GAAP Net Revenue of $414 Million; Adjusted Net Revenue of $462 Million on a Combined Company Basis
| BRIDGEWATER, N.J., Aug. 9, 2018 /PRNewswire/ -- Amneal Pharmaceuticals, Inc. (NYSE: AMRX) (the “Company”) announced its results today for the quarter ended June 30, 2018. “We delivered solid sequential growth across our Generics and Specialty Pharma businesses on a combined adjusted basis compared to the first quarter of 2018 as we began to realize the benefits of our recent transformative combination with Impax,” said Rob Stewart, President and CEO of Amneal. “On a sequential basis, our Generics business delivered solid growth as we capitalized on the 16 product launches during the first six months of 2018, including generic versions of gConcerta®, (methylphenidate HCI ER), Mephyton® (phytonadione) and Welchol® (colesevelam). We also benefited from higher sales of generic versions of Vagifem® (yuvafem), Aggrenox® (aspirin and extended-release dipyridamole) and Voltaren® Gel 1% (diclofenac sodium gel), which more than offset the seasonal decline in sales of generic gTamiflu® (oseltamivir phosphate). In our Specialty Pharma business, we achieved sequential growth from sales of key products Rytary® and Zomig® nasal spray and across our anthelmintic product franchise. We have made significant progress with the integration of Impax and continue to anticipate delivering at least $200 million in annual synergies within three years of the May 4th closing. Although we are revising our 2018 guidance to reflect the delayed timing of deliveries of our Epinephrine Auto-Injector product from our third-party manufacturer and the timing of certain key launches, we remain confident in the long-term growth potential for Amneal as we leverage our enhanced portfolio and focus on driving commercial and operational excellence initiatives to fuel organic growth, generate savings and strong cash flow, and deliver long-term returns for our shareholders.”
Summary of GAAP and Combined Adjusted Results Three Months Ended Variance ------------------ -------- (Unaudited; In thousands) June 30, March 31, June 30, Sequential Year/ 2018 2018 2017 Year ---- ---- ---- ---- GAAP Results(1) Net revenue $413,787 $275,189 $259,871 50.4% 59.2% Net (loss) income $(250,090) $51,652 $37,748 NM NM Diluted EPS $(0.15) N/A N/A N/A N/A Non-GAAP Results(2) Combined net revenue $462,328 $427,030 $474,171 8.2% (2.5)% Combined adjusted net income $70,153 $38,632 $62,472 81.6% 12.3% Combined EBITDA $(204,048) $14,930 $88,993 NM NM Combined adjusted EBITDA $138,836 $95,904 $118,853 44.8% 16.8% Combined adjusted diluted EPS $0.24 $0.14 N/A 71.4% N/A (1) Current year financials reflect the results of Amneal Pharmaceuticals LLC consolidating the results of Impax Laboratories, LLC from the transaction closing date on May 4, 2018. Prior year GAAP results represent Amneal Pharmaceuticals LLC only. (2) Assumes the combination between Amneal Pharmaceuticals LLC and Impax Laboratories, LLC occurred on the first day of the quarter presented. “NM” is used when the variance is not meaningful because it is immaterial in absolute or percentage terms. The Company’s financial results are presented in accordance with GAAP, which includes the results of Amneal Pharmaceuticals LLC consolidating the results of Impax Laboratories, LLC (“Impax”) from the transaction closing date of May 4, 2018. Management believes that using additional non-GAAP measures on a combined company basis will facilitate the evaluation of the financial performance of the Company and its ongoing operations. The adjusted results presented combine the results of Amneal with Impax as if the closing date had occurred on the first day of all periods presented. All combined business results presented in this News Release are unaudited. Such combined business results are not prepared in accordance with Article 11 of Regulation S-X. Refer to the “Non-GAAP Financial Measures” section for additional information, including reconciliations of all GAAP to non-GAAP financial measures. GAAP Basis Results
Non-GAAP Combined Results
Business Segment Information The Company has two reportable segments, the Generics business and the Specialty Pharma business and does not allocate general corporate services to either segment.
Generics Business Information The following Consolidated Statements of Operations table reconciles the Generics Business GAAP results to combined results. (Unaudited; In thousands) Three months ended June 30, 2018 Three months ended June 30, 2017 -------------------------------- -------------------------------- Add: Add: GAAP Impax Combined GAAP Impax Combined ---- ----- -------- ---- ----- -------- Revenues Generics, net $361,770 $20,995 $382,765 $259,871 $150,889 $410,760 -------- ------- -------- -------- -------- -------- Cost of goods sold 211,534 29,624 241,158 136,138 108,901 245,039 ------- ------ ------- ------- ------- ------- Gross profit 150,236 (8,629) 141,607 123,733 41,988 165,721 Selling, general, and administrative 16,621 4,340 20,961 14,845 8,034 22,879 Research and development 47,206 3,984 51,190 47,184 20,995 68,179 In-process R&D impairment charge - - - - - - Intellectual property legal development 4,004 - 4,004 4,926 319 5,245 expenses Acquisition, integration and transaction 114,622 - 114,622 - - - related expenses Restructuring 24,797 - 24,797 - - - ------ --- ------ --- --- --- Operating profit $(57,014) $(16,953) $(73,967) $56,778 $12,640 $69,418 ======== ======== ======== ======= ======= ======= GAAP and combined gross margin 41.5% (41.1)% 37.0% 47.6% 27.8% 40.3% Adjusted gross profit $186,848 $(1,690) $185,158 $141,224 $64,162 $205,386 Adjusted gross margin 51.6% (8.0)% 48.4% 54.3% 42.5% 50.0% Six months ended June 30, 2018 Six months ended June 30, 2017 ------------------------------ ------------------------------ Add: Add: GAAP Impax Combined GAAP Impax Combined ---- ----- -------- ---- ----- -------- Revenues Generics, net $636,959 $102,237 $739,196 $485,552 $285,036 $770,588 -------- -------- -------- -------- -------- -------- Cost of goods sold 342,128 122,761 464,889 245,803 251,516 497,319 ------- ------- ------- ------- ------- ------- Gross profit 294,831 (20,524) 274,307 239,749 33,520 273,269 Selling, general, and administrative 27,823 11,896 39,719 29,808 14,502 44,310 Research and development 91,414 13,623 105,037 86,603 38,391 124,994 In-process R&D impairment charge - - - - 6,079 6,079 Intellectual property legal development 8,580 84,597 93,177 11,093 687 11,780 expenses Acquisition, integration and transaction 114,622 - 114,622 - - - related expenses Restructuring 24,797 - 24,797 - - - ------ --- ------ --- --- --- Operating profit $27,595 $(130,640) $(103,045) $112,245 $(26,139) $86,106 ======= ========= ========= ======== ======== ======= GAAP and combined gross margin 46.3% (20.0)% 37.1% 49.4% 11.8% 35.5% Adjusted gross profit $333,203 $3,193 $336,396 258,126 $116,115 $374,281 Adjusted gross margin 52.3% 3.1% 45.5% 53.2% 40.8% 48.6% (a) Adjusted gross profit is calculated as total revenues less adjusted cost of goods sold. Adjusted gross margin is calculated as adjusted gross profit divided by total revenues. Refer to the “Non-GAAP Financial Measures” for a reconciliation of GAAP to non-GAAP items.
GAAP Results Generics business revenues increased 39.2% for the second quarter of 2018, compared to the prior year period. The increase is primarily attributable to increased sales of Aspirin Dipyridamole ER due to higher volume, higher demand for Diclofenac Sodium Gel 1%, new launches including Methylphenidate ER Tabs and Phytonadione, and additional revenue from the combination with Impax. Gross margin for the second quarter of 2018 was 41.5%, compared to 47.6% for the second quarter of 2017, primarily due to higher cost of sales due to purchase accounting adjustments as well as the fact that the Impax portfolio contains products with relatively lower profit margins. Non-GAAP Combined Results Generics business combined net revenue in the second quarter of 2018 was $382.8 million, a decrease of 6.8%, compared to $410.8 million in the prior year period. The decrease is primarily due to revenue reductions from lower sales of Epinephrine Auto-Injector due to an ongoing supply shortage at the Company’s third-party manufacturer, increased competition on Budesonide, Lidocaine, Yuvafem and Fenofibrate, and the impact of discontinued products. The decrease was partially offset by increased revenue from new product launches and increased sales of Aspirin Dipyridamole ER and Diclofenac Sodium Gel 1%. Gross margin for the second quarter of 2018 on a combined basis was 37.0%, compared to 40.3% for the second quarter of 2017, primarily due to a charge for inventory step-up. Adjusted gross margin on a combined adjusted basis was 48.4% for the second quarter of 2018, compared to 50.0% in the prior year period.
Specialty Pharma Business Information The following Consolidated Statements of Operations table reconciles the Specialty Pharma business GAAP results to combined results. (Unaudited; In thousands) Three months ended June 30, 2018 Three months ended June 30, 2017 -------------------------------- -------------------------------- Add: Add: GAAP Impax/ Combined GAAP Impax/ Combined Gemini Gemini --- --- Revenues Rytary(R), net $20,520 $8,578 $29,098 $ - $21,922 $21,922 Zomig(R), net 9,695 3,933 13,628 - 12,325 12,325 All Other Specialty Pharma Products 21,802 15,035 36,837 - 29,164 29,164 sales, net Total revenues 52,017 27,546 79,563 - 63,411 63,411 ------ ------ ------ --- ------ ------ Cost of goods sold 23,958 6,711 30,669 - 25,269 25,269 ------ ----- ------ --- ------ ------ Gross profit 28,059 20,835 48,894 - 38,142 38,142 Selling, general, and administrative 13,549 7,707 21,256 - 19,693 19,693 Research and development 3,129 1,007 4,136 - 5,852 5,852 Intellectual property legal development 43 - 43 - 851 851 expenses Restructuring 2,421 - 2,421 - - - ----- --- ----- --- Operating profit $8,917 $12,121 $21,038 $ - $11,746 $11,746 GAAP and combined gross margin 53.9% 75.6% 61.5% - 60.2% 60.2% Adjusted gross profit $40,660 $22,363 $63,023 $ - $43,982 $43,982 Adjusted gross margin 78.2% 81.2% 79.2% - 69.4% 69.4% Six months ended June 30, 2018 Six months ended June 30, 2017 ------------------------------ ------------------------------ Add: Add: GAAP Impax/ Combined GAAP Impax/ Combined Gemini Gemini --- --- Revenues Rytary(R), net $20,520 $35,086 $55,606 $ - $41,827 $41,827 Zomig(R), net 9,695 14,411 24,106 - 22,182 22,182 All Other Specialty Pharma Products 21,802 46,748 68,550 - 61,202 61,202 sales, net Total revenues 52,017 96,245 148,262 - 125,211 125,211 ------ ------ ------- --- ------- ------- Cost of goods sold 23,958 26,731 50,689 - 47,083 47,083 ------ ------ ------ --- ------ ------ Gross profit 28,059 69,514 97,573 - 78,128 78,128 Selling, general, and administrative 13,549 27,942 41,491 - 38,816 38,816 Research and development 3,129 3,664 6,793 - 10,945 10,945 Intellectual property legal development 43 23 66 - 1,555 1,555 expenses Restructuring 2,421 940 3,361 - - - ----- --- ----- --- --- --- Operating profit $8,917 $36,945 $45,862 $ - $26,812 $26,812 ====== ======= ======= ========== ======= ======= GAAP and combined gross margin 53.9% 72.2% 65.8% - 62.4% 62.4% Adjusted gross profit $40,660 $75,626 $116,286 $ - $87,802 $87,802 Adjusted gross margin 78.2% 78.6% 78.4% - 70.1% 70.1% (a) Adjusted gross profit is calculated as total revenues less adjusted cost of goods sold. Adjusted gross margin is calculated as adjusted gross profit divided by total revenues. Refer to the “Non-GAAP Financial Measures” for a reconciliation of GAAP to non-GAAP items.
GAAP Results The Specialty Pharma business is comprised of the Impax Specialty business acquired on May 4, 2018 and the Gemini Laboratories, LLC business acquired on May 7, 2018. Prior to these two transactions, Amneal did not have a specialty business. Non-GAAP Combined Results Specialty Pharma business combined net revenue in the second quarter 2018 was $79.6 million, an increase of 25.5%, compared to $63.4 million in the prior year period, driven by higher revenue from Rytary®, Zomig® and the anthelmintic products franchise. Gross margin for the second quarter of 2018 on a combined basis was 61.5%, compared to 60.2% for the second quarter of 2017. Adjusted gross margin on a combined adjusted basis was 79.2% for the second quarter of 2018, compared to 69.4% in the prior year period, primarily due to favorable product sales mix.
Corporate and Other Information (Unaudited; In thousands) Three months ended June 30, 2018 Three months ended June 30, 2017 -------------------------------- -------------------------------- Add: Add: GAAP Impax Combined GAAP Impax Combined ---- ----- -------- ---- ----- -------- General and administrative expenses $(22,833) $(8,223) $(31,056) $(12,093) $(27,767) $(39,860) Unallocated corporate expenses $(22,833) $(8,223) $(31,056) $(12,093) $(27,767) $(39,860) ======== ======= ======== ======== ======== ======== Six months ended June 30, 2017 Six months ended June 30, 2017 ------------------------------ ------------------------------ Add: Add: GAAP Impax Combined GAAP Impax Combined ---- ----- -------- ---- ----- -------- General and administrative expenses $(36,751) $(40,404) $(77,155) $(24,832) $(51,024) $(75,856) Unallocated corporate expenses $(36,751) $(40,404) $(77,155) $(24,832) $(51,024) $(75,856) ======== ======== ======== ======== ======== ======== GAAP Results General and administrative expenses in the second quarter of 2018 were $22.8 million, an increase of $10.7 million, compared to the second quarter of 2018. The increase was primarily due to general and administrative expenses of the Impax organization since the closing of the combination, which includes certain public company costs that will remain on a go-forward basis. The increase is also attributable to stock-based compensation. Non-GAAP Combined Results General and administrative expenses in the second quarter of 2018 were $31.1 million, a decrease of 22.1%, compared to the second quarter of 2017, primarily due to cost synergies as a result of the business combination with Impax. Other Information 2018 Financial Guidance Amneal’s full year 2018 estimates are based on management’s current expectations, including with respect to prescription trends, pricing levels, inventory levels, and the anticipated timing of future product launches and events. The Company does not provide forward-looking guidance metrics as outlined below on a GAAP basis. Consequently, the Company cannot provide a reconciliation between non-GAAP expectations and corresponding GAAP measures 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, asset impairments and certain and other gains and losses. These items are uncertain, depend on various factors, and could have a material impact on U.S. GAAP reported results for the guidance period. The following statements are forward looking and actual results could differ materially depending on market conditions and the factors set forth under “Safe Harbor” below. 2018 Key Guidance Assumptions
Financial Guidance Full Year 2018 ---- Adjusted Gross Margins 50% to 55% Adjusted R&D as a % of Total Revenues 10% to 15% Adjusted SG&A as a % of Total Revenues 13% to 16% Adjusted EBITDA(1) $580 to $620 million (previously $600 to $650 million) Adjusted EPS $0.90 to $1.00 (previously $0.95 to $1.10) Adjusted Effective Tax Rate 20% to 22% Capital Expenditures $80 to $100 million Diluted Shares Outstanding Approximately 300 million (1) Includes $30 million to $35 million of cost synergies expected to be realized in 2018.
Conference Call Information Amneal will hold a conference call on August 9, 2018 at 8:30 a.m. Eastern Time to discuss its results. The call and presentation can also be accessed via a live Webcast through the Investor Relations section of Amneal’s Web site at https://investors.amneal.com/investor-relations, or directly at https://event.on24.com/wcc/r/1772042/9F111678E78468805741A3106805A25B. The number to call from within the United States is (877) 356-3814 and (706) 758-0033 internationally. The conference ID is 3045719. A replay of the conference call will be available shortly after the call for a period of seven days. To access the replay, dial (855) 859-2056 (in the U.S.) and (404) 537-3406 (international callers). About Amneal Amneal is one of the largest and fastest growing generic pharmaceutical manufacturers in the United States, with an expanding portfolio of generic products to include complex dosage forms in a broad range of therapeutic areas. The Company markets a portfolio of branded pharmaceutical products through its Impax Specialty Pharma division focused principally on central nervous system disorders and parasitic infections. For more information, visit www.amneal.com. Safe Harbor Statement Such forward-looking statements are based on the expectations of Amneal Pharmaceuticals, Inc. (“our” or the “Company”) and involve risks and uncertainties; consequently, actual results may differ materially from those expressed or implied in the statements. Such risks and uncertainties include, but are not limited to (i) the impact of global economic conditions, (ii) our ability to integrate the operations of Amneal Pharmaceuticals LLC (“Amneal”) and Impax Laboratories, LLC (“Impax”) pursuant to the transactions (the “Combination”) contemplated by that certain Business Combination Agreement dated as of October 17, 2017 by and among the Company, Amneal, Impax and K2 Merger Sub Corporation as amended on November 21, 2017 and December 16, 2017 and our ability to realize the anticipated synergies and other benefits of the Combination, (iii) our ability to successfully develop and commercialize new products, (iv) our ability to obtain exclusive marketing rights for our products and to introduce products on a timely basis, (v) the competition we face in the pharmaceutical industry from brand and generic drug product companies, (vi) our ability to manage our growth, (vii) the illegal distribution and sale by third parties of counterfeit versions of our products or of stolen products, (viii) market perceptions of us and the safety and quality of our products, (ix) our dependence on the sales of a limited number of products for a substantial portion of our total revenues, (x) our ability to develop, license or acquire and introduce new products on a timely basis, (xi) the ability of our approved products to achieve expected levels of market acceptance, (xii) the risk that we may discontinue the manufacture and distribution of certain existing products, (xiii) the impact of manufacturing or quality control problems, (xiv) the risk of product liability and other claims against us by consumers and other third parties, (xv) risks related to changes in the regulatory environment, including United States federal and state laws related to healthcare fraud abuse and health information privacy and security and changes in such laws, (xvi) changes to FDA product approval requirements, (xvii) risks related to federal regulation of arrangements between manufacturers of branded and generic products, (xviii) the impact of healthcare reform and changes in coverage and reimbursement levels by governmental authorities and other third-party payers, (xix) our dependence on a few locations that produce a majority of our products, (xx) relationships with our major customers, (xxi) the continuing trend of consolidation of certain customer groups, (xxii) our reliance on certain licenses to proprietary technologies from time to time, (xxiii) our dependence on third party suppliers and distributors for raw materials for our products and certain finished goods, (xxiv) the time necessary to develop generic and branded drug products, (xxv) our dependence on third parties for testing required for regulatory approval of our products, (xxvi) our dependence on third party agreements for a portion of our product offerings, (xxvii) our ability to make acquisitions of or investments in complementary businesses and products on advantageous terms, (xxviii) regulatory oversight related to our international operations, (xxix) our increased exposure to tax liabilities due to our international operations and the impact of recent U.S. tax legislation, (xxx) payments required by our Tax Receivable Agreement, (xxxi) our involvement in various legal proceedings, including those brought by third parties alleging infringement of their intellectual property rights, (xxxii) legal, regulatory and legislative efforts by our brand competitors to deter competition from our generic alternatives, (xxxiii) the significant amount of resources we expend on research and development, (xxxiv) our substantial amount of indebtedness and our ability to generate sufficient cash to service our indebtedness in the future, (xxxv) risks inherent in conducting clinical trials, (xxxvi) our reporting and payment obligations under the Medicaid rebate program and other government purchase and rebate programs, (xxxvii) quarterly fluctuations in our operating results, (xxxviii) adjustments to our reserves based on price adjustments and sales allowances, (xix) impairment of our goodwill and other intangible assets, (xl) investigations and litigation concerning the calculation of average wholesale prices, (xli) cybersecurity and data leakage risks, (xlii) our ability to attract and retain talented employees and consultants, (xliii) our ability to protect our intellectual property rights, (xliv) uncertainties involved in the preparation of our financial statements, (xlv) our ability to maintain an effective system of internal controls over financial reporting, (xlvi) the impact of terrorist attacks and other acts of violence, (xlvii) expansion of social media platforms, (xlviii) our need to raise additional funds in the future, (xlix) the restrictions imposed by the terms of our credit agreement, (l) the fact that we are a holding company with nominal net worth, (li) the volatility of the price of our Class A Common Stock, (lii) the impact from future sales of shares by our stockholders on the price of our Class A Common Stock, (liii) the high concentration of ownership of our Class A Common Stock, (liv) the fact that we are controlled by APHC Holdings, LLC, (lv) the impact of our charter specifying the Court of Chancery of the State of Delaware as the sole and exclusive forum for all disputes between us and our stockholders, (lvi) the impact of anti-takeover provisions under Delaware law, (lvii) our current expectation that we will not pay dividends in the future, (lviii) the impact of any changed recommendations regarding our Class A Common Stock from analysts and (lix) such other factors as may be set forth in our public filings with the Securities and Exchange Commission. 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 events or circumstances after the date hereof or to reflect the occurrence of unanticipated events or circumstances. Trademarks referenced herein are the property of their respective owners.
Amneal Pharmaceutical, Inc. Consolidated Statements of Operations (Unaudited; In thousands, except per share amounts) Three months ended Six months ended June 30, June 30, June 30, June 30, 2018 2017 2018 2017 ---- ---- ---- ---- Net Revenue $413,787 $259,871 $688,976 $485,552 Cost of goods sold 235,492 136,138 366,086 245,803 Gross profit 178,295 123,733 322,890 239,749 ------- ------- ------- ------- Selling, general and administrative 53,003 26,938 78,124 54,640 Research and development 50,335 47,184 94,544 86,603 Intellectual property legal development expenses 4,047 4,926 8,623 11,093 Acquisition, transaction-related and integration expenses 207,507 82 214,642 82 Restructuring expenses 44,465 - 44,465 - Operating (loss) income (181,062) 44,603 (117,508) 87,331 -------- ------ -------- ------ Other (expense) income: Interest expense, net (36,622) (17,726) (57,673) (31,887) Foreign exchange (loss) gain (25,946) 15,332 (17,381) 29,929 Loss on extinguishment of debt (19,667) (2,531) (19,667) (2,531) Other income (expense) 791 (78) 1,739 22 --- --- ----- --- Total other expense, net (81,444) (5,003) (92,982) (4,467) ------- ------ ------- ------ (Loss) income before income taxes (262,506) 39,600 (210,490) 82,864 (Benefit from) provision for income taxes (12,416) 1,852 (12,052) 2,855 ------- ----- ------- ----- Net (loss) income (250,090) 37,748 (198,438) 80,009 Less: Net loss (income) attributable to Amneal 200,341 (37,446) 148,806 (79,299) Pharmaceuticals LLC pre-Combination Less: Net loss (income) attributable to non-controlling 31,885 (302) 31,768 (710) interests Net loss attributable to Amneal Pharmaceuticals, Inc. before (17,864) - (17,864) - accretion of redeemable non-controlling interest Accretion of redeemable non-controlling interest (1,240) - (1,240) - Net loss attributable to Amneal Pharmaceuticals, Inc. $(19,104) $ - $(19,104) $ - ======== =============== ======== ============ Net Loss per share attributable to Amneal Pharmaceuticals, Inc.'s common stockholders: Class A and Class B-1 basic and diluted $(0.15) $ - $(0.15) $ - ====== =============== ====== =============== Weighted-average common shares outstanding: Class A and Class B-1 basic and diluted 127,112 127,112
Amneal Pharmaceutical, Inc. Condensed Consolidated Balance Sheets (Unaudited; In thousands) June 30, 2018 December 31, 2017 ------------- ----------------- Assets Current assets: Cash and cash equivalents $61,521 $74,166 Restricted cash 7,069 3,756 Trade accounts receivable, net 626,491 351,367 Inventories 512,479 284,038 Prepaid expenses and other current assets 139,596 42,396 Related party receivables 738 16,210 --- ------ Total current assets 1,347,894 771,933 Property, plant and equipment, net 569,328 486,758 Goodwill 386,475 26,444 Intangible assets, net 1,788,533 44,599 Deferred tax asset, net 373,705 898 Other assets 78,653 11,257 Total assets $4,544,588 $1,341,889 ========== ========== Liabilities and Stockholders’ Equity / Members’ Deficit Current liabilities: Accounts payable and accrued expenses $555,634 $194,779 Note payable-related party 77,549 - Current portion of financing obligations 251 311 Revolving credit facility - 75,000 Current portion of long-term debt, net 21,427 14,171 Related-party payables 14,875 12,622 ------ ------ Total current liabilities 669,736 296,883 Long-term debt, net 2,641,305 1,355,274 Long-term portion of financing obligations 39,220 39,987 Deferred income taxes 2,491 2,491 Liabilities under tax receivable agreement 194,825 - Other long-term liabilities 45,667 7,793 Related-party payable- long term - 15,043 --- ------ Total long-term liabilities 2,923,508 1,420,588 Redeemable non-controlling interest 11,858 - Total stockholders’ equity / members’ deficit 939,486 (375,582) Total liabilities and stockholders’ equity / members’ deficit $4,544,588 $1,341,889 ========== ==========
Amneal Pharmaceutical, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited; In thousands) Six Months Ended June 30, -------- 2018 2017 ---- ---- Cash flows from operating activities: Net (loss) income $(198,438) $80,009 Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 46,897 21,136 Unrealized foreign currency gain (loss) 17,032 (33,089) Amortization of debt issuance costs 2,577 2,463 Loss on extinguishment and modification of debt 19,667 2,531 Gain termination of lease (3,524) - Deferred tax provision (14,993) 244 Inventory provision 17,426 2,047 Stock-based compensation and PPU expense 160,401 - Other 927 124 Changes in assets and liabilities: - - Trade accounts receivable, net (60,051) 28,065 Inventories (71,655) (10,890) Prepaid expenses and other assets 5,910 (2,692) Accounts payable and accrued expenses 15,299 (3,811) Other liabilities 4,331 (1,791) Related-party payables (13,356) 11,063 Net cash (used in) provided by operating activities (71,550) 95,409 ------- ------ Investing activities: Purchases of property, plant and equipment (36,600) (54,612) Acquisition of product rights and licenses (3,000) - Acquisitions, net of cash acquired (321,324) - Net cash used in investing activities (360,924) (54,612) -------- ------- Financing activities: Payments of deferred financing costs and debt extinguishment costs (54,955) (4,889) Proceeds from issuance of debt 1,325,383 250,000 Payments on financing obligations (129) (175) Net (payments) borrowings on revolving credit line (75,000) 25,000 Payments on debt (603,543) (6,448) Exercise of stock options 1,977 - Equity contributions 27,742 40 Capital contribution from non-controlling interest 360 - Distributions to members (182,998) (295,265) Repayment of related party note (14,842) - Net cash provided by (used in) financing activities 423,995 (31,737) ------- ------- Effect of foreign exchange rate on cash (853) 5,238 Net (decrease) increase in cash, cash equivalents, and restricted cash (9,332) 14,298 Cash, cash equivalents, and restricted cash - beginning of period 77,922 37,546 Cash, cash equivalents, and restricted cash - end of period 68,590 51,844 ====== ====== Cash and cash equivalents - end of period 61,521 48,217 Restricted cash - end of period 7,069 3,627 Cash, cash equivalents, and restricted cash - end of period $68,590 $51,844 ======= =======
Amneal Pharmaceutical, Inc. Non-GAAP Financial Measures Combined adjusted revenue, adjusted net income, adjusted diluted EPS, EBITDA, adjusted EBITDA and adjusted cost of goods sold are not measures of financial performance under generally accepted accounting principles (GAAP) and should not be construed as a measure of financial performance. However, management uses both GAAP financial measures and the disclosed non-GAAP financial measures internally to evaluate and manage the Company’s operations and to better understand its business. Further, management believes the addition of non-GAAP financial measures provides meaningful supplementary information to, and facilitates analysis by, investors in evaluating the Company’s financial performance, results of operations and trends. The Company’s calculations of combined adjusted revenue, adjusted net income, adjusted diluted EPS, EBITDA, adjusted EBITDA and adjusted cost of goods sold may not be comparable to similarly designated measures reported by other companies, since companies and investors may differ as to what type of events warrant adjustment. The following Consolidated Statements of Operations table reconciles GAAP results to combined results: (Unaudited; In thousands) Three months ended June 30, 2018 Three months ended June 30, 2017 -------------------------------- -------------------------------- Add: Add: GAAP Impax/ Combined GAAP Impax/ Combined Gemini Gemini --- --- Revenues: Generics, net $361,770 $20,995 $382,765 $259,871 $150,889 $410,760 Specialty Pharma, net 52,017 27,546 79,563 - 63,411 63,411 ------ ------ ------ --- ------ ------ Total revenues 413,787 48,541 462,328 259,871 214,300 474,171 ------ ------- ------- Cost of goods sold 235,492 36,335 271,827 136,138 134,170 270,308 ------- ------ Gross profit 178,295 12,206 190,501 123,733 80,130 203,863 ------- ------ ------- ------- ------ ------- Selling, general and administrative 53,003 20,270 73,273 26,938 54,494 81,432 Research and development 50,335 4,991 55,326 47,184 26,847 74,031 Intellectual property legal development expenses 4,047 - 4,047 4,926 1,170 6,096 Acquisition, transaction-related and integration expenses 207,507 4,381 211,888 82 - 82 Restructuring expenses 44,465 - 44,465 - - - Operating (loss) income (181,062) (17,436) (198,498) 44,603 (2,381) 42,222 -------- ------- -------- ------ ------ ------ Other (expense) income: Interest expense, net (36,622) (4,539) (41,161) (17,726) (13,214) (30,940) Foreign exchange (loss) gain (25,946) - (25,946) 15,332 - 15,332 Loss on extinguishment of debt (19,667) - (19,667) (2,531) - (2,531) Other income (expense) 791 (14) 777 (78) (497) (575) Total other (expense) income, net 81,444) (4,553) (85,997) (5,003) (13,711) (18,714) ------ ------ ------- ------ ------- ------- (Loss) income before income taxes (262,506) (21,989) (284,495) 39,600 (16,092) 23,508 Provision for income taxes (12,416) 1,017 (11,399) 1,852 (520) 1,332 Net (loss) income (250,090) (23,006) (273,096) 37,748 (15,572) 22,176 Less: Net loss (income) attributable to Amneal 200,341 (37,446 ) Pharmaceuticals LLC pre-Combination Less: Net loss (income) attributable to non-controlling interests 31,885 (302 ) ------ ----- Net loss attributable to Amneal Pharmaceuticals, Inc. (17,864) - before accretion of redeemable non-controlling interest Accretion of redeemable non-controlling interest (1,240) - ------ --- Net income (loss) attributable to Amneal Pharmaceuticals, Inc. $(19,104) $ - ======== ============
Amneal Pharmaceutical, Inc. Non-GAAP Financial Measures The following Consolidated Statements of Operations table reconciles GAAP results to combined results: (Unaudited; In thousands) Six months ended June 30, 2018 Six months ended June 30, 2017 ------------------------------ ------------------------------ Add: Add: GAAP Impax/ Combined GAAP Impax/ Combined Gemini Gemini --- --- Revenues: Generics, net $636,959 $102,237 $739,196 $485,552 $285,036 $770,588 Specialty Pharma, net 52,017 96,245 148,262 - 125,211 125,211 Total revenues $688,976 $198,482 $887,458 $485,552 $410,247 $895,799 -------- -------- -------- -------- -------- -------- Cost of goods sold 366,086 149,492 515,578 245,803 298,599 544,402 Gross profit 322,890 48,990 371,880 239,749 111,648 351,397 ------- ------ ------- ------- ------- ------- Selling, general and administrative 78,124 80,242 158,366 54,640 104,342 158,982 Research and development 94,544 17,287 111,831 86,603 49,336 135,939 In-process IPR&D impairment charge - - - - 6,079 6,079 Intellectual property legal development expenses 8,623 - 8,623 11,093 2,242 13,335 Litigation, settlements and related charges - 85,537 85,537 - - - Acquisition, transaction-related and integration expenses 214,642 4,381 219,023 82 - 82 Restructuring expenses 44,465 - 44,465 - - - Operating (loss) income (117,508) (138,457) (255,965) 87,331 (50,351) 36,980 -------- -------- -------- ------ ------- ------ Other (expense) (income): Interest expense, net (57,673) (18,231) (75,904) (31,887) (26,440) (58,327) Foreign exchange (loss) gain (17,381) 921 (16,460) 29,929 - 29,929 Loss on early extinguishment of debt (19,667) - (19,667) (2,531) (1,215) (3,746) Other income (expense) 1,739 (638) 1,101 22 (1,782) (1,760) Total other (expense) income, net (92,982) (17,948) (110,930) (4,467) (29,437) (33,904) ------- ------- -------- ------ ------- ------- (Loss) income before income taxes (210,490) (156,405) (366,895) 82,864 (79,788) 3,076 Provision for income taxes (12,052) (6,273) (18,325) 2,855 30,381 33,236 Net (loss) income (198,438) (150,132) (348,570) 80,009 (110,169) (30,160) Less: Net loss (income) attributable to Amneal 148,806 (79,299) Pharmaceuticals LLC pre-Combination Less: Net loss (income) attributable to non- 31,768 (710) controlling interests Net loss attributable to Amneal Pharmaceuticals, (17,864) - Inc. before accretion of redeemable non- controlling interest Accretion of redeemable non-controlling interest (1,240) - ------ --- Net income (loss) attributable to Amneal Pharmaceuticals, Inc. $(19,104) $ - ======== ============
Amneal Pharmaceutical, Inc. Non-GAAP Financial Measures The following table reconciles GAAP net loss to combined adjusted net income: (Unaudited; In thousands, except per share amounts) Three months ended June 30, 2018 Three months ended June 30, 2017 -------------------------------- -------------------------------- Add: Add: GAAP Impax/ Combined GAAP Impax/ Combined Gemini Gemini --- --- Net loss $(250,090) $(23,006) $(273,096) $37,748 $(15,917) $21,831 Adjusted to add (deduct): Non-cash interest 4,407 2,549 6,956 1,521 6,430 7,951 GAAP Income taxes (12,416) 1,017 (11,399) 1,852 (520) 1,332 Amortization 16,694 5,462 22,156 886 17,219 18,105 Share-based compensation expense 1,644 - 1,644 - 6,225 6,225 Acquisition, transaction and integration 207,507 4,381 211,888 81 99 180 Restructuring and severance charges 44,465 223 44,688 - 13,943 13,943 Loss on extinguishment of debt 19,667 - 19,667 - - - Inventory related charges 32,519 3,005 35,524 16,605 - 16,605 Litigation, settlements and related charges - - - - 7,989 7,989 (Gain)/loss on sale of assets 878 - 878 - (12,200) (12,200) Asset impairment charges - - - - 1,894 1,894 Royalty expense - - - 4,921 - 4,921 Exchange gain 25,946 - 25,946 (15,333) - (15,333) Other 2,649 1,300 3,949 997 4,639 5,636 Income tax at 21% (19,713) 1,064 (18,648) (10,348) (6,258) (16,607) Adjusted Net Income $74,157 $(4,005) $70,153 $38,930 $23,543 $62,472 ------- ------- ------- ------- ------- ------- Adjusted Earnings per share $0.24 =====
Amneal Pharmaceutical, Inc. Non-GAAP Financial Measures The following table reconciles GAAP net loss to combined adjusted net income: (Unaudited; In thousands, except per share amounts) Six months ended June 30, 2018 Six months ended June 30, 2017 ------------------------------ ------------------------------ Add: Add: GAAP Impax/ Combined GAAP Impax/ Combined Gemini Gemini --- --- Net loss $(198,438) $(150,132) $(348,570) $80,009 $(110,198) $(30,189) Adjusted to add (deduct): Non-cash interest 5,577 9,413 14,990 2,463 12,742 58,397 GAAP Income taxes (12,052) (6,273) (18,325) 2,855 30,381 33,236 Amortization 18,454 19,935 38,389 1,772 34,451 36,223 Share-based compensation expense 1,644 4,816 6,460 - 13,182 13,182 Acquisition, transaction and integration 215,738 9,829 225,567 - 150 150 Restructuring and severance charges 44,465 5,123 49,588 1,761 21,718 23,479 Loss on extinguishment of debt 19,667 - 19,667 - 1,215 1,215 Inventory related charges 32,519 9,894 42,413 16,605 - 16,605 Litigation, settlements and related charges - 90,099 90,099 - 7,494 7,494 (Gain)/loss on sale of assets 878 - 878 - (12,200) (12,200) Asset impairment charges - 53 53 - 47,253 47,253 Royalty expense - - - 8,684 - 8,684 Exchange gain 17,381 (921) 16,460 (29,929) - (29,929) Other 1,880 1,953 3,833 2,458 5,887 8,345 Income tax at 21% (31,020) 1,304 (29,715) (18,202) (10,936) (38,194) Adjusted Net Income $116,693 $(5,065) $(111,787) $68,476 $41,138 $143,680 -------- ------- --------- ------- ------- -------- Adjusted Earnings per share $0.37 =====
Amneal Pharmaceutical, Inc. Non-GAAP Financial Measures The following table reconciles GAAP net loss to combined EBITDA and combined adjusted EBITDA: (Unaudited, In thousands) Three months ended June 30, 2018 Three months ended June 30, 2017 -------------------------------- -------------------------------- Add: Add: GAAP Impax/ Combined GAAP Impax/ Combined Gemini Gemini --- --- Net loss $(250,090) $(23,006) $(273,096) $37,748 $(15,917) $21,831 Adjusted to add (deduct): Interest expense, net 36,622 4,753 41,375 17,726 13,214 30,940 Income taxes (12,416) 1,017 (11,399) 1,852 (520) 1,332 Depreciation and amortization 32,147 6,925 39,072 10,535 24,355 34,890 EBITDA (193,737) (10,311) (204,048) 67,861 21,132 88,993 -------- ------- -------- ------ ------ ------ Adjusted to add (deduct): Share-based compensation expense 1,644 - 1,644 - 6,225 6,225 Acquisition, transaction and integration 207,507 4,381 211,888 81 99 180 Restructuring and severance charges 44,465 223 44,688 - 13,943 13,943 Loss on extinguishment of debt 19,667 - 19,667 - - - Inventory related charges 32,519 3,005 35,524 16,605 - 16,605 Litigation, settlements and related charges - - - - 7,989 7,989 (Gain)/loss on sale of assets 878 - 878 - (12,200) (12,200) Asset impairment charges - - - - 1,894 1,894 Royalty expense - - - 4,921 - 4,921 Exchange gain 25,946 - 25,946 (15,333) - (15,333) Other 2,649 - 2,649 997 4,639 5,636 Adjusted EBITDA $141,538 $(2,702) $138,836 $75,132 $43,721 $118,853 -------- ------- -------- ------- ------- --------
Amneal Pharmaceutical, Inc. Non-GAAP Financial Measures The following table reconciles GAAP net loss to combined EBITDA and combined adjusted EBITDA: (Unaudited; In thousands) Six months ended June 30, 2018 Six months ended June 30, 2017 ------------------------------ ------------------------------ Add: Add: GAAP Impax/ Combined GAAP Impax/ Combined Gemini Gemini --- --- Net loss $(198,438) $(150,132) $(348,570) $80,009 $(110,198) $(30,189) Adjusted to add (deduct): Interest expense, net 57,673 18,445 76,118 31,887 26,440 58,327 Income taxes (12,052) (6,273) (18,325) 2,855 30,381 33,236 Depreciation and amortization 46,897 24,902 71,799 21,135 48,453 69,588 EBITDA (105,920) (113,058) (218,978) 135,886 (4,924) 130,962 -------- -------- -------- ------- ------ ------- Adjusted to add (deduct): Share-based compensation expense 1,644 4,816 6,460 - 13,182 13,182 Acquisition, transaction and integration 215,738 9,829 225,567 - 150 150 Restructuring and severance charges 44,465 5,123 49,588 1,761 21,718 23,479 Loss on extinguishment of debt 19,667 - 19,667 - 1,215 1,215 Inventory related charges 32,519 9,894 42,413 16,605 - 16,605 Litigation, settlements and related charges - 90,099 90,099 - 7,494 7,494 (Gain)/loss on sale of assets 878 - 878 - (12,200) (12,200) Asset impairment charges - 53 53 - 47,253 47,253 Royalty expense - - - 8,684 - 8,684 Exchange gain 17,381 (921) 16,460 29,929) - (29,929) Other 1,880 653 2,533 2,458 5,887 8,345 Adjusted EBITDA $228,252 $6,488 $234,740 $135,465 $79,774 $215,239 -------- ------ -------- -------- ------- --------
Amneal Pharmaceutical, Inc. Non-GAAP Financial Measures The following tables reconciles GAAP cost of goods sold to combined adjusted cost of goods sold for purposes of determining combined adjusted cost of goods sold, combined adjusted gross profit and combined adjusted gross margin: (Unaudited; In thousands) Consolidated Total Company Three months ended June 30, 2018 Three months ended June 30, 2017 -------------------------------- -------------------------------- Add: Add: GAAP Impax/ Combined GAAP Impax/ Combined Gemini Gemini --- --- Cost of goods sold $235,492 $36,335 $271,827 $136,138 $134,170 $270,308 Adjusted to deduct: Amortization 16,694 5,462 22,506 886 17,219 18,105 Inventory step-up 15,200 - 15,200 - - - Restructuring and severance - - - - 10,795 10,795 Other inventory related charges 17,319 3,005 20,324 16,605 - 16,605 Adjusted cost of goods sold $186,279 $27,868 $213,797 $118,647 $106,156 $224,803 ======== ======= ======== ======== ======== ======== Adjusted gross profit $227,508 $20,673 $248,181 $141,224 $108,144 $249,368 Adjusted gross margin 55.0% 42.6% 53.7% 54.3% 50.5% 52.6% Six months ended June 30, 2018 Six months ended June 30, 2017 ------------------------------ ------------------------------ Add: Add: GAAP Impax/ Combined GAAP Impax/ Combined Gemini Gemini --- --- Cost of goods sold $366,086 $149,492 $515,578 $245,803 $298,599 $544,402 Adjusted to deduct: Amortization 18,454 19,935 38,389 1,772 34,451 36,223 Restructuring - - - - 18,578 18,520 Intangible Asset impairment - - - - 39,280 39,280 Inventory step-up 15,200 - 15,200 - - - Other inventory related charges 17,319 9,894 27,213 16,605 - 16,605 Adjusted cost of goods sold $315,113 $119,663 $434,776 $227,426 $206,290 $433,774 ======== ======== ======== ======== ======== ======== Adjusted gross profit $373,863 $78,819 $452,682 $258,126 $203,957 $462,083 Adjusted gross margin 54.3% 39.7% 51.0% 53.2% 49.7% 51.6%
Amneal Pharmaceutical, Inc. Non-GAAP Financial Measures The following tables reconciles the GAAP cost of goods sold to combined adjusted cost of goods sold for purposes of determining combined adjusted cost of goods sold, combined adjusted gross profit and combined adjusted gross margin: (Unaudited; In thousands) Generics Business Three months ended June 30, 2018 Three months ended June 30, 2017 -------------------------------- -------------------------------- Add: Add: GAAP Impax/ Combined GAAP Impax/ Combined Gemini Gemini --- --- Cost of goods sold $211,534 $29,624 $241,158 $136,138 $108,901 $245,039 Adjusted to deduct: Amortization 6,043 3,934 10,327 886 13,385 14,271 Restructuring and severance - - - - 8,789 8,789 Inventory step-up 13,250 - 13,250 - - - Other inventory related charges 17,319 3,005 20,324 16,605 - 16,605 Adjusted cost of goods sold $174,922 $22,685 $197,257 $118,647 $86,727 $205,374 ======== ======= ======== ======== ======= ======== Adjusted gross profit $186,848 $(1,690) $185,158 $141,224 $64,162 $205,386 Adjusted gross margin 51.6% (8.0)% 48.4% 54.3% 42.5% 50.0% Six months ended June 30, 2018 Six months ended June 30, 2017 ------------------------------ ------------------------------ Add: Add: GAAP Impax/ Combined GAAP Impax/ Combined Gemini Gemini --- --- Cost of goods sold $342,128 $122,761 $464,889 $245,803 $251,516 $497,319 Adjusted to deduct: Amortization 7,803 13,823 21,626 1,772 26,783 28,555 Restructuring and severance - - - - 16,572 16,572 Intangible Asset impairment - - - - 39,280 39,280 Inventory step-up 13,250 - 13,250 - - - Other inventory related charges 17,319 9,894 27,213 16,605 - 16,605 Adjusted cost of goods sold $303,756 $99,044 $402,800 $227,426 $168,881 $396,307 ======== ======= ======== ======== ======== ======== Adjusted gross profit $333,203 $3,193 $336,396 $258,126 $116,155 $374,281 Adjusted gross margin 52.3% 3.1% 45.5% 53.2% 40.8% 48.6%
Amneal Pharmaceutical, Inc. Non-GAAP Financial Measures The following tables reconciles the GAAP cost of goods sold to combined adjusted cost of goods sold for purposes of determining combined adjusted cost of goods sold, combined adjusted gross profit and combined adjusted gross margin: (Unaudited; In thousands) Specialty Pharma Business Three months ended June 30, 2018 Three months ended June 30, 2017 -------------------------------- -------------------------------- Add: Add: GAAP Impax/ Combined GAAP Impax/ Combined Gemini Gemini --- --- Cost of goods sold $23,958 $6,711 $30,669 $ - $25,269 $25,269 Adjusted to deduct: Amortization 10,651 1,528 12,179 - 3,834 3,834 Inventory step-up 1,950 - 1,950 - - - Other inventory related charges - - - - 2,006 2,006 Adjusted cost of goods sold $11,357 $5,183 $16,540 $ - $19,429 $19,429 ======= ====== ======= ========= ======= ======= Adjusted gross profit $40,660 $22,363 $63,023 $ - $43,982 $43,982 Adjusted gross margin 78.2% 81.2% 79.2% 0.0% 69.4% 69.4% Six months ended June 30, 2018 Six months ended June 30, 2017 ------------------------------ ------------------------------ Add: Add: GAAP Impax/ Combined GAAP Impax/ Combined Gemini Gemini --- --- Cost of goods sold $23,958 $26,731 $50,689 $ - $47,083 $47,083 Adjusted to deduct: Amortization 10,651 6,112 16,763 - 7,668 7,668 Restructuring - - - - 2,006 2,006 Intangible Asset impairment - - - - - - Inventory step-up 1,950 - 1,950 - - - Other inventory related charges - - - - - - Adjusted cost of goods sold $11,357 $20,619 $31,976 $ - $37,409 $37,409 ======= ======= ======= ========= ======= ======= Adjusted gross profit $40,660 $75,626 $116,286 $ - $87,802 $87,802 Adjusted gross margin 78.2% 78.6% 78.4% 0.0% 70.1% 70.1%
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Company Codes: NYSE:AMRX |
