of complex products and therapeutic
areas, including injectables and biosimilars. In its Specialty
segment, Amneal has a growing portfolio of branded pharmaceutical
products 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 or forecasts
for the future, including among other things: discussions of future
operations; 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 expenditures. Words such as “plans,” “expects,”
“will,” “anticipates,” “estimates,” 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 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, in general, specifically 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 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 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 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 and any associated supply chain disruptions;
existing and future legal proceedings, the outcome of which are
uncertain and may divert management resources and require us to
incur substantial defense or settlement payments and costs; legal,
regulatory and legislative efforts by our brand competitors to
deter competition from our generic alternatives; the impact of
severe weather; the impact of the ongoing COVID-19 pandemic, and
the emergence of variant strains; 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 (“FDA”) product
approval requirements; the impact of healthcare reform and changes
in coverage and reimbursement levels by governmental authorities
and other third-party payers; our dependence on third-party
agreements for a portion of our product offerings; the impact of
global economic conditions, including any economic effects stemming
from adverse geopolitical events, an economic downturn, inflation
and rising interest rates; our ability to identify, make and
integrate acquisitions or investments in complementary businesses
and products on advantageous terms; 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, adjusted net income, adjusted
diluted earnings per share, adjusted gross profit, adjusted gross
margin, adjusted operating income, adjusted cost of goods sold,
adjusted selling general and administrative expense, and adjusted
research and development expense, which are intended as
supplemental measures of the Company’s performance that are not
required by or presented in accordance with GAAP. 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 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.
As previously disclosed, beginning in the first quarter of 2022,
we no longer exclude research and development milestone expenses
related to license and collaboration agreements from our non-GAAP
financial measures and our line item components, including adjusted
research and development, adjusted EBITDA, adjusted operating
income, adjusted net income and adjusted earnings per share. Prior
period adjusted results have been revised to reflect this change.
Refer to our Form 8-K filed with the Securities and Exchange
Commission on May 4, 2022 for a full reconciliation of previously
reported non-GAAP results to revised non-GAAP results for prior
periods.
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 net income, diluted earnings per share, gross
profit, gross margin, operating income, cost of goods sold, selling
general and administrative expense, and research and development
expense 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 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,
2022
2021
2022
2021
Net revenue
$
545,557
$
528,593
$
1,602,545
$
1,556,773
Cost of goods sold
350,653
329,394
1,027,439
953,514
Cost of goods sold impairment charges
674
688
5,786
688
Gross profit
194,230
198,511
569,320
602,571
Selling, general and administrative
100,071
91,397
297,542
268,280
Research and development
50,235
48,927
153,781
149,973
In-process research and development
impairment charges
—
—
—
710
Intellectual property legal development
expenses
1,411
1,627
2,996
6,574
Acquisition, transaction-related and
integration expenses
39
134
714
7,219
Charges related to legal matters, net
285
19,000
249,836
19,000
Charges (insurance recoveries) for
property losses and associated expenses
—
8,186
(1,911
)
8,186
Restructuring and other charges
581
425
1,312
788
Change in fair value of contingent
consideration
(1,425
)
300
(1,495
)
300
Other operating income
(1,320
)
—
(2,495
)
—
Operating income (loss)
44,353
28,515
(130,960
)
141,541
Other (expense) income:
Interest expense, net
(42,391
)
(34,400
)
(111,349
)
(102,368
)
Foreign exchange loss, net
(5,491
)
(29
)
(12,933
)
(185
)
Loss on refinancing
—
—
(291
)
—
Other income, net
5,709
3,871
15,061
8,697
Total other expense, net
(42,173
)
(30,558
)
(109,512
)
(93,856
)
Income (loss) before income taxes
2,180
(2,043
)
(240,472
)
47,685
Provision for income taxes
4,570
4,049
8,459
7,056
Net (loss) income
(2,390
)
(6,092
)
(248,931
)
40,629
Less: Net (income) loss attributable to
non-controlling interests
(299
)
1,855
123,716
(23,628
)
Net (loss) income attributable to
Amneal Pharmaceuticals, Inc. before accretion of redeemable
non-controlling interest
(2,689
)
(4,237
)
(125,215
)
17,001
Accretion of redeemable non-controlling
interest
—
—
(438
)
—
Net (loss) income attributable to
Amneal Pharmaceuticals, Inc.
$
(2,689
)
$
(4,237
)
$
(125,653
)
$
17,001
Net (loss) income per share
attributable to Amneal Pharmaceuticals, Inc.'s class A common
stockholders:
Basic
$
(0.02
)
$
(0.03
)
$
(0.83
)
$
0.11
Diluted
$
(0.02
)
$
(0.03
)
$
(0.83
)
$
0.11
Weighted-average common shares
outstanding:
Basic
151,393
149,290
150,765
148,771
Diluted
151,393
149,290
150,765
151,655
Amneal Pharmaceuticals,
Inc.
Condensed Consolidated Balance
Sheets
(Unaudited; In
thousands)
September 30, 2022
December 31, 2021
Assets
Current assets:
Cash and cash equivalents
$
87,335
$
247,790
Restricted cash
8,556
8,949
Trade accounts receivable, net
628,737
662,583
Inventories
543,858
489,389
Prepaid expenses and other current
assets
149,650
110,218
Related party receivables
1,696
1,179
Total current assets
1,419,832
1,520,108
Property, plant and equipment, net
470,150
514,158
Goodwill
599,504
593,017
Intangible assets, net
1,159,005
1,166,922
Operating lease right-of-use assets
34,252
39,899
Operating lease right-of-use assets -
related party
18,566
20,471
Financing lease right-of-use assets
64,468
64,475
Other assets
108,262
20,614
Total assets
$
3,874,039
$
3,939,664
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable and accrued expenses
$
531,462
$
525,345
Current portion of liabilities for legal
matters
176,094
58,000
Revolving credit facility
60,000
—
Current portion of long-term debt, net
29,940
30,614
Current portion of operating lease
liabilities
10,266
9,686
Current portion of operating and financing
lease liabilities - related party
2,809
2,636
Current portion of financing lease
liabilities
3,557
3,101
Related party payables - short term
3,867
47,861
Total current liabilities
817,995
677,243
Long-term debt, net
2,607,217
2,680,053
Note payable - related party
39,279
38,038
Operating lease liabilities
26,366
32,894
Operating lease liabilities - related
party
16,653
18,783
Financing lease liabilities
61,311
60,251
Related party payables - long term
10,296
9,619
Other long-term liabilities
78,258
38,903
Total long-term liabilities
2,839,380
2,878,541
Redeemable non-controlling interests
22,375
16,907
Total stockholders' equity
194,289
366,973
Total liabilities and stockholders'
equity
$
3,874,039
$
3,939,664
Amneal Pharmaceuticals,
Inc.
Consolidated Statements of
Cash Flows
(Unaudited; In
thousands)
Nine Months Ended September
30,
2022
2021
Cash flows from operating
activities:
Net (loss) income
$
(248,931
)
$
40,629
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation and amortization
179,119
172,223
Unrealized foreign currency loss
12,893
(94
)
Amortization of debt issuance costs and
discount
6,489
6,873
Loss on refinancing
291
—
Intangible asset impairment charges
5,786
1,398
Insurance recoveries for property and
equipment losses
(1,000
)
—
Non-cash property losses
—
5,152
Stock-based compensation
24,016
20,670
Inventory provision
28,884
39,290
Change in fair value of contingent
consideration
(1,495
)
300
Other operating charges and credits,
net
7,077
3,965
Changes in assets and liabilities:
Trade accounts receivable, net
33,570
10,894
Inventories
(91,326
)
(65,643
)
Prepaid expenses, other current assets and
other assets
(34,380
)
(27,493
)
Related party receivables
(517
)
7,201
Accounts payable, accrued expenses and
other liabilities
165,437
(32,819
)
Related party payables
2,479
(3,987
)
Net cash provided by operating
activities
88,392
178,559
Cash flows from investing
activities:
Purchases of property, plant and
equipment
(34,941
)
(30,230
)
Deposits for future acquisition of
property, plant, and equipment
(2,388
)
(2,655
)
Acquisition of intangible assets
(41,800
)
(500
)
Acquisitions of businesses, net of cash
acquired
(84,714
)
(73,828
)
Proceeds from insurance recoveries for
property and equipment losses
1,000
—
Net cash used in investing activities
(162,843
)
(107,213
)
Cash flows from financing
activities:
Payments of deferred financing and
refinancing costs
(1,663
)
—
Payments of principal on debt, revolving
credit facility, financing leases and other
(105,618
)
(68,240
)
Borrowings on revolving credit
facility
85,000
—
Proceeds from exercise of stock
options
662
834
Employee payroll tax withholding on
restricted stock unit vesting
(3,483
)
(2,595
)
Tax distributions to non-controlling
interests
(13,131
)
(36,678
)
Acquisition of redeemable non-controlling
interest
(1,722
)
—
Payments of deferred consideration for
acquisitions - related party
(44,498
)
—
Payments of principal on financing lease -
related party
—
(93
)
Repayment of related party note
—
(1,000
)
Net cash used in financing activities
(84,453
)
(107,772
)
Effect of foreign exchange rate on
cash
(1,944
)
(76
)
Net decrease in cash, cash equivalents,
and restricted cash
(160,848
)
(36,502
)
Cash, cash equivalents, and restricted
cash - beginning of period
256,739
347,121
Cash, cash equivalents, and restricted
cash - end of period
$
95,891
$
310,619
Cash and cash equivalents - end of
period
$
87,335
$
302,655
Restricted cash - end of period
8,556
7,964
Cash, cash equivalents, and restricted
cash - end of period
$
95,891
$
310,619
Amneal Pharmaceuticals,
Inc.
Non-GAAP
Reconciliations
(Unaudited, In
thousands)
Reconciliation of Net (Loss)
Income to EBITDA and Adjusted EBITDA (1)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
Net (loss) income
$
(2,390
)
$
(6,092
)
$
(248,931
)
$
40,629
Adjusted to add:
Interest expense, net
42,391
34,400
111,349
102,368
Provision for income taxes
4,570
4,049
8,459
7,056
Depreciation and amortization
61,608
60,186
179,119
172,223
EBITDA (Non-GAAP)
$
106,179
$
92,543
$
49,996
$
322,276
Adjusted to add (deduct):
Stock-based compensation expense
7,689
7,708
24,016
20,670
Acquisition, site closure, and idle
facility expenses (2)
3,468
2,220
12,230
13,976
Restructuring and other charges (3)
538
425
1,269
788
Loss on refinancing
—
—
291
—
Inventory related charges
—
44
—
245
Charges related to legal matters, net
(4)
285
19,000
249,836
19,000
Asset impairment charges
3,108
688
8,358
1,752
Foreign exchange loss
5,491
29
12,933
185
Regulatory approval milestone
—
—
5,000
—
Change in fair value of contingent
consideration
(1,425
)
300
(1,495
)
300
Charges (insurance recoveries) for
property losses and associated
expenses (5)
—
8,186
(1,911
)
8,186
Other
300
1,282
(445
)
3,088
Adjusted EBITDA (Non-GAAP)
$
125,633
$
132,425
$
360,078
$
390,466
Amneal Pharmaceuticals,
Inc.
Non-GAAP
Reconciliations
(Unaudited; In thousands,
except per share amounts)
Reconciliation of Net (Loss)
Income to Adjusted Net Income and Calculation of Adjusted Diluted
Earnings Per Share (1)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
Net (loss) income
$
(2,390
)
$
(6,092
)
$
(248,931
)
$
40,629
Adjusted to add (deduct):
Non-cash interest
1,882
2,183
5,830
6,232
GAAP provision for income taxes
4,570
4,049
8,459
7,056
Amortization
42,778
41,651
122,146
122,526
Stock-based compensation expense
7,689
7,708
24,016
20,670
Acquisition, site closure expenses, and
idle facility expenses (2)
3,468
2,220
12,230
13,976
Restructuring and other charges (3)
538
425
1,269
788
Loss on refinancing
—
—
291
—
Inventory related charges
—
44
—
245
Charges related to legal matters,
including interest, net (4)
1,758
19,000
251,662
19,000
Asset impairment charges
3,108
688
8,358
1,752
Regulatory approval milestone
—
—
5,000
—
Change in fair value of contingent
consideration
(1,425
)
300
(1,495
)
300
Charges (insurance recoveries) for
property losses and associated expenses (5)
—
8,186
(1,911
)
8,186
Other
300
1,282
(303
)
3,088
Provision for income taxes (6)
(13,494
)
(16,821
)
(41,153
)
(52,006
)
Net income attributable to non-controlling
interests not associated
with our class B common stock
(5,075
)
(1,541
)
(9,163
)
(5,391
)
Adjusted net income (Non-GAAP)
$
43,707
$
63,282
$
136,305
$
187,051
Weighted average diluted shares
outstanding (Non-GAAP) (7)
304,319
303,861
304,415
303,772
Adjusted diluted earnings per share
(Non-GAAP)
$
0.14
$
0.21
$
0.45
$
0.62
Amneal Pharmaceuticals,
Inc.
Non-GAAP
Reconciliations
(Unaudited; In
thousands)
Explanations for
Reconciliations of Net (Loss) Income to EBITDA and Adjusted EBITDA
and
Net (Loss) Income to Adjusted
Net Income and Calculation of Adjusted Diluted Earnings per
Share
(1)
Beginning in the first quarter of 2022, we
will no longer exclude research and development milestone expenses
related to license and collaboration agreements from our non-GAAP
financial measures and our line item components, including adjusted
research and development, adjusted EBITDA, adjusted operating
income, adjusted net income and adjusted earnings per share. Prior
period adjusted results have been revised to reflect this change.
Refer to our Form 8-K filed on May 4, 2022 for additional
information.
(2)
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, 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 nine months ended September 30, 2022
primarily included (i) transaction and integration costs associated
with the Saol Acquistion; (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.
Acquisition, site closure and idle facility expenses for the three
and nine months ended September 30, 2021 primarily included (i)
transaction and integration costs associated with the acquisition
of Kashiv Specialty Pharmaceuticals, LLC (the “KSP Acquisition”);
(ii) integration costs associated with the acquisition of AvKARE;
and (iii) site closure costs associated with the planned cessation
of manufacturing at our Hauppauge, NY facility.
(3)
For the three and nine months ended
September 30, 2022 and 2021, restructuring and other charges
primarily consisted of cash severance charges associated with cost
of benefits for former senior executives and management
employees.
(4)
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, primarily included charges for the settlements and
preliminary settlements of the Opana ER® antitrust litigation, net
of insurance recoveries associated with class action shareholder
lawsuits. For the three and nine months ended September 30, 2022,
charges related to legal matters, including interest, net, also
included interest associated with the settlements and preliminary
settlements of the Opana ER® antitrust litigation. For the three
and nine months ended September 30, 2021, charges related to legal
matters, net were for commercial legal claims.
(5)
For the three and nine months ended
September 30, 2021, property losses and associated expenses were a
result of damage to two of our facilities from Tropical Storm Ida
which consisted of impairment of equipment and inventory, repairs
and maintenance expenses and salaries and benefits. The nine months
ended September 30, 2022 included $1.9 million in insurance
recoveries.
(6)
The non-GAAP effective tax rates for the
three and nine months ended September 30, 2022 were 23.6% and
23.2%, respectively. The non-GAAP effective tax rate for both the
three and nine months ended September 30, 2021 was 21.0%.
(7)
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, 2022
Three Months Ended September
30, 2021
As Reported
Adjustments
Non-GAAP
As Reported
Adjustments
Non-GAAP
Net revenue
$
350,266
$
—
$
350,266
$
347,127
$
—
$
347,127
Cost of goods sold (2)
217,997
(18,367
)
199,630
208,670
(13,049
)
195,621
Cost of goods sold impairment charges
674
(674
)
—
688
(688
)
—
Gross profit
131,595
19,041
150,636
137,769
13,737
151,506
Gross margin %
37.6
%
43.0
%
39.7
%
43.6
%
Selling, general and administrative
(3)
30,259
(1,191
)
29,068
15,941
(988
)
14,953
Research and development (4)
41,987
(1,142
)
40,845
34,999
(1,042
)
33,957
Intellectual property legal development
expense
1,369
—
1,369
1,584
—
1,584
Acquisition, transaction-related and
integration expenses
16
(16
)
—
—
—
—
Charges related to legal matters
285
(285
)
—
—
—
—
Charges (insurance recoveries) for
property losses and associated expenses (5)
—
—
—
8,186
(8,186
)
—
Restructuring and other charges
507
(507
)
—
—
—
—
Other operating income
(1,320
)
—
(1,320
)
—
—
—
Operating income
$
58,492
$
22,182
$
80,674
$
77,059
$
23,953
$
101,012
(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, 2022 and 2021, respectively, were comprised of
stock-based compensation expense ($0.8 million and $1.3 million),
amortization expense ($12.3 million and $10.2 million), site
closure and idle facility expenses ($2.8 million and $1.5 million),
and asset impairment charges ($2.5 million and none).
(3)
Adjustments for the three months ended
September 30, 2022 and 2021, respectively, were comprised of
stock-based compensation expense ($0.6 million and $0.5 million),
and site closure costs ($0.6 million and $0.5 million).
(4)
Adjustments for the three months ended
September 30, 2022 and 2021, respectively, were comprised of
stock-based compensation expense ($1.1 million and $1.0 million).
Non-GAAP adjusted research and development for the three months
ended September 30, 2021, as previously reported, has been revised
to include $0.5 million of research and development milestone
expenses previously excluded.
(5)
Adjustments for the three months ended
September 30, 2021, were a result of damage to two of our
facilities from Tropical Storm Ida, which consisted of impairment
of equipment and inventory, repairs and maintenance expenses and
salaries and benefits.
Amneal Pharmaceuticals,
Inc.
Generics Segment
Reconciliation of GAAP to
Non-GAAP Operating Results (1)
(Unaudited; In
thousands)
Nine Months Ended September
30, 2022
Nine Months Ended September
30, 2021
As Reported
Adjustments
Non-GAAP
As Reported
Adjustments
Non-GAAP
Net revenue
$
1,032,908
$
—
$
1,032,908
$
1,020,072
$
—
$
1,020,072
Cost of goods sold (2)
640,450
(47,419
)
593,031
598,122
(38,705
)
559,417
Cost of goods sold impairment charges
5,786
(5,786
)
—
688
(688
)
—
Gross profit
386,672
53,205
439,877
421,262
39,393
460,655
Gross margin %
37.4
%
42.6
%
41.3
%
45.2
%
Selling, general and administrative
(3)
84,410
(8,641
)
75,769
46,500
(1,803
)
44,697
Research and development (4)
129,382
(3,707
)
125,675
114,547
(3,239
)
111,308
In-process research and development
impairment charges
—
—
—
710
(710
)
—
Intellectual property legal development
expenses
2,919
—
2,919
6,506
—
6,506
Acquisition, transaction-related and
integration expenses
24
(24
)
—
—
—
—
Charges related to legal matters
2,442
(2,442
)
—
—
—
—
Charges (insurance recoveries) for
property losses and associated expenses (5)
(1,911
)
1,911
—
8,186
(8,186
)
—
Restructuring and other charges
713
(713
)
—
80
(80
)
—
Other operating income
(2,495
)
—
(2,495
)
—
—
—
Operating income
$
171,188
$
66,821
$
238,009
$
244,733
$
53,411
$
298,144
(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, 2022 and 2021, respectively, were comprised of
stock-based compensation expense ($3.6 million and $3.3 million),
amortization expense ($31.8 million and $28.0 million), site
closure and idle facility expenses ($9.8 million and $6.2 million),
inventory related charges (none and $0.2 million), asset impairment
charges ($2.6 and $0.4 million), and other ($(0.3) million and $0.6
million).
(3)
Adjustments for the nine months ended
September 30, 2022 and 2021, respectively, were comprised of
stock-based compensation expense ($1.9 million and $1.3 million), a
regulatory approval milestone ($5.0 million and none), and site
closure costs ($1.7 million and $0.5 million).
(4)
Adjustments for the nine months ended
September 30, 2022 and 2021, respectively, were comprised of
stock-based compensation expense ($3.7 million and $2.9 million)
and other (none and $0.3 million). Non-GAAP adjusted research and
development for the nine months ended September 30, 2021, as
previously reported, has been revised to include $11.8 million of
research and development milestone expenses previously
excluded.
(5)
Adjustments for the nine months ended
September 30, 2021, were a result of damage to two of our
facilities from Tropical Storm Ida, which consisted of impairment
of equipment and inventory, repairs and maintenance expenses and
salaries and benefits. The nine months ended September 30, 2022
included $1.9 million in insurance recoveries.
Amneal Pharmaceuticals,
Inc.
Specialty Segment
Reconciliation of GAAP to
Non-GAAP Operating Results
(Unaudited; In
thousands)
Three Months Ended September
30, 2022
Three Months Ended September
30, 2021
As Reported
Adjustments
Non-GAAP
As Reported
Adjustments
Non-GAAP
Net revenue
$
89,484
$
—
$
89,484
$
92,745
$
—
$
92,745
Cost of goods sold (1)
43,719
(27,328
)
16,391
47,303
(27,503
)
19,800
Gross profit
45,765
27,328
73,093
45,442
27,503
72,945
Gross margin %
51.1
%
81.7
%
49.0
%
78.7
%
Selling, general and administrative
(2)
22,201
(380
)
21,821
22,211
(749
)
21,462
Research and development (3)
8,248
(370
)
7,878
13,928
(314
)
13,614
Intellectual property legal development
expenses
42
—
42
43
—
43
Acquisition, transaction-related and
integration expenses
15
(15
)
—
—
—
—
Change in fair value of contingent
consideration (4)
(1,425
)
1,425
—
300
(300
)
—
Operating income
$
16,684
$
26,668
$
43,352
$
8,960
$
28,866
$
37,826
(1)
Adjustments for the three months ended
September 30, 2022 and 2021 were comprised of amortization
expense.
(2)
Adjustments for the three months ended
September 30, 2022 and 2021 were comprised of stock-based
compensation expense.
(3)
Adjustments for the three months ended
September 30, 2022 and 2021 were comprised of stock-based
compensation expense. Non-GAAP adjusted research and development
for the three months ended September 30, 2021, as previously
reported, has been revised to include $2.0 million of research and
development milestone expenses previously excluded.
(4)
Contingent consideration was recorded in
connection with the Saol Acquisition and the KSP Acquisition.
Amneal Pharmaceuticals,
Inc.
Specialty Segment
Reconciliation of GAAP to
Non-GAAP Operating Results
(Unaudited; In
thousands)
Nine Months Ended September
30, 2022
Nine Months Ended September
30, 2021
As Reported
Adjustments
Non-GAAP
As Reported
Adjustments
Non-GAAP
Net revenue
$
271,571
$
—
$
271,571
$
277,311
$
—
$
277,311
Cost of goods sold (1)
130,363
(80,860
)
49,503
144,184
(82,496
)
61,688
Gross profit
141,208
80,860
222,068
133,127
82,496
215,623
Gross margin %
52.0
%
81.8
%
48.0
%
77.8
%
Selling, general and administrative
(2)
69,772
(794
)
68,978
62,748
(2,081
)
60,667
Research and development (3)
24,399
(1,099
)
23,300
35,426
(783
)
34,643
Intellectual property legal development
expenses
77
—
77
68
—
68
Acquisition, transaction-related and
integration expenses
47
(47
)
—
16
(16
)
—
Change in fair value of contingent
consideration (4)
(1,495
)
1,495
—
300
(300
)
—
Operating income
$
48,408
$
81,305
$
129,713
$
34,569
$
85,676
$
120,245
(1)
Adjustments for the nine months ended
September 30, 2022 and 2021 were comprised of amortization
expense.
(2)
Adjustments for the nine months ended
September 30, 2022 and 2021 were comprised of stock-based
compensation expense.
(3)
Adjustments for the nine months ended
September 30, 2022 and 2021 were comprised of stock-based
compensation expense. Non-GAAP adjusted research and development
for the nine months ended September 30, 2021, as previously
reported, has been revised to include $9.4 million of research and
development milestone expenses previously excluded.
(4)
Contingent consideration was recorded in
connection with the Saol Acquisition and the KSP Acquisition.
Amneal Pharmaceuticals,
Inc.
AvKARE Segment
Reconciliation of GAAP to
Non-GAAP Operating Results (1)
(Unaudited; In
thousands)
Three Months Ended September
30, 2022
Three Months Ended September
30, 2021
As Reported
Adjustments
Non-GAAP
As Reported
Adjustments
Non-GAAP
Net revenue
$
105,807
$
—
$
105,807
$
88,721
$
—
$
88,721
Cost of goods sold
88,937
—
88,937
73,421
—
73,421
Gross profit
16,870
—
16,870
15,300
—
15,300
Gross margin %
15.9
%
15.9
%
17.2
%
17.2
%
Selling, general and administrative
(2)
13,216
(4,933
)
8,283
14,683
(6,303
)
8,380
Operating income
$
3,654
$
4,933
$
8,587
$
617
$
6,303
$
6,920
(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, 2022 and 2021 were comprised of amortization
expense.
Nine Months Ended September
30, 2022
Nine Months Ended September
30, 2021
As Reported
Adjustments
Non-GAAP
As Reported
Adjustments
Non-GAAP
Net revenue
$
298,066
$
—
$
298,066
$
259,390
$
—
$
259,390
Cost of goods sold
256,626
—
256,626
211,208
—
211,208
Gross profit
41,440
—
41,440
48,182
—
48,182
Gross margin %
13.9
%
13.9
%
18.6
%
18.6
%
Selling, general and administrative
(2)
39,361
(14,392
)
24,969
41,986
(18,670
)
23,316
Acquisition, transaction-related and
integration expenses (3)
—
—
—
1,422
(1,422
)
—
Operating income
$
2,079
$
14,392
$
16,471
$
4,774
$
20,092
$
24,866
(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, 2022 and 2021, respectively, were comprised of
amortization expense ($14.8 million and $18.7 million) and other
($(0.4) million and none).
(3)
Adjustments for the nine months ended
September 30, 2021 were comprised of finance integration
expenses.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221104005076/en/
Anthony DiMeo Head of Investor Relations
anthony.dimeo@amneal.com
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