Amneal Reports First Quarter 2022 Financial Results

May 4th, 2022 6:00 EST

BRIDGEWATER, N.J.–(BUSINESS WIRE)–Amneal Pharmaceuticals, Inc. (NYSE: AMRX) (“Amneal” or the “Company”) announced its results today for the first quarter ended March 31, 2022.

“We are very pleased with our first quarter results and the progress we have made to advance our growth strategy. With recent U.S. FDA approvals for our first two biosimilars, as well as the closing of our Saol Baclofen acquisition, Amneal is expanding in high growth areas, including biosimilars and injectables, which we expect to drive meaningful growth going forward. These important milestones, as well as our continued focus on advancing R&D initiatives, are diversifying our business as we work to fulfill our mission of bringing innovative and affordable medicines to patients and creating value for shareholders,” said Chirag and Chintu Patel, Co-Chief Executive Officers.

Net revenue in the first quarter of 2022 was $498 million, an increase of 1% compared to $493 million in the first quarter of 2021. The increase was driven by solid broad-based performance in Generics, including new product launches, and the expansion of AvKARE’s distribution channel, partially offset by the loss of exclusivity of Zomig® Nasal Spray.

Net loss attributable to Amneal Pharmaceuticals, Inc. was $2 million in the first quarter of 2022 compared to a net income of $7 million in the first quarter of 2021. Beginning in the first quarter of 2022, we will no longer exclude research and development milestone expenses from non-GAAP financial measures. In the first quarter of 2022 and 2021, R&D milestone expenses were $5 million and $11 million, respectively. Prior periods presented have been revised to reflect this change. Adjusted EBITDA(1) in the first quarter of 2022 was $100 million, a decrease of 13% compared to the first quarter of 2021, reflective of lower gross profit due to product mix and a tough comparison to the prior year. Adjusted diluted EPS(1) in the first quarter of 2022 was $0.12, compared to $0.17 in the first quarter of 2021.

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

Maintaining Full Year 2022 Financial Outlook

Amneal is maintaining its previously provided guidance.

Full Year 2022 Financial Guidance

Net revenue

$2.15 billion – $2.25 billion

Adjusted EBITDA (1)

$540 million – $560 million

Adjusted diluted EPS (2)

$0.80 – $0.85

Operating cash flow (3)

$225 million – $250 million

Capital expenditures

$75 million – $85 million

Weighted average diluted shares outstanding (4)

Approximately 307 million

(1)

Includes 100% of EBITDA from the AvKARE acquisition. Beginning in the first quarter of 2022, we will no longer exclude research and development milestone expense from non-GAAP financial measures.

(2)

Accounts for 35% non-controlling interest in AvKARE. Beginning in the first quarter of 2022, we will no longer exclude research and development milestone expense from 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.

(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, 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 May 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 874223. 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 097886.

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 operating results and financial performance; impact of planned acquisitions and dispositions; the Company’s strategy for growth; product development; regulatory approvals; market position 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 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 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; 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; 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 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 and inflation rates; our ability to identify, make and integrate acquisitions or investments in complementary businesses and products on advantageous terms; 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 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

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.

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.

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
March 31,

 

2022

 

2021

Net revenue

$

497,633

 

 

$

493,105

 

Cost of goods sold

 

323,062

 

 

 

301,543

 

Gross profit

 

174,571

 

 

 

191,562

 

Selling, general and administrative

 

98,665

 

 

 

90,726

 

Research and development

 

52,798

 

 

 

48,182

 

Intellectual property legal development expenses

 

764

 

 

 

3,582

 

Acquisition, transaction-related and integration expenses

 

434

 

 

 

2,802

 

Credit related to legal matters, net

 

(2,326

)

 

 

 

Restructuring and other charges

 

731

 

 

 

363

 

Change in fair value of contingent consideration

 

200

 

 

 

 

Operating income

 

23,305

 

 

 

45,907

 

Other (expense) income:

 

 

 

Interest expense, net

 

(33,335

)

 

 

(33,885

)

Foreign exchange (loss) gain, net

 

(2,013

)

 

 

2,088

 

Other income, net

 

2,122

 

 

 

794

 

Total other expense, net

 

(33,226

)

 

 

(31,003

)

(Loss) income before income taxes

 

(9,921

)

 

 

14,904

 

(Benefit from) provision for income taxes

 

(3,461

)

 

 

359

 

Net (loss) income

 

(6,460

)

 

 

14,545

 

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

 

4,742

 

 

 

(7,839

)

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

$

(1,718

)

 

$

6,706

 

Accretion of redeemable non-controlling interest

 

(438

)

 

 

 

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

$

(2,156

)

 

$

6,706

 

 

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

Basic

$

(0.01

)

 

$

0.05

 

Diluted

$

(0.01

)

 

$

0.04

 

Weighted-average common shares outstanding:

 

 

 

Basic

 

149,892

 

 

 

148,013

 

Diluted

 

149,892

 

 

 

151,220

 

Amneal Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets
(Unaudited; In thousands)

 

March 31, 2022

 

December 31, 2021

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

210,477

 

$

247,790

Restricted cash

 

6,068

 

 

8,949

Trade accounts receivable, net

 

538,309

 

 

662,583

Inventories

 

512,241

 

 

489,389

Prepaid expenses and other current assets

 

121,408

 

 

110,218

Related party receivables

 

1,175

 

 

1,179

Total current assets

 

1,389,678

 

 

1,520,108

Property, plant and equipment, net

 

500,911

 

 

514,158

Goodwill

 

602,893

 

 

593,017

Intangible assets, net

 

1,209,818

 

 

1,166,922

Operating lease right-of-use assets

 

37,675

 

 

39,899

Operating lease right-of-use assets – related party

 

19,846

 

 

20,471

Financing lease right-of-use assets

 

64,204

 

 

64,475

Other assets

 

63,943

 

 

20,614

Total assets

$

3,888,968

 

$

3,939,664

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued expenses

$

539,734

 

$

583,345

Current portion of long-term debt, net

 

30,523

 

 

30,614

Current portion of operating lease liabilities

 

9,901

 

 

9,686

Current portion of operating and financing lease liabilities – related party

 

2,692

 

 

2,636

Current portion of financing lease liabilities

 

3,233

 

 

3,101

Related party payables – short term

 

15,960

 

 

47,861

Total current liabilities

 

602,043

 

 

677,243

Long-term debt, net

 

2,672,661

 

 

2,680,053

Note payable – related party

 

38,443

 

 

38,038

Operating lease liabilities

 

30,378

 

 

32,894

Operating lease liabilities – related party

 

18,093

 

 

18,783

Financing lease liabilities

 

60,286

 

 

60,251

Related party payables – long term

 

10,371

 

 

9,619

Other long-term liabilities

 

32,866

 

 

38,903

Total long-term liabilities

 

2,863,098

 

 

2,878,541

Redeemable non-controlling interests

 

16,420

 

 

16,907

Total stockholders’ equity

 

407,407

 

 

366,973

Total liabilities and stockholders’ equity

$

3,888,968

 

$

3,939,664

Amneal Pharmaceuticals, Inc.
Consolidated Statements of Cash Flows
(Unaudited; In thousands)

 

 

Three Months Ended
March 31,

 

2022

 

2021

Cash flows from operating activities:

 

 

 

Net (loss) income

$

(6,460

)

 

$

14,545

 

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

 

 

 

Depreciation and amortization

 

57,815

 

 

 

55,549

 

Unrealized foreign currency loss (gain)

 

3,140

 

 

 

(1,970

)

Amortization of debt issuance costs and discount

 

2,195

 

 

 

2,183

 

Stock-based compensation

 

8,065

 

 

 

5,330

 

Inventory provision

 

3,578

 

 

 

16,021

 

Change in fair value of contingent consideration

 

200

 

 

 

 

Other operating charges and credits, net

 

1,155

 

 

 

1,431

 

Changes in assets and liabilities:

 

 

 

Trade accounts receivable, net

 

124,268

 

 

 

108,385

 

Inventories

 

(25,549

)

 

 

(20,283

)

Prepaid expenses, other current assets and other assets

 

(4,423

)

 

 

602

 

Related party receivables

 

4

 

 

 

301

 

Accounts payable, accrued expenses and other liabilities

 

(48,777

)

 

 

(37,226

)

Related party payables

 

5,132

 

 

 

3,260

 

Net cash provided by operating activities

 

120,343

 

 

 

148,128

 

Cash flows from investing activities:

 

 

 

Purchases of property, plant and equipment

 

(10,793

)

 

 

(11,776

)

Deposits for future acquisition of property, plant, and equipment

 

(1,888

)

 

 

(917

)

Acquisition of business

 

(84,714

)

 

 

 

Net cash used in investing activities

 

(97,395

)

 

 

(12,693

)

Cash flows from financing activities:

 

 

 

Payments of principal on debt, financing leases and other

 

(9,796

)

 

 

(23,630

)

Proceeds from exercise of stock options

 

111

 

 

 

676

 

Employee payroll tax withholding on restricted stock unit vesting

 

(3,001

)

 

 

(2,102

)

Tax distributions to non-controlling interests

 

(3,164

)

 

 

 

Acquisition of redeemable non-controlling interest

 

(1,722

)

 

 

 

Payments of deferred consideration for acquisitions – related party

 

(43,998

)

 

 

 

Payments of principal on financing lease – related party

 

 

 

 

(93

)

Repayment of related party note

 

 

 

 

(1,000

)

Net cash used in financing activities

 

(61,570

)

 

 

(26,149

)

Effect of foreign exchange rate on cash

 

(1,572

)

 

 

(593

)

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

 

(40,194

)

 

 

108,693

 

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

 

256,739

 

 

 

347,121

 

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

$

216,545

 

 

$

455,814

 

Cash and cash equivalents – end of period

$

210,477

 

 

$

452,097

 

Restricted cash – end of period

 

6,068

 

 

 

3,717

 

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

$

216,545

 

 

$

455,814

 

Amneal Pharmaceuticals, Inc.
Non-GAAP Reconciliations
(Unaudited, In thousands)

Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA (1)

 

 

Three Months Ended
March 31,

 

2022

 

2021

Net (loss) income

$

(6,460

)

 

$

14,545

 

Adjusted to add (deduct):

 

 

 

Interest expense, net

 

33,335

 

 

 

33,885

 

Income tax expense (benefit)

 

(3,461

)

 

 

359

 

Depreciation and amortization

 

57,815

 

 

 

55,549

 

EBITDA (Non-GAAP)

$

81,229

 

 

$

104,338

 

Adjusted to add (deduct):

 

 

 

Stock-based compensation expense

 

8,065

 

 

 

5,330

 

Acquisition, site closure, and idle facility expenses (2)

 

5,589

 

 

 

5,792

 

Restructuring and other charges (3)

 

731

 

 

 

363

 

Inventory related charges

 

 

 

 

114

 

Credit related to legal matters, net (4)

 

(2,326

)

 

 

 

Asset impairment charges

 

 

 

 

323

 

Foreign exchange loss (gain)

 

2,013

 

 

 

(2,088

)

Regulatory approval milestone

 

5,000

 

 

 

 

Change in fair value of contingent consideration

 

200

 

 

 

 

Other

 

(641

)

 

 

999

 

Adjusted EBITDA (Non-GAAP)

$

99,860

 

 

$

115,171

 

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
March 31,

 

2022

2021

Net (loss) income

$

(6,460

)

 

$

14,545

 

Adjusted to add (deduct):

 

 

 

Non-cash interest

 

1,982

 

 

 

1,972

 

GAAP Income tax (benefit) expense

 

(3,461

)

 

 

359

 

Amortization

 

39,152

 

 

 

39,514

 

Stock-based compensation expense

 

8,065

 

 

 

5,330

 

Acquisition, site closure expenses, and idle facility expenses (2)

 

5,589

 

 

 

5,792

 

Restructuring and other charges (3)

 

731

 

 

 

363

 

Inventory related charges

 

 

 

 

114

 

Credit related to legal matters, net (4)

 

(2,326

)

 

 

 

Asset impairment charges

 

 

 

 

323

 

Regulatory approval milestone

 

5,000

 

 

 

 

Change in fair value of contingent consideration

 

200

 

 

 

 

Other

 

(500

)

 

 

999

 

Income tax (5)

 

(10,185

)

 

 

(15,053

)

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

B common stock

 

(2,199

)

 

 

(1,796

)

Adjusted net income (Non-GAAP)

$

35,588

 

 

$

52,462

 

Weighted average diluted shares outstanding (Non-GAAP) (6)

 

304,630

 

 

 

303,337

 

Adjusted diluted earnings per share (Non-GAAP)

$

0.12

 

 

$

0.17

 

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.

 

 

(2)

Acquisition, site closure, and idle facility expenses for the three months ended March 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. Acquisition, site closure and idle facility expenses for the three months ended March 31, 2021 primarily included (i) transaction costs associated with the acquisition of Kashiv Specialty Pharmaceuticals, LLC, which closed on April 2, 2021; (ii) integration costs associated with the acquisition of AvKARE; and (iii) site closure expenses associated with the planned cessation of manufacturing at our Hauppauge, NY facility.

 

 

(3)

For the three months ended March 31, 2022 and 2021, restructuring and other charges primarily consisted of cash severance charges associated with the cost of benefits for former senior executives and management employees.

 

 

(4)

For the three months ended March 31, 2022, we recorded a net credit of $2.3 million consisting of an insurance recovery of $4 million, partially offset by charges for legal proceedings (none for the three months ended March 31, 2021).

 

 

(5)

The non-GAAP effective tax rates for the three months ended March 31, 2022 and 2021 were 22.3% and 21.0%, respectively.

 

 

(6)

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
March 31, 2022

 

Three Months Ended
March 31, 2021

 

As Reported

 

Adjustments

 

Non-GAAP

 

As Reported

 

Adjustments

 

Non-GAAP

Net revenue

 

$

317,747

 

 

$

 

 

$

317,747

 

 

$

312,508

 

 

$

 

 

$

312,508

 

Cost of goods sold (2)

 

 

199,030

 

 

 

(15,091

)

 

 

183,939

 

 

 

185,298

 

 

 

(12,019

)

 

 

173,279

 

Gross profit

 

 

118,717

 

 

 

15,091

 

 

 

133,808

 

 

 

127,210

 

 

 

12,019

 

 

 

139,229

 

Gross margin %

 

 

37.4

%

 

 

 

 

42.1

%

 

 

40.7

%

 

 

 

 

44.6

%

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative (3)

 

 

27,593

 

 

 

(6,250

)

 

 

21,343

 

 

 

18,762

 

 

 

(824

)

 

 

17,938

 

Research and development (4)

 

 

43,221

 

 

 

(1,159

)

 

 

42,062

 

 

 

36,117

 

 

 

(1,002

)

 

 

35,115

 

Charges related to legal matters, net (5)

 

 

1,674

 

 

 

(1,674

)

 

 

 

 

 

 

 

 

 

 

 

 

Intellectual property legal development expenses

 

 

772

 

 

 

 

 

 

772

 

 

 

3,582

 

 

 

 

 

 

3,582

 

Restructuring and other charges

 

 

206

 

 

 

(206

)

 

 

 

 

 

80

 

 

 

(80

)

 

 

 

Operating income

 

$

45,251

 

 

$

24,380

 

 

$

69,631

 

 

$

68,669

 

 

$

13,925

 

 

$

82,594

 

(1)

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

 

 

(2)

Adjustments for the three months ended March 31, 2022 and 2021, respectively, were comprised of stock-based compensation expense ($1.5 million and $0.6 million), amortization expense ($9.3 million and $8.0 million), site closure and idle facility expenses ($4.6 million and $2.5 million), inventory related charges (none and $0.1 million), asset impairment charges (none and $0.3 million), and other ($(0.3) million and $0.5 million).

 

 

(3)

Adjustments for the three months ended March 31, 2022 and 2021, respectively, were comprised of stock-based compensation expense ($0.7 million and $0.3 million), a regulatory approval milestone ($5.0 million and none) and site closure costs ($0.6 million and $0.5 million).

 

 

(4)

Adjustments for the three months ended March 31, 2022 and 2021, respectively, were comprised of stock-based compensation expense ($1.2 million and $0.8 million) and other (none and $0.2 million). Non-GAAP adjusted research and development for the three months ended March 31, 2021, as previously reported, has been revised to include $3.4 million of research and development milestone expenses previously excluded.

 

 

(5)

Adjustments for the three months ended March 31, 2022 were related to charges for legal proceedings.

Amneal Pharmaceuticals, Inc.Specialty SegmentReconciliation of GAAP to Non-GAAP Operating Results(Unaudited; In thousands)

 

 

Three Months Ended
March 31, 2022

 

Three Months Ended
March 31, 2021

 

As Reported

 

Adjustments

 

Non-GAAP

 

As Reported

 

Adjustments

 

Non-GAAP

Net revenue

$

85,086

 

 

$

 

 

$

85,086

 

 

$

95,931

 

 

$

 

 

$

95,931

 

Cost of goods sold (1)

 

43,853

 

 

 

(26,653

)

 

 

17,200

 

 

 

48,198

 

 

 

(27,493

)

 

 

20,705

 

Gross profit

 

41,233

 

 

 

26,653

 

 

 

67,886

 

 

 

47,733

 

 

 

27,493

 

 

 

75,226

 

Gross margin %

 

48.5

%

 

 

 

 

79.8

%

 

 

49.8

%

 

 

 

 

78.4

%

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative (2)

 

24,400

 

 

 

(613

)

 

 

23,787

 

 

 

19,881

 

 

 

(591

)

 

 

19,290

 

Research and development (3)

 

9,577

 

 

 

(326

)

 

 

9,251

 

 

 

12,065

 

 

 

(180

)

 

 

11,885

 

Change in fair value of contingent consideration (4)

 

200

 

 

 

(200

)

 

 

 

 

 

 

 

 

 

 

 

 

Intellectual property legal development credit

 

(8

)

 

 

 

 

 

(8

)

 

 

 

 

 

 

 

 

 

Operating income

$

7,064

 

 

$

27,792

 

 

$

34,856

 

 

$

15,787

 

 

$

28,264

 

 

$

44,051

 

(1)

Adjustments for the three months ended March 31, 2022 and 2021 were comprised of amortization expense.

 

 

(2)

Adjustments for the three months ended March 31, 2022 and 2021 were comprised of stock-based compensation expense.

 

 

(3)

Adjustments for the three months ended March 31, 2022 and 2021 were comprised of stock-based compensation expense. Non-GAAP adjusted research and development for the three months ended March 31, 2021, as previously reported, has been revised to include $7.4 million of research and development milestone expenses previously excluded.

 

 

(4)

Contingent consideration was recorded in connection with 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
March 31, 2022

 

Three Months Ended
March 31, 2021

 

As Reported

 

Adjustments

 

Non-GAAP

 

As Reported

 

Adjustments

 

Non-GAAP

Net revenue

$

94,800

 

 

$

 

 

$

94,800

 

 

$

84,666

 

 

$

 

 

$

84,666

 

Cost of goods sold

 

80,179

 

 

 

 

 

 

80,179

 

 

 

68,047

 

 

 

 

 

 

68,047

 

Gross profit

 

14,621

 

 

 

 

 

 

14,621

 

 

 

16,619

 

 

 

 

 

 

16,619

 

Gross margin %

 

15.4

%

 

 

 

 

15.4

%

 

 

19.6

%

 

 

 

 

19.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative (2)

 

13,410

 

 

 

(4,526

)

 

 

8,884

 

 

 

13,704

 

 

 

(6,184

)

 

 

7,520

 

Acquisition, transaction-related and integration expenses (3)

 

 

 

 

 

 

 

 

 

 

931

 

 

$

(931

)

 

 

 

Operating income (loss)

$

1,211

 

 

$

4,526

 

 

$

5,737

 

 

$

1,984

 

 

$

7,115

 

 

$

9,099

 

(1)

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

 

 

(2)

Adjustments for the three months ended March 31, 2022 and 2021, respectively, were comprised of amortization expense ($4.9 million and $6.2 million) and other ($(0.4) million and none).

 

 

(3)

Adjustments for the three months ended March 31, 2021 were comprised of finance integration expenses.

Amneal Pharmaceuticals, Inc.
Reconciliation of Previously Reported GAAP and Non-GAAP Results to Revised Non-GAAP Results for Prior Periods
(Unaudited; In thousands, except per share amounts)

 

 

Three months ended

 

Year ended

 

Dec. 31, 2021

 

Sept. 30, 2021

 

June 30, 2021

 

March 31, 2021

 

Dec. 31, 2021

 

Dec. 31, 2020

Net (loss) income

$ (20,459)

 

$ (6,092)

 

$ 32,176

 

$ 14,545

 

$ 20,170

 

$ 68,578

Adjusted to add (deduct):

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

33,957

 

34,400

 

34,083

 

33,885

 

136,325

 

145,998

Income tax expense (benefit)

4,140

 

4,049

 

2,648

 

359

 

11,196

 

(104,358)

Depreciation and amortization

61,183

 

60,186

 

56,487

 

55,549

 

233,406

 

235,387

EBITDA (Non-GAAP)

$ 78,821

 

$ 92,543

 

$ 125,394

 

$ 104,338

 

$ 401,097

 

$ 345,605

Adjusted to add (deduct):

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

7,742

 

7,708

 

7,632

 

5,330

 

28,412

 

20,750

Acquisition, site closure, and idle facility expenses

6,027

 

2,220

 

5,964

 

5,792

 

20,003

 

23,384

Restructuring and other charges

 

425

 

 

363

 

788

 

2,398

Inventory related charges

16

 

44

 

87

 

114

 

261

 

6,574

Charges related to legal matters, net

6,000

 

19,000

 

 

 

25,000

 

5,610

Asset impairment charges

22,353

 

688

 

741

 

323

 

24,105

 

43,629

Foreign exchange loss (gain)

170

 

29

 

2,244

 

(2,088)

 

355

 

(16,350)

Gain on sale of international businesses, net

 

 

 

 

 

(123)

Research and development milestones

4,566

 

2,496

 

7,847

 

10,886

 

25,795

 

22,771

Change in fair value of contingent consideration

(100)

 

300

 

 

 

200

 

Property losses and associated expenses, net

(2,818)

 

8,186

 

 

 

5,368

 

Other

3,592

 

1,282

 

807

 

999

 

6,680

 

1,926

Adjusted EBITDA (Non-GAAP), as previously reported

$ 126,369

 

$ 134,921

 

$ 150,716

 

$ 126,057

 

$ 538,064

 

$ 456,174

Research and development milestones (1)

(4,566)

 

(2,496)

 

(7,847)

 

(10,886)

 

(25,795)

 

(22,771)

Adjusted EBITDA (Non-GAAP), as revised

$ 121,803

 

$ 132,425

 

$ 142,869

 

$ 115,171

 

$ 512,269

 

$ 433,403

(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 diluted earnings per share. Prior period results have been revised to reflect this change.

Amneal Pharmaceuticals, Inc.
Reconciliation of Previously Reported GAAP and Non-GAAP Results to Revised Non-GAAP Results for Prior Periods
(Unaudited; In thousands, except per share amounts)

 

 

Three months ended

 

Year ended

 

Dec. 31, 2021

 

Sept. 30, 2021

 

June 30, 2021

 

March 31, 2021

 

Dec. 31, 2021

 

Dec. 31, 2020

Net (loss) income

$

(20,459

)

 

$

(6,092

)

 

$

32,176

 

 

$

14,545

 

 

$

20,170

 

 

$

68,578

 

Adjusted to add (deduct):

 

 

 

 

 

 

 

 

 

 

 

Non-cash interest

 

2,123

 

 

 

2,183

 

 

 

2,077

 

 

 

1,972

 

 

 

8,355

 

 

 

7,900

 

GAAP Income tax expense (benefit)

 

4,140

 

 

 

4,049

 

 

 

2,648

 

 

 

359

 

 

 

11,196

 

 

 

(104,358

)

Amortization

 

41,543

 

 

 

41,651

 

 

 

41,361

 

 

 

39,514

 

 

 

164,069

 

 

 

163,842

 

Stock-based compensation expense

 

7,742

 

 

 

7,708

 

 

 

7,632

 

 

 

5,330

 

 

 

28,412

 

 

 

20,750

 

Acquisition, site closure, and idle facility expenses

 

6,027

 

 

 

2,220

 

 

 

5,964

 

 

 

5,792

 

 

 

20,003

 

 

 

23,384

 

Restructuring and other charges

 

 

 

 

425

 

 

 

 

 

 

363

 

 

 

788

 

 

 

2,398

 

Inventory related charges

 

16

 

 

 

44

 

 

 

87

 

 

 

114

 

 

 

261

 

 

 

6,574

 

Charges related to legal matters, net

 

6,000

 

 

 

19,000

 

 

 

 

 

 

 

 

 

25,000

 

 

 

5,610

 

Asset impairment charges

 

22,353

 

 

 

688

 

 

 

741

 

 

 

323

 

 

 

24,105

 

 

 

43,629

 

Foreign exchange gain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,350

)

Gain on sale of international businesses, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(123

)

Research and development milestones

 

4,566

 

 

 

2,496

 

 

 

7,847

 

 

 

10,886

 

 

 

25,795

 

 

 

22,771

 

Change in fair value of contingent consideration

 

(100

)

 

 

300

 

 

 

 

 

 

 

 

 

200

 

 

 

 

Property losses and associated expenses, net

 

(2,818

)

 

 

8,186

 

 

 

 

 

 

 

 

 

5,368

 

 

 

 

Other

 

3,592

 

 

 

1,282

 

 

 

807

 

 

 

999

 

 

 

6,680

 

 

 

1,926

 

Income tax

 

(19,313

)

 

 

(17,346

)

 

 

(21,779

)

 

 

(17,339

)

 

 

(75,777

)

 

 

(54,271

)

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

 

(1,191

)

 

 

(1,541

)

 

 

(2,054

)

 

 

(1,796

)

 

 

(6,582

)

 

 

(1,240

)

Adjusted net income (Non-GAAP), as previously reported

$

54,221

 

 

$

65,253

 

 

$

77,507

 

 

$

61,062

 

 

$

258,043

 

 

$

191,020

 

Research and development milestones (1)

 

(4,566

)

 

 

(2,496

)

 

 

(7,847

)

 

 

(10,886

)

 

 

(25,795

)

 

 

(22,771

)

Income tax impact of revision

 

1,120

 

 

 

525

 

 

 

1,647

 

 

 

2,286

 

 

 

5,578

 

 

 

4,640

 

Adjusted net income (Non-GAAP), as revised

$

50,775

 

 

$

63,282

 

 

$

71,307

 

 

$

52,462

 

 

$

237,826

 

 

$

172,889

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average diluted shares outstanding (Non-GAAP) (2)

 

304,429

 

 

 

303,861

 

 

 

304,103

 

 

 

303,337

 

 

 

303,937

 

 

 

301,030

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted diluted EPS (Non-GAAP), as previously reported

$

0.18

 

 

$

0.21

 

 

$

0.25

 

 

$

0.20

 

 

$

0.85

 

 

$

0.63

 

Adjusted diluted EPS (Non-GAAP), as revised

$

0.17

 

 

$

0.21

 

 

$

0.23

 

 

$

0.17

 

 

$

0.78

 

 

$

0.57

 

(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 diluted earnings per share. Prior period results have been revised to reflect this change.

 

 

(2)

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

 

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