Amneal Pharmaceuticals, Inc. (NYSE: AMRX) (“Amneal” or
the “Company”) today announced certain unaudited preliminary
financial results for the third quarter ended September 30, 2023.
The Company also raised its financial guidance for the year ending
December 31, 2023, which was most recently issued on August 4,
2023. The Company plans to report actual third quarter 2023
financial results on November 7, 2023.
Unaudited Preliminary Financial Results
for the Third Quarter Ended September 30, 2023
- Net revenue of $610 million to $620 million, an increase of
approximately 13% compared to the third quarter of 2022
- Income before income taxes of $18 million to $28 million, which
is substantially higher compared to the third quarter of 2022
- Adjusted EBITDA(1) of $150 million to $155 million, an increase
of approximately 21% compared to the third quarter of 2022
- Net leverage(1) decreased to approximately 4.6x as of September
30, 2023, compared to 5.3x as of December 31, 2022, due to higher
profitability and continued reduction in debt
“We are pleased to again raise our full year guidance following
double-digit revenue and adjusted EBITDA growth in the third
quarter. Our strong performance reflects the significant momentum
across our business, driven by Amneal’s disciplined execution,
continued portfolio diversification, steady cadence of new Generics
launches and rapidly increasing uptake of our biosimilars.
Specialty is also growing, with IPX203 on-track for potential 2024
launch. AvKARE, our distribution business, continues to deliver
strong top and bottom-line growth. Importantly, 2023 is on track to
mark Amneal’s fourth consecutive year of revenue and adjusted
EBITDA growth, underscoring the strength of our strategy,
disciplined approach to capital allocation as we further
deleverage, and commitment to shareholder value creation,” said
Chirag and Chintu Patel, Co-Chief Executive Officers and
Co-Founders.
Amneal's preliminary financial results are based on the most
recent information available to the Company’s management. Such
preliminary financial results are forward-looking statements.
Actual results may differ from these preliminary financial results
due to the completion of the Company’s financial close procedures,
final accounting adjustments and other developments that may arise
between the date of this Current Report on Form 8-K and the time
that financial results for the third quarter of 2023 are finalized,
and such differences may be material. The preliminary financial
results for the third quarter of 2023 are not necessarily
indicative of the results to be achieved in any future period.
(1)
See “Non-GAAP Financial Measures”
below.
Raising Full Year 2023 Financial
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)
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.
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, certain
unaudited preliminary 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 Company’s statements about certain unaudited preliminary
financial results for the third quarter ended September 30, 2023,
included herein, provide projected information based on the
Company’s current estimates and expectations and remain subject to
change and finalization based on management’s ongoing review of
results of the quarter and completion of all quarter-end close
processes. The Company cautions investors that if the estimates,
expectations or assumptions underlying the forward-looking
statements contained herein prove inaccurate or if other risks or
uncertainties arise, actual results could differ materially from
those expressed in, or implied by, these 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; 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, adjusted diluted EPS, net debt,
and net leverage, which are intended as supplemental measures of
the Company’s performance that are not required by or presented in
accordance with GAAP. Net debt reflects current and long-term
indebtedness less cash and cash equivalents. 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 milestones, (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 expenses and (xv) 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. Net leverage is calculated as the total
outstanding principal on the Company's debt less cash and cash
equivalents, divided by adjusted EBITDA for the last twelve months
or year ended, as applicable.
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. Non-GAAP Reconciliations (unaudited, in
thousands) Reconciliation of Income Before Income Taxes to
EBITDA and Adjusted EBITDA
Three Months Ended September
30,
2023 (Preliminary
Range)
2022
Low End
High End
Income before income taxes
$
18,000
$
28,000
$
2,180
Adjusted to add:
Interest expense, net
52,000
50,000
42,391
Depreciation and amortization
58,000
56,000
61,608
EBITDA (Non-GAAP)
$
128,000
$
134,000
$
106,179
Adjusted to add (deduct):
Stock-based compensation expense
6,800
6,400
7,689
Acquisition, site closure, and idle
facility expenses (1)
1,700
1,400
3,468
Restructuring and other charges
1,100
900
538
Charges related to legal matters, net
(2)
3,000
2,000
285
Asset impairment charges
900
700
3,108
Foreign exchange loss
3,000
2,800
5,491
Change in fair value of contingent
consideration
3,300
2,900
(1,425
)
System implementation expenses (3)
2,100
1,900
2,091
Other
100
2,000
(1,791
)
Adjusted EBITDA (Non-GAAP)
$
150,000
$
155,000
$
125,633
Amneal Pharmaceuticals,
Inc. Non-GAAP Reconciliations (unaudited)
Explanations for Reconciliation of Income Before Income Taxes to
EBITDA and Adjusted EBITDA
(1)
Acquisition, site closure, and idle
facility expenses for the three 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
and 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 for the
settlement of commercial litigation. For the three months ended
September 30, 2022 charges related to legal matters, net were
immaterial.
(3)
System implementation expenses for the
three months ended September 30, 2023 was primarily for the
implementation of indirect procurement software. System
implementation expenses for the three months ended September 30,
2022 was primarily for the implementation of indirect procurement
software and sales deduction software.
Amneal Pharmaceuticals,
Inc. Non-GAAP Reconciliations (unaudited, in
thousands, except net leverage) Calculation of Net Debt and
Net Leverage
September 30, 2023
(Preliminary)
December 31, 2022
Term Loan due May 2025
$
2,543,626
$
2,563,876
Rondo Term Loan due January 2025
37,500
72,000
Revolving credit facilities
76,000
60,000
Sellers Notes
44,200
44,200
Gross debt (1)
2,701,326
2,740,076
Less: Cash and cash equivalents
(86,929
)
(25,976
)
Net debt (Non-GAAP)
$
2,614,397
$
2,714,100
Last Twelve Months Ended
September 30, 2023 (Preliminary)
Year Ended December 31,
2022
Adjusted EBITDA (Non-GAAP) (2)
$
568,800
$
514,110
Net leverage (Non-GAAP) (3)
4.6
5.3
(1)
See “Note 16. Debt” in the Company's 2022
Annual Report on Form 10-K for additional information.
(2)
See “Reconciliation of (Loss) Income
Before Income Taxes to EBITDA and adjusted EBITDA” below.
(3)
Net leverage was calculated by dividing
net debt by adjusted EBITDA
Amneal Pharmaceuticals,
Inc. Non-GAAP Reconciliations (unaudited, in
thousands) Reconciliation of (Loss) Income Before Income
Taxes to EBITDA and Adjusted EBITDA
Three Months Ended
Six Months Ended
Three Months Ended
Last Twelve Months
Ended
Year Ended
December 31, 2022
June 30, 2023
September 30, 2023
(Preliminary) (1)
September 30, 2023
(Preliminary)
December 31, 2022
(Loss) income before income
taxes
$
(7,655
)
$
20,234
$
23,000
$
35,579
$
(248,127
)
Adjusted to add:
Interest expense, net
47,028
100,172
51,000
198,200
158,377
Depreciation and amortization
61,056
115,261
57,000
233,317
240,175
EBITDA (Non-GAAP)
$
100,429
$
235,667
$
131,000
$
467,096
$
150,425
Adjusted to add (deduct):
Stock-based
compensation expense
7,831
14,157
6,600
28,588
31,847
Acquisition, site
closure, and idle
facility expenses (2)
3,452
4,280
1,550
9,282
15,682
Restructuring and
other charges
109
493
1,000
1,602
1,378
Loss on refinancing
—
—
—
—
291
Charges related to
legal matters, net (3)
20,094
6,081
2,500
28,675
269,930
Asset impairment
charges (4)
18,551
2,071
800
21,422
26,909
Foreign exchange
(gain) loss
(569
)
(2,322
)
2,900
9
12,364
Change in fair value of
contingent
consideration
2,226
(3,907
)
3,100
1,419
731
Insurance recoveries
for property losses and
associated expenses
—
—
—
—
(1,911
)
Regulatory approval
milestone
—
—
—
—
5,000
System implementation expenses (5)
727
2,413
2,000
5,140
2,818
Other
1,182
3,335
1,050
5,567
(1,354
)
Adjusted EBITDA (Non-GAAP)
$
154,032
$
262,268
$
152,500
$
568,800
$
514,110
Amneal Pharmaceuticals,
Inc. Non-GAAP Reconciliations (unaudited)
Explanations for Reconciliation of (Loss) Income Before Income
Taxes to EBITDA and Adjusted EBITDA
(1)
Represents the mid-point in the
preliminary adjusted EBITDA range. See “Reconciliation of Income
Before Income Taxes to EBITDA and Adjusted EBITDA” in the first
Non-GAAP reconciliation above.
(2)
Acquisition, site closure, and idle
facility expenses for the three months ended December 31, 2022, six
months ended June 30, 2023 and three 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 year
ended December 31, 2022 primarily included (i) transaction and
integration costs associated with the acquisition of the baclofen
franchise from certain entities affiliated with Saol International
Limited, (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.
(3)
For the three months ended December 31,
2022 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 months ended September 30, 2023, charges
related to legal matters, net primarily were primarily for the
settlement of commercial litigation. For the year ended December
31, 2022, charges related to legal matters, net, primarily included
charges for (i) the settlements of the Opana ER® antitrust
litigation and (ii) civil prescription opioid litigation, offset by
insurance recoveries associated with class action shareholder
lawsuits.
(4)
Asset impairment charges for the three
months and year ended December 31, 2022 were associated with the
write-offs of intangible assets and equipment, except for equipment
damaged by Tropical Storm Ida.
(5)
System implementation expenses for the six
months ended June 30, 2023, three months ended September 30, 2023,
and year ended December 31, 2022 were primarily for the
implementation of indirect procurement software and sales deduction
software.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231023317675/en/
Anthony DiMeo Head of Investor Relations
anthony.dimeo@amneal.com
Amneal Pharmaceuticals (NYSE:AMRX)
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