Amneal Announces Solid Third Quarter 2018 Financial Results

‒ Net Revenue of $476 Million; Diluted EPS of $0.05; Adjusted Diluted EPS of $0.28 ‒
‒ Integration of Amneal and Impax Nearing Completion; On Track to Achieve More Than $200 Million in Cost Synergies ‒
‒ Company Tightens Existing 2018 Financial Guidance ‒

BRIDGEWATER, N.J., Nov. 7, 2018 /PRNewswire/ -- Amneal Pharmaceuticals, Inc. (NYSE: AMRX) (the "Company") announced its results today for the quarter ended September 30, 2018.

(PRNewsfoto/Amneal Pharmaceuticals, Inc.)

"The third quarter was defined by solid financial performance and strategic accomplishments as we advanced the integration of Impax and Amneal, completed two strategic partnerships that strengthen our portfolio and launched 11 new generic products," said Rob Stewart, President and CEO of Amneal. "We delivered revenue of $476 million and adjusted EBITDA.1 of $163 million as both our Generics and Specialty Pharma businesses grew sequentially, on a combined basis, compared with the second quarter of 2018.

"The Generics business benefited from higher sales of Yuvafem® and the seasonality of Epinephrine Auto-injector despite the product's ongoing supply constraints. Additionally, our large and diverse generic pipeline has delivered 27 new product launches through September of this year including the 11 launched in the third quarter. Within our Specialty Pharma business, we delivered solid sequential growth led by revenue increases for Rytary®, Emverm® and Zomig®.

"We are focused on long-term strategic initiatives to position Amneal for future growth. In August, we announced partnership agreements with Jerome Stevens Pharmaceuticals, Inc. for Levothyroxine and with American Regent for a generic alternative to Makena®, important steps forward in our strategy to enhance our portfolio. Pursuing additional external growth opportunities to fuel growth remains a strategic priority.

"The integration of Impax is essentially finished and all actions required to deliver our synergy target of at least $200 million annually within three years of closing the combination are completed. We have tightened our existing 2018 guidance range to reflect the late third quarter generic competition on a few key products including Yuvafem, Aspirin Dipyridamole ER, and Oseltamivir, together with the slow start to the flu season, and ongoing Epinephrine Auto-Injector supply constraints. Despite this, we continue to focus on building Amneal from our position of strength and deploying our capital to support long-term growth initiatives that will maintain double-digit earnings growth," concluded Stewart.

_____________________________

1 Please see "Non-GAAP Financial Measures" below.

 

Summary of GAAP and Combined Adjusted Results

       
 

Three Months Ended

 

Variance

(Unaudited; In thousands)

Sept. 30,
2018

June 30,
2018

Sept. 30,
2017

 

Sequential

Year/
Year

GAAP Results1

           

Net revenue

$

476,487

 

$

413,787

 

$

254,733

   

15.2

%

87.1

%

Net income (loss)

$

17,465

 

$

(250,090)

 

$

27,122

   

107.0

%

35.6

%

Diluted EPS

$

0.05

 

$

(0.15)

 

N/A

   

133.3

%

N/A

 
             

Non-GAAP Results2

           

Combined net revenue

$

476,487

 

$

462,328

 

$

474,598

   

3.1

%

0.4

%

Combined adjusted net income

$

82,154

 

$

70,153

 

$

79,465

   

17.1

%

3.4

%

Combined adjusted EBITDA

$

162,917

 

$

138,836

 

$

147,823

   

17.3

%

10.2

%

Combined adjusted diluted EPS

$

0.28

 

$

0.24

 

N/A

   

16.7

%

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.

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. 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.

GAAP Basis Results

  • GAAP net revenue in the third quarter of 2018 was $476.5 million, an increase of 87.1%, compared to the third quarter of 2017, primarily due to the combination with Impax and the acquisition of Gemini Laboratories, LLC in May 2018, as well as new generic product launches.
  • GAAP net income in the third quarter of 2018 was $17.5 million, compared to net income of $27.1 million for the third quarter of 2017. The third quarter's results were impacted by the combination with Impax and Gemini, including approximately $24.0 million of incremental interest expense.
  • GAAP diluted EPS in the third quarter of 2018 was $0.05. GAAP diluted EPS for the third quarter of 2017 is not available as Amneal Pharmaceuticals LLC was a privately-held company for the period presented.

Non-GAAP Combined Results

  • Net revenue in the third quarter of 2018 was $476.5 million, an increase of 0.4%, compared to the third quarter of 2017, primarily due to a 24.0% increase in Specialty Pharma business revenue, partially offset by a 3.6% decline in Generics business revenue.
  • Adjusted net income in the third quarter of 2018 was $82.2 million, an increase of 3.4%, compared to the third quarter of 2017, primarily due to favorable product sales mix.
  • Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the third quarter of 2018 was $162.9 million, an increase of 10.2%, compared to the third quarter of 2017, primarily due to favorable product sales mix and cost synergies from the combination with Impax.
  • Combined adjusted diluted EPS in the third quarter of 2018 was $0.28.

 

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 Sept. 30, 2018

 

Three months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax

Combined

 

Actual

Impax

Combined

Revenues

             

Generics, net

$

391,175

 

$

 

$

391,175

   

$

254,733

 

$

151,098

 

$

405,831

 

Cost of goods sold

237,866

 

 

237,866

   

119,720

 

154,756

 

274,476

 

Gross profit

153,309

 

 

153,309

   

135,013

 

(3,658)

 

131,355

 

Selling, general, and administrative

21,030

 

 

21,030

   

15,030

 

5,570

 

20,600

 

Research and development

38,997

 

 

38,997

   

41,323

 

12,241

 

53,564

 

Intellectual property legal
development expenses

3,929

 

 

3,929

   

6,693

 

28

 

6,721

 

Legal settlement gain

 

 

   

(21,467)

 

 

(21,467)

 

Restructuring

(2,885)

 

 

(2,885)

   

 

 

 

Operating profit (loss)

$

92,238

 

$

 

$

92,238

   

$

93,434

 

$

(21,497)

 

$

71,937

 
               

Gross margin

39.2

%

 

39.2

%

 

53.0

%

(2.4)

%

32.4

%

Adjusted gross profit

$

194,368

 

 

$

194,368

   

$

138,968

 

$

52,203

 

$

191,171

 

Adjusted gross margin

49.7

%

 

49.7

%

 

54.6

%

34.5

%

47.1

%

 

 

 

Nine months ended Sept. 30, 2018

 

Nine months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax

Combined

 

Actual

Impax

Combined

Revenues

             

Generics, net

$

1,028,134

 

$

102,237

 

$

1,130,371

   

$

740,285

 

$

436,134

 

$

1,176,419

 

Cost of goods sold

579,994

 

122,761

 

702,755

   

365,523

 

408,278

 

773,801

 

Gross profit

448,140

 

(20,524)

 

427,616

   

374,762

 

27,856

 

402,618

 

Selling, general, and administrative

48,854

 

11,896

 

60,750

   

44,838

 

20,072

 

64,910

 

Research and development

130,412

 

13,623

 

144,035

   

127,926

 

56,711

 

184,637

 

Intellectual property legal
development expenses

12,509

 

 

12,509

   

17,786

 

715

 

18,501

 

Litigation, settlements and related
charges

 

84,597

 

84,597

   

 

 

 

Legal settlement gain

 

 

   

(21,467)

 

 

(21,467)

 

Acquisition, integration and
transaction related expenses

114,622

 

 

114,622

   

 

 

 

Restructuring

21,912

 

 

21,912

   

 

 

 

Operating profit (loss)

$

119,831

 

$

(130,640)

 

$

(10,809)

   

$

205,679

 

$

(49,642)

 

$

156,037

 
               

Gross margin

43.6

%

(20.1)

%

37.8

%

 

50.6

%

6.4

%

34.2

%

Adjusted gross profit

$

527,686

 

$

3,193

 

$

530,879

   

$

397,095

 

$

166,352

 

$

563,447

 

Adjusted gross margin

51.3

%

3.1

%

47.0

%

 

53.6

%

38.1

%

47.9

%

   

(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 of $391.2 million increased 53.6% for the third quarter of 2018, compared to the prior year period. The increase is primarily attributable to the combination with Impax as well as strong 2018 launches, including Potassium Chloride oral solution, Phytonadione tablets and Methylphenidate Hydrochloride extended release tablets, higher demand for Yuvafem, Spironoctalone cream and Diclofenac Sodium gel 1%. These increases are partially offset by lower demand for Oseltamivir, Diclofenac sodium gel 3%, and Epinephrine auto-injector due to supply constraints.

Gross margin for the third quarter of 2018 was 39.2%, compared to 53.0% for the third quarter of 2017. The decrease is primarily as a result of higher cost of sales due to incremental amortization and inventory acquisition accounting adjustments, inventory related charges, manufacturing plant closure charges, impairment of product intangible assets and lower margin products in the Impax portfolio.

Non-GAAP Combined Results

Generics business combined net revenue in the third quarter of 2018 was $391.2 million, a decrease of 3.6%, compared to $405.8 million in the prior year period. The decrease is primarily due to lower sales of Epinephrine Auto-Injector due to an ongoing supply shortage at the Company's third-party manufacturer, increased competition on Budesonide, Lidocaine, Aspirin Dipyridamole ER and Diclofenac Sodium Gel 3%. The decrease was partially offset by increased revenue from new product launches and increased sales of Yuvafem, Spironoctalone cream and Diclofenac Sodium gel 1%.

Gross margin for the third quarter of 2018 on a combined basis was 39.2%, compared to 32.4% for the third quarter of 2017, primarily due to a decline in inventory related charges and amortization expense. Adjusted gross margin on a combined adjusted basis was 49.7% for the third quarter of 2018, compared to 47.1% 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 Sept. 30, 2018

 

Three months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax/
Gemini

Combined

 

Actual

Impax/
Gemini

Combined

Revenues

             

Rytary®, net

$

33,073

 

$

 

$

33,073

   

$

 

$

21,520

 

$

21,520

 

Zomig®, net

15,445

 

 

15,445

   

 

13,899

 

13,899

 

All Other Specialty Pharma
Products sales,  net

36,794

 

 

36,794

   

 

33,348

 

33,348

 

Total revenues

85,312

 

 

85,312

   

 

68,767

 

68,767

 

Cost of goods sold

38,516

 

 

38,516

   

 

23,026

 

23,026

 

Gross profit

46,796

 

 

46,796

   

 

45,741

 

45,741

 

Selling, general, and administrative

19,716

 

 

19,716

   

 

19,213

 

19,213

 

Research and development

4,002

 

 

4,002

   

 

3,640

 

3,640

 

Intellectual property legal
development expenses

472

 

 

472

   

 

1,612

 

1,612

 

Restructuring

(27)

 

 

(27)

   

 

 

 

Operating profit

$

22,633

 

$

 

$

22,633

   

$

 

$

21,276

 

$

21,276

 
               

Gross margin

54.9

%

 

54.9

%

 

 

66.5

%

66.5

%

Adjusted gross profit

$

67,304

 

 

$

67,304

   

 

$

54,903

 

$

54,903

 

Adjusted gross margin

78.9

%

 

78.9

%

 

 

79.8

%

79.8

%

 

 

Nine months ended Sept. 30, 2018

 

Nine months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax/
Gemini

Combined

 

Actual

Impax/
Gemini

Combined

Revenues

             

Rytary®, net

$

53,593

 

$

35,086

 

$

88,679

   

$

 

$

63,347

 

$

63,347

 

Zomig®, net

25,140

 

14,411

 

39,551

   

 

36,081

 

36,081

 

All Other Specialty Pharma 
Products sales, net

58,596

 

46,748

 

105,344

   

 

94,550

 

94,550

 

Total revenues

137,329

 

96,245

 

233,574

   

 

193,978

 

193,978

 

Cost of goods sold

62,474

 

26,731

 

89,205

   

 

68,103

 

68,103

 

Gross profit

74,855

 

69,514

 

144,369

   

 

125,875

 

125,875

 

Selling, general, and administrative

33,265

 

27,942

 

61,207

   

 

58,029

 

58,029

 

Research and development

7,131

 

3,664

 

10,795

   

 

14,585

 

14,585

 

Intellectual property legal
development expenses

515

 

23

 

538

   

 

3,167

 

3,167

 

Litigation, settlements and related
charges

 

940

 

940

   

 

 

 

Restructuring

2,394

 

 

2,394

   

 

 

 

Operating profit

$

31,550

 

$

36,945

 

$

68,495

   

$

 

$

50,094

 

$

50,094

 
               

Gross margin

54.5

%

72.2

%

61.8

%

 

 

64.9

%

64.9

%

Adjusted gross profit

$

107,964

 

$

75,626

 

$

183,590

   

 

$

144,711

 

$

144,711

 

Adjusted gross margin

78.6

%

78.6

%

78.6

%

 

 

74.6

%

74.6

%

   

(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

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 net revenue in the third quarter 2018 was $85.3 million, an increase of 24.1%, compared to $68.8 million in the prior year period, driven by higher revenue from Rytary®, Zomig® and the anthelmintic products franchise.

Gross margin for the third quarter of 2018 was 54.9%, compared to 66.5% for the third quarter of 2017, driven primarily by higher amortization expense. Adjusted gross margin was 78.9% for the third quarter of 2018, compared to 79.8% in the prior year period, primarily due to product sales mix.

 

Corporate and Other Information

(Unaudited; In thousands)

 
 

Three months ended Sept. 30, 2018

 

Three months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax

Combined

 

Actual

Impax

Combined

               

General and administrative expenses

$

(37,329)

 

$

 

$

(37,329)

   

$

(12,410)

 

$

(31,880)

 

$

(44,290)

 

Unallocated corporate expenses

$

(37,329)

 

$

 

$

(37,329)

   

$

(12,410)

 

$

(31,880)

 

$

(44,290)

 
               
               
 

Nine months ended Sept. 30, 2018

 

Nine months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax

Combined

 

Actual

Impax

Combined

               

General and administrative expenses

$

(74,080)

 

$

(40,404)

 

$

(114,484)

   

$

(37,242)

 

$

(82,904)

 

$

(120,146)

 

Unallocated corporate expenses

$

(74,080)

 

$

(40,404)

 

$

(114,484)

   

$

(37,242)

 

$

(82,904)

 

$

(120,146)

 

GAAP Results

General and administrative expenses in the third quarter of 2018 were $37.3 million, an increase of $24.9 million, compared to the third quarter of 2018, primarily due to general and administrative expenses of the Impax organization since 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 third quarter of 2018 were $37.3 million, a decrease of $7.0 million, compared to the third quarter of 2017, primarily due to cost synergies as a result of the business combination with Impax.

Other Information

Interest expense, net for the third quarter of 2018 was $43.0 million, compared to $19.2 million in the third quarter of 2017, due to an increase in long-term debt as a result of the business combination with Impax.

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. 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 Company does not provide forward-looking guidance metrics 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.

2018 Key Guidance Assumptions

  • Tightened the range of full year 2018 adjusted EBITDA and adjusted EPS guidance due to generic competition, which occurred late in the third quarter on Yuvafem, Aspirin Dipyridamole ER, Diclofenac Sodium Gel 1%, and Oseltamivir (including the slow start to flu season), the loss of exclusivity on Albenza® and the ongoing supply constraints for Epinephrine Auto-Injector.
  • Generics business growth driven by new product launches which are expected to more than offset additional competition on existing portfolio.
    • Potential opportunity to launch up to 47 generic products in 2018 including 8 the last two months of 2018
    • Specialty Pharma business growth driven by Rytary®, Zomig® nasal spray and Emverm®.

 

 

Full Year 2018 Financial Guidance

 

Prior

Updated

Adjusted Gross Margins

50% to 55%

51% to 53%

Adjusted R&D as a % of Net Revenues

10% to 15%

11% to 12%

Adjusted SG&A as a % of Net Revenues

13% to 16%

15% to 16%

Adjusted EBITDA

$580 to $620 million

$580 to $585 million

Adjusted EPS

$0.90 to $1.00

$0.90 to $0.92

Adjusted Effective Tax Rate

20% to 22%

Approximately 21%

Capital Expenditures

$80 to $100 million

Approximately $90 million

Diluted Shares Outstanding

Approximately 300 million

Approximately 300 million

Conference Call Information

Amneal will hold a conference call on November 7, 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/1821566/B0F8BD4D6CEF9543C52C47B3B3FA1A30. The number to call from within the United States is (877) 356-3814 and (706) 758-0033 internationally. The conference ID is 3488019.  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 Pharmaceuticals, Inc. (NYSE: AMRX), headquartered in Bridgewater, NJ, is an integrated pharmaceutical company focused on developing, manufacturing and distributing generic, brand and biosimilar products. The Company has approximately 6,500 employees in its operations in North America, Asia, and Europe, working together to bring high-quality medicines to patients primarily within the United States.

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 also markets a portfolio of branded pharmaceutical products through its Specialty Pharma division focused principally on central nervous system disorders and parasitic infections. For more information, visit www.amneal.com.

Safe Harbor Statement
Certain statements contained herein, regarding matters that are not historical facts, may be forward-looking statements (as defined in the 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, future operating results and financial performance, product development and launches, integration strategies and resulting cost reduction, market position and business strategy. Words such as "may," "will," "could," "expect," "plan," "anticipate," "intend," "believe," "estimate," "assume," "continue," 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 Amneal Pharmaceuticals, Inc. (the "Company").  Such risks and uncertainties include, but are not limited to: the impact of global economic conditions; our ability to integrate the operations of Amneal Pharmaceuticals LLC and Impax Laboratories, LLC pursuant to the business combination completed on May 4, 2018, and our ability to realize the anticipated synergies and other benefits of the combination; our ability to successfully develop and commercialize new products; our ability to obtain exclusive marketing rights for our products and to introduce 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 manage our growth; the illegal distribution and sale by third parties of counterfeit versions of our products or of stolen products; market perceptions of us and the safety and quality of our products; our dependence on the sales of a limited number of products for a substantial portion of our total revenues; our ability to develop, license or acquire and introduce new products on a timely basis; the ability of our approved products to achieve expected levels of market acceptance; the risk that we may discontinue the manufacture and distribution of certain existing products; the impact of manufacturing or quality control problems; 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 United States federal and state laws related to healthcare fraud abuse and health information privacy and security and changes in such laws; changes to FDA product approval requirements; risks related to federal regulation of arrangements between manufacturers of branded and generic products; the impact of healthcare reform and changes in coverage and reimbursement levels by governmental authorities and other third-party payers; our dependence on a few locations that produce a majority of our products; relationships with our major customers; the continuing trend of consolidation of certain customer groups; our reliance on certain licenses to proprietary technologies from time to time; our dependence on third party suppliers and distributors for raw materials for our products and certain finished goods; the time necessary to develop generic and branded drug products; our dependence on third parties for testing required for regulatory approval of our products; our dependence on third party agreements for a portion of our product offerings; our ability to make acquisitions of or investments in complementary businesses and products on advantageous terms; regulatory oversight related to our international operations; our increased exposure to tax liabilities due to our international operations and the impact of recent U.S. tax legislation; payments required by our Tax Receivable Agreement; our involvement in various legal proceedings, including those brought by third parties alleging infringement of their intellectual property rights; legal, regulatory and legislative efforts by our brand competitors to deter competition from our generic alternatives; the significant amount of resources we expend on research and development; 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; risks inherent in conducting clinical trials; our reporting and payment obligations under the Medicaid rebate program and other government purchase and rebate programs; quarterly fluctuations in our operating results; adjustments to our reserves based on price adjustments and sales allowances; investigations and litigation concerning the calculation of average wholesale prices; the high concentration of ownership of our Class A Common Stock and the fact that we are controlled by a group of stockholders.  A further list and descriptions of these risks, uncertainties and other factors can be found in the Company's most recently filed Quarterly Report on Form 10-Q and in the Company's subsequent filings with the Securities and Exchange Commission.  Copies of these filings are available online at www.sec.gov, www.amneal.com or on request from the Company.

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.

Trademarks referenced herein are the property of their respective owner.

CONTACT:
Mark Donohue
(908) 409-6718

 

 

Amneal Pharmaceutical, Inc.

Consolidated Statements of Operations

(Unaudited; In thousands, except per share amounts)

 
 

Three months ended

 

Nine months ended

 

Sept. 30,
2018

Sept. 30,
2017

 

Sept. 30,
2018

Sept. 30,
2017

Net Revenue

$

476,487

 

$

254,733

   

$

1,165,463

 

$

740,285

 

Cost of goods sold

276,382

 

119,720

   

642,468

 

365,523

 

Gross profit

200,105

 

135,013

   

522,995

 

374,762

 

Selling, general and administrative

78,075

 

27,440

   

156,199

 

82,080

 

Research and development

42,999

 

41,323

   

137,543

 

127,926

 

Intellectual property legal development expenses

4,401

 

6,693

   

13,024

 

17,786

 

Legal settlement gain

 

(21,467)

   

 

(21,467)

 

Acquisition, transaction-related and integration expenses

2,231

 

2,271

   

216,873

 

2,353

 

Restructuring expenses

(2,156)

 

   

42,309

 

 

Operating income (loss)

74,555

 

78,753

   

(42,953)

 

166,084

 

Other (expense) income:

           

   Interest expense, net

(43,018)

 

(19,218)

   

(100,691)

 

(51,105)

 

   Foreign exchange (loss) gain

(5,137)

 

(4,178)

   

(22,518)

 

25,751

 

   Loss on extinguishment of debt

 

   

(19,667)

 

(2,531)

 

   Loss on sale of international operations

(2,812)

 

(28,880)

   

(2,812)

 

(28,880)

 

   Other (expense) income

(1,014)

 

(93)

   

725

 

(71)

 

Total other expense, net

(51,981)

 

(52,369)

   

(144,963)

 

(56,836)

 

Income (loss) before income taxes

22,574

 

26,384

   

(187,916)

 

109,248

 

Provision for (benefit from) income taxes

5,109

 

(738)

   

(6,943)

 

2,117

 

Net income (loss)

17,465

 

27,122

   

(180,973)

 

107,131

 

Less: Net (income) loss attributable to Amneal Pharmaceuticals
LLC pre-Combination

 

(26,780)

   

148,806

 

(106,079)

 

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

(10,577)

 

(342)

   

21,191

 

(1,052)

 

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

6,888

 

   

(10,976)

 

 

Accretion of redeemable non-controlling interest

64

 

   

(1,176)

 

 

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

$

6,952

 

$

   

$

(12,152)

 

$

 
           

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

         

     Class A and Class B-1 basic

$

0.05

     

$

(0.10)

   

     Class A and Class B-1 diluted

$

0.05

     

$

(0.10)

   
           

Weighted-average common shares outstanding:

         

     Class A and Class B-1 basic

127,247

     

127,196

   

     Class A and Class B-1 diluted

128,222

     

127,196

   

 

 

Amneal Pharmaceutical, Inc.

Condensed Consolidated Balance Sheets

(Unaudited; In thousands)

 
 

September 30, 2018

 

December 31, 2017

Assets

     

Current assets:

     

Cash and cash equivalents

$

165,192

     

$

74,166

 

Restricted cash

7,001

   

3,756

 

Trade accounts receivable, net

641,029

   

351,367

 

Inventories

490,768

   

284,038

 

Prepaid expenses and other current assets

126,386

   

42,396

 

Related party receivables

925

   

16,210

 

Total current assets

1,431,301

   

771,933

 

Property, plant and equipment, net

567,498

   

486,758

 

Goodwill

410,616

   

26,444

 

Intangible assets, net

1,733,020

   

44,599

 

Deferred tax asset, net

365,971

   

898

 

Other assets

73,642

   

11,257

 

Total assets

$

4,582,048

     

$

1,341,889

 
       

Liabilities and Stockholders' Equity / Members' Deficit

     

Current liabilities:

     

Accounts payable and accrued expenses

$

513,122

     

$

194,779

 

Note payable-related party

78,126

     

 

Current portion of long-term debt and financing obligations, net

121,694

   

89,482

 

Related party payables

36,329

   

12,622

 

Total current liabilities

749,271

   

296,883

 

Long-term debt and financing obligations, net

2,675,108

   

1,395,261

 

Deferred income taxes

1,761

   

2,491

 

Liabilities under tax receivable agreement

195,820

     

 

Other long-term liabilities

44,769

   

7,793

 

Related party payable- long term

   

15,043

 

Total long-term liabilities

2,917,458

   

1,420,588

 

Total stockholders' equity / members' deficit

915,319

   

(375,582)

 

Total liabilities and stockholders' / members' deficit

$

4,582,048

     

$

1,341,889

 

 

 

Amneal Pharmaceutical, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited; In thousands)

 
 

Nine Months Ended

 

September 30,

 

2018

 

2017

Cash flows from operating activities:

     

Net (loss) income

$

(180,973)

 

$

107,131

Adjustments to reconcile net loss to net cash provided by operating activities:

     

   Depreciation and amortization

89,910

 

33,094

   Unrealized foreign currency loss (gain)

21,560

 

(27,692)

   Amortization of debt issuance costs

4,220

 

3,895

   Loss on extinguishment of debt

19,667

 

2,531

   Loss on sale of certain international businesses

2,812

 

28,880

   Transaction costs paid by Amneal Holdings, LLC

 

2,008

   Intangible asset impairment charges

8,474

 

   Deferred tax provision

(9,111)

 

(534)

   Stock-based compensation and PPU expense

163,991

 

0

   Inventory provision

20,755

 

1,510

   Other operating charges and credits, net

(1,955)

 

431

Changes in assets and liabilities:

     

   Trade accounts receivable, net

(74,711)

 

48,468

   Inventories

(53,708)

 

(25,186)

   Prepaid expenses, other current assets and other assets

9,803

 

(18,604)

   Related party receivables

10,828

 

1,397

   Accounts payable, accrued expenses and other liabilities

(26,858)

 

5,583

   Related party payables

(14,125)

 

6,010

      Net cash (used in) provided by operating activities

(9,421)

 

168,922

Investing activities:

     

Purchases of property, plant and equipment

(63,065)

 

(70,153)

Acquisition of product rights and licenses

(14,000)

 

(19,500)

Acquisitions, net of cash acquired

(324,634)

 

      Net cash used in investing activities

(401,699)

 

(89,653)

Financing activities:

     

Payments of deferred financing costs and debt extinguishment costs

(54,955)

 

(5,026)

Proceeds from issuance of debt

1,325,383

 

250,000

Payments of principal on debt, financing obligations and capital leases

(610,482)

 

(10,260)

Net borrowings on revolving credit line

25,000

 

25,000

Proceeds from exercise of stock options

3,162

 

Equity contributions

27,742

 

40

Capital contribution from non-controlling interest

360

 

Acquisition of redeemable non-controlling interest

(11,775)

 

Distributions to members

(182,998)

 

(355,265)

Repayment of related party note

(14,842)

 

      Net cash provided by (used in) financing activities

506,595

 

(95,511)

Effect of foreign exchange rate on cash

(1,204)

 

50

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

94,271

 

(16,192)

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

77,922

 

37,546

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

$

172,193

 

$

21,354

 

 

Amneal Pharmaceutical, Inc.

Non-GAAP Financial Measures

 

Combined adjusted revenue, adjusted net income, adjusted diluted EPS, EBITDA, adjusted EBITDA, adjusted cost of goods sold, adjusted gross profit, adjusted gross profit margin, adjusted selling, general and administrative expenses and adjusted research and development expenses 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, adjusted cost of goods sold, adjusted gross profit, adjusted gross profit margin, adjusted selling, general and administrative expenses and adjusted research and development expenses 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 actual results to combined results:

 
 
 

Three months ended Sept. 30, 2018

 

Three months ended Sept. 30, 2017

(Unaudited: In thousands)

 

Add:

     

Add:

 
 

Actual

Impax/
Gemini

Combined

 

Actual

Impax/
Gemini

Combined

Revenues:

             

Generics, net

$

391,175

 

$

 

$

391,175

   

$

254,733

 

$

151,098

 

$

405,831

 

Specialty Pharma, net

85,312

 

 

85,312

   

 

68,767

 

68,767

 

Total revenues

476,487

 

 

476,487

   

254,733

 

219,865

 

474,598

 

Cost of goods sold

276,382

 

 

276,382

   

119,720

 

177,782

 

297,502

 

Gross profit

200,105

 

 

200,105

   

135,013

 

42,083

 

177,096

 

Selling, general and administrative

78,075

 

 

78,075

   

27,440

 

56,663

 

84,103

 

Research and development

42,999

 

 

42,999

   

41,323

 

15,881

 

57,204

 

Intellectual property legal development expenses

4,401

 

 

4,401

   

6,693

 

1,640

 

8,333

 

Impairment loss on tangible assets

 

 

   

 

828

 

828

 

Gain on sale of assets

 

 

   

 

(4,708)

 

(4,708)

 

Change in FV of contingent consideration

 

 

   

 

6,333

 

6,333

 

Legal settlement gain

 

 

   

(21,467)

 

 

(21,467)

 

Acquisition, transaction-related and integration
expenses

2,231

 

 

2,231

   

2,271

 

 

2,271

 

Restructuring expenses

(2,156)

 

 

(2,156)

   

 

 

 

Operating income (loss)

74,555

 

 

74,555

   

78,753

 

(34,554)

 

44,199

 

Other (expense) income:

             

Interest expense, net

(43,018)

 

 

(43,018)

   

(19,218)

 

(13,300)

 

(32,518)

 

Foreign exchange (loss) gain

(5,137)

 

 

(5,137)

   

(4,178)

 

 

(4,178)

 

Loss on sale of international operations

(2,812)

 

 

(2,812)

   

(28,880)

 

 

(28,880)

 

Other (expense) income

(1,014)

 

 

(1,014)

   

(93)

 

352

 

259

 

Total other (expense) income, net

(51,981)

 

 

(51,981)

   

(52,369)

 

(12,948)

 

(65,317)

 

Income (loss) before income taxes

22,574

 

 

22,574

   

26,384

 

(47,502)

 

(21,118)

 

Provision for (benefit from) income taxes

5,109

 

 

5,109

   

(738)

 

(3,045)

 

(3,783)

 

Net income (loss)

17,465

 

 

17,465

   

27,122

 

(44,457)

 

(17,335)

 

Less: Net income attributable to Amneal
Pharmaceuticals LLC pre-Combination

       

(26,780)

     

Less: Net income attributable to non-controlling
interests

(10,577)

       

(342)

     

Accretion of redeemable non-controlling interest

64

       

     

Net income attributable to Amneal
Pharmaceuticals, Inc.

$

6,952

       

$

     

 

 

Amneal Pharmaceutical, Inc.

Non-GAAP Financial Measures

 

The following Consolidated Statements of Operations table reconciles actual results to combined results: (Unaudited; In thousands)

 
 

Nine months ended Sept. 30, 2018

 

Nine months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax/
Gemini

 

Combined

 

Actual

Impax/
Gemini

 

Combined

Revenues:

             

Generics, net

$

1,028,134

 

$

102,237

 

$

1,130,371

   

$

740,285

 

$

436,134

 

$

1,176,419

 

Specialty Pharma, net

137,329

 

96,245

 

233,574

   

 

193,978

 

193,978

 

Total revenues

1,165,463

 

198,482

 

1,363,945

   

740,285

 

630,112

 

1,370,397

 

Cost of goods sold

642,468

 

149,492

 

791,960

   

365,523

 

476,381

 

841,904

 

Gross profit

522,995

 

48,990

 

571,985

   

374,762

 

153,731

 

528,493

 

Selling, general and administrative

156,199

 

80,242

 

236,441

   

82,080

 

161,005

 

243,085

 

Research and development

137,543

 

17,287

 

154,830

   

127,926

 

71,296

 

199,222

 

Intellectual property legal development expenses

13,024

 

23

 

13,047

   

17,786

 

3,882

 

21,668

 

Impairment loss on tangible assets

 

 

   

 

828

 

828

 

Gain on sale of assets

 

 

   

 

(4,708)

 

(4,708)

 

Change in FV of contingent consideration

 

 

   

 

6,333

 

6,333

 

Legal settlement gain

 

 

   

(21,467)

 

 

(21,467)

 

Litigation, settlements and related charges

 

85,537

 

85,537

   

 

 

 

Acquisition, transaction-related and integration
expenses

216,873

 

4,381

 

221,254

   

2,353

 

 

2,353

 

Restructuring expenses

42,309

 

 

42,309

   

 

 

 

Operating (loss) income

(42,953)

 

(138,480)

 

(181,433)

   

166,084

 

(84,905)

 

81,179

 

Other (expense) income:

             

   Interest expense, net

(100,691)

 

(18,231)

 

(118,922)

   

(51,105)

 

(39,740)

 

(90,845)

 

   Foreign exchange (loss) gain

(22,518)

 

921

 

(21,597)

   

25,751

 

 

25,751

 

   Loss on early extinguishment of debt

(19,667)

 

 

(19,667)

   

(2,531)

 

(1,215)

 

(3,746)

 

   Loss on sale of international operations

(2,812)

 

 

(2,812)

   

(28,880)

 

 

(28,880)

 

   Other income (expense)

725

 

(638)

 

87

   

(71)

 

(1,430)

 

(1,501)

 

Total other (expense) income, net

(144,963)

 

(17,948)

 

(162,911)

   

(56,836)

 

(42,385)

 

(99,221)

 

(Loss) income before income taxes

(187,916)

 

(156,428)

 

(344,344)

   

109,248

 

(127,290)

 

(18,042)

 

(Benefit from) provision for income taxes

(6,943)

 

(6,273)

 

(13,216)

   

2,117

 

27,336

 

29,453

 

Net (loss) income

(180,973)

 

(150,155)

 

(331,128)

   

107,131

 

(154,626)

 

(47,495)

 

Less: Net loss (income) attributable to Amneal
Pharmaceuticals LLC pre-Combination

148,806

       

(106,079)

     

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

21,191

       

(1,052)

     

Accretion of redeemable non-controlling interest

(1,176)

       

     

Net (loss) attributable to Amneal
Pharmaceuticals, Inc.

$

(12,152)

       

$

     

 

 

Amneal Pharmaceutical, Inc.

Non-GAAP Financial Measures

 

The following table reconciles actual net income (loss) to combined adjusted net income and adjusted diluted earnings per share: (Unaudited; In thousands, except per share amounts)

 
 

Three months ended Sept. 30, 2018

 

Three months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax/
Gemini

Combined

 

Actual

Impax/
Gemini

Combined

Net income (loss)

$

17,465

 

$

 

$

17,465

   

$

27,122

 

$

(44,457)

 

$

(17,335)

 

Adjusted to add (deduct):

             

Non-cash interest

1,452

 

 

1,452

   

1,432

 

6,547

 

7,979

 

GAAP Income taxes

5,109

 

 

5,109

   

(738)

 

(3,045)

 

(3,783)

 

Amortization

25,655

 

 

25,655

   

1,278

 

17,088

 

18,366

 

Share-based compensation expense

3,590

 

 

3,590

   

 

6,490

 

6,490

 

Acquisition, transaction and integration

2,231

 

 

2,231

   

2,271

 

 

2,271

 

Restructuring and severance charges

(2,156)

 

 

(2,156)

   

 

10,937

 

10,937

 

Inventory related charges

17,422

 

 

17,422

   

2,677

 

20,478

 

23,155

 

Litigation, settlements and related charges

2,589

 

 

2,589

   

 

 

 

Gain on sale of assets

 

 

   

 

(4,379)

 

(4,379)

 

Asset impairment charges

8,541

 

 

8,541

   

 

13,623

 

13,623

 

Plant closure

10,199

 

 

10,199

   

 

4,334

 

4,334

 

Exchange loss

5,137

 

 

5,137

   

4,178

 

 

4,178

 

Loss on sale of international operations

2,812

 

 

2,812

   

28,880

 

 

28,880

 

Other

3,947

 

 

3,947

   

1,700

 

9,495

 

11,195

 

Income tax at 21%

(21,839)

 

 

(21,839)

   

(14,448)

 

(11,998)

 

(26,446)

 

Adjusted net income

$

82,154

 

$

 

$

82,154

   

$

54,352

 

$

25,113

 

$

79,465

 

Adjusted diluted earnings per share

   

$

0.28

         

 

 

Amneal Pharmaceutical, Inc.

Non-GAAP Financial Measures

 

The following table reconciles actual net income (loss) to combined adjusted net income and adjusted diluted earnings per share: (Unaudited; In thousands, except per share amounts)

 
 

Nine months ended Sept. 30, 2018

 

Nine months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax/
Gemini

Combined

 

Actual

Impax/
Gemini

Combined

Net income (loss)

$

(180,973)

 

$

(150,155)

 

$

(331,128)

   

$

107,131

 

$

(154,626)

 

$

(47,495)

 

Adjusted to add (deduct):

             

Non-cash interest

7,029

 

9,413

 

16,442

   

3,895

 

19,289

 

23,184

 

GAAP Income taxes

(6,943)

 

(6,273)

 

(13,216)

   

2,117

 

27,336

 

29,453

 

Amortization

44,109

 

19,935

 

64,044

   

3,051

 

51,539

 

54,590

 

Share-based compensation expense

5,234

 

4,816

 

10,050

   

 

19,672

 

19,672

 

Acquisition, transaction and integration

217,969

 

9,829

 

227,798

   

2,353

 

150

 

2,503

 

Restructuring and severance charges

42,309

 

5,123

 

47,432

   

1,761

 

32,654

 

34,415

 

Loss on extinguishment of debt

19,667

 

 

19,667

   

2,531

 

1,215

 

3,746

 

Inventory related charges

44,905

 

9,894

 

54,799

   

19,282

 

20,478

 

39,760

 

Litigation, settlements and related charges

2,589

 

90,099

 

92,688

   

 

7,494

 

7,494

 

Loss/(gain) on sale of assets

878

 

 

878

   

 

(16,579)

 

(16,579)

 

Asset impairment charges

8,541

 

53

 

8,594

   

 

60,876

 

60,876

 

Plant closure

15,235

 

 

15,235

   

 

4,334

 

4,334

 

Royalty expense

 

 

   

8,684

 

 

8,684

 

Exchange loss (gain)

22,518

 

(921)

 

21,597

   

(25,751)

 

 

(25,751)

 

Loss on sale of international operations

2,812

 

 

2,812

   

28,880

 

 

28,880

 

Other

5,827

 

1,953

 

7,780

   

4,158

 

15,382

 

19,540

 

Income tax at 21%

(52,858)

 

1,309

 

(51,549)

   

(33,199)

 

(22,934)

 

(56,133)

 

Adjusted net income (loss)

$

198,848

 

$

(4,925)

 

$

193,923

   

$

124,893

 

$

66,280

 

$

191,173

 

Adjusted diluted earnings per share

   

$

0.65

         

 

 

Amneal Pharmaceutical, Inc.

Non-GAAP Financial Measures

 

The following table reconciles actual net income (loss) to combined EBITDA and combined adjusted EBITDA:

(Unaudited, In thousands)

 
 

Three months ended Sept. 30, 2018

 

Three months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax/
Gemini

Combined

 

Actual

Impax/
Gemini

Combined

Net income (loss)

$

17,465

 

$

 

$

17,465

   

$

27,122

 

$

(44,457)

 

$

(17,335)

 

Adjusted to add (deduct):

             

Interest expense, net

43,018

 

 

43,018

   

19,218

 

13,300

 

32,518

 

Income taxes

5,109

 

 

5,109

   

(738)

 

(3,045)

 

(3,783)

 

Depreciation and amortization

43,013

 

 

43,013

   

11,958

 

23,781

 

35,739

 

EBITDA

108,605

 

 

108,605

   

57,560

 

(10,421)

 

47,139

 
               

Adjusted to add (deduct):

             

Share-based compensation expense

3,590

 

 

3,590

   

 

6,490

 

6,490

 

Acquisition, transaction and integration

2,231

 

 

2,231

   

2,271

 

 

2,271

 

Restructuring and severance charges

(2,156)

 

 

(2,156)

   

 

10,937

 

10,937

 

Inventory related charges

17,422

 

 

17,422

   

2,677

 

20,478

 

23,155

 

Litigation, settlements and related charges

2,589

 

 

2,589

   

 

 

 

(Gain)/loss on sale of assets

 

 

   

 

(4,379)

 

(4,379)

 

Asset impairment charges

8,541

 

 

8,541

   

 

13,623

 

13,623

 

Plant closure

10,199

 

 

10,199

   

 

4,334

 

4,334

 

Exchange loss

5,137

 

 

5,137

   

4,178

 

 

4,178

 

Loss on sale of international operations

2,812

 

 

2,812

   

28,880

 

 

28,880

 

Other

3,947

 

 

3,947

   

1,700

 

9,495

 

11,195

 

Adjusted EBITDA

$

162,917

 

$

 

$

162,917

   

$

97,266

 

$

50,557

 

$

147,823

 

 

 

Amneal Pharmaceutical, Inc.

Non-GAAP Financial Measures

 

The following table reconciles actual net income (loss) to combined EBITDA and combined adjusted EBITDA:

(Unaudited; In thousands)

 
 

Nine months ended Sept. 30, 2018

 

Nine months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax/
Gemini

Combined

 

Actual

Impax/
Gemini

Combined

Net (loss) income

$

(180,973)

 

$

(150,155)

 

$

(331,128)

   

$

107,131

 

$

(154,626)

 

$

(47,495)

 

Adjusted to add (deduct):

             

Interest expense, net

100,691

 

18,445

 

119,136

   

51,105

 

39,740

 

90,845

 

Income taxes

(6,943)

 

(6,273)

 

(13,216)

   

2,117

 

27,336

 

29,453

 

Depreciation and amortization

89,910

 

24,902

 

114,812

   

33,094

 

72,234

 

105,328

 

EBITDA

2,685

 

(113,081)

 

(110,396)

   

193,447

 

(15,316)

 

178,131

 
               

Adjusted to add (deduct):

             

Share-based compensation expense

5,234

 

4,816

 

10,050

   

 

19,672

 

19,672

 

Acquisition, transaction and integration

217,969

 

9,829

 

227,798

   

2,353

 

150

 

2,503

 

Restructuring and severance charges

42,309

 

5,123

 

47,432

   

1,761

 

32,654

 

34,415

 

Loss on extinguishment of debt

19,667

 

 

19,667

   

2,531

 

1,215

 

3,746

 

Inventory related charges

44,905

 

9,894

 

54,799

   

19,282

 

20,478

 

39,760

 

Litigation, settlements and related charges

2,589

 

90,099

 

92,688

   

 

7,494

 

7,494

 

Loss/(gain) on sale of assets

878

 

 

878

   

 

(16,579)

 

(16,579)

 

Asset impairment charges

8,541

 

53

 

8,594

   

 

60,876

 

60,876

 

Plant closure

15,235

 

 

15,235

   

 

4,334

 

4,334

 

Royalty expense

 

 

   

8,684

 

 

8,684

 

Exchange loss (gain)

22,518

 

(921)

 

21,597

   

(25,751)

 

 

(25,751)

 

Loss on sale of international operations

2,812

 

 

2,812

   

28,880

 

 

28,880

 

Other

5,827

 

653

 

6,480

   

4,158

 

15,382

 

19,540

 

Adjusted EBITDA

$

391,169

 

$

6,465

 

$

397,634

   

$

235,345

 

$

130,360

 

$

365,705

 

 

 

Amneal Pharmaceutical, Inc.

Non-GAAP Financial Measures

 

The following tables reconcile actual 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 Sept. 30, 2018

 

Three months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax/
Gemini

Combined

 

Actual

Impax/
Gemini

Combined

Cost of goods sold

$

276,382

 

$

 

$

276,382

   

$

119,720

 

$

177,782

 

$

297,502

 

Adjusted to deduct:

             

Amortization

25,655

 

 

25,655

   

1,278

 

17,086

 

18,364

 

Inventory step-up

17,050

 

 

17,050

   

 

 

 

Plant closure

10,199

 

 

10,199

   

 

4,334

 

4,334

 

Asset impairment charges

7,891

 

 

7,891

   

 

13,623

 

13,623

 

Share-based compensation expense

400

 

 

400

   

 

 

 

Restructuring and severance

 

 

   

 

9,502

 

9,502

 

Other inventory related charges

372

 

 

372

   

2,677

 

20,478

 

23,155

 

Adjusted cost of goods sold

$

214,815

 

$

 

$

214,815

   

$

115,765

 

$

112,759

 

$

228,524

 
               

Adjusted gross profit

$

261,672

 

 

$

261,672

   

$

138,968

 

$

107,106

 

$

246,074

 

Adjusted gross margin

54.9

%

 

54.9

%

 

54.6

%

48.7

%

51.8

%

 

 

 

Nine months ended Sept. 30, 2018

 

Nine months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax/
Gemini

Combined

 

Actual

Impax/
Gemini

Combined

Cost of goods sold

$

642,468

 

$

149,492

 

$

791,960

   

$

365,523

 

$

476,381

 

$

841,904

 

Adjusted to deduct:

             

Amortization

44,109

 

19,935

 

64,044

   

3,051

 

51,537

 

54,588

 

Inventory step-up

32,250

 

 

32,250

   

 

 

 

Plant closure

15,235

   

15,235

   

 

4,334

 

4,334

 

Asset impairment charges

7,891

 

 

7,891

   

 

52,903

 

52,903

 

Share-based compensation expense

515

   

515

   

 

 

 

Restructuring and severance

 

 

   

 

28,080

 

28,080

 

Other inventory related charges

12,655

 

9,894

 

22,549

   

19,282

 

20,478

 

39,760

 

Adjusted cost of goods sold

$

529,813

 

$

119,663

 

$

649,476

   

$

343,190

 

$

319,049

 

$

662,239

 
               

Adjusted gross profit

$

635,650

 

$

78,819

 

$

707,586

   

$

397,095

 

$

311,063

 

$

708,158

 

Adjusted gross margin

54.5

%

39.7

%

52.4

%

 

53.6

%

49.4

%

51.7

%

 

 

Amneal Pharmaceutical, Inc.

Non-GAAP Financial Measures

 

The following tables reconcile the actual 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 Sept. 30, 2018

 

Three months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax/
Gemini

Combined

 

Actual

Impax/
Gemini

Combined

Cost of goods sold

$

237,866

 

$

 

$

237,866

   

$

119,720

 

$

154,756

 

$

274,476

 

Adjusted to deduct:

             

Amortization

6,107

 

 

6,107

   

1,278

 

13,181

 

14,459

 

Inventory step-up

16,090

 

 

16,090

   

 

 

 

Plant closure

10,199

 

 

10,199

   

 

4,334

 

4,334

 

Asset impairment charges

7,891

 

 

7,891

   

 

13,623

 

13,623

 

Share-based compensation expense

400

 

 

400

   

 

 

 

Restructuring and severance

 

 

   

 

4,245

 

4,245

 

Other inventory related charges

372

 

 

372

   

2,677

 

20,478

 

23,155

 

Adjusted cost of goods sold

$

196,807

 

$

 

$

196,807

   

$

115,765

 

$

98,895

 

$

214,660

 
               

Adjusted gross profit

$

194,368

 

 

$

194,368

   

$

138,968

 

$

52,203

 

$

191,171

 

Adjusted gross margin

49.7

%

 

49.7

%

 

54.6

%

34.5

%

47.1

%

 

 

 

Nine months ended Sept. 30, 2018

 

Nine months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax/
Gemini

Combined

 

Actual

Impax/
Gemini

Combined

Cost of goods sold

$

579,994

 

$

122,761

 

$

702,755

   

$

365,523

 

$

408,278

 

$

773,801

 

Adjusted to deduct:

             

Amortization

13,910

 

13,823

 

27,733

   

3,051

 

39,964

 

43,015

 

Inventory step-up

29,340

 

 

29,340

   

 

 

 

Plant closure

15,235

 

 

15,235

   

 

4,334

 

4,334

 

Asset impairment charges

7,891

 

 

7,891

   

 

52,903

 

52,903

 

Share-based compensation expense

515

 

 

515

   

 

 

 

Restructuring and severance

 

 

   

 

20,817

 

20,817

 

Other inventory related charges

12,655

 

9,894

 

22,549

   

19,282

 

20,478

 

39,760

 

Adjusted cost of goods sold

$

500,448

 

$

99,044

 

$

599,492

   

$

343,190

 

$

269,782

 

$

612,972

 
               

Adjusted gross profit

$

527,686

 

$

3,193

 

$

530,879

   

$

397,095

 

$

166,352

 

$

563,447

 

Adjusted gross margin

51.3

%

3.1

%

47.0

%

 

53.6

%

38.1

%

47.9

%

 

 

Amneal Pharmaceutical, Inc.

Non-GAAP Financial Measures

 

The following tables reconcile the actual 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 Sept. 30, 2018

 

Three months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax/
Gemini

Combined

 

Actual

Impax/
Gemini

Combined

Cost of goods sold

$

38,516

 

$

 

$

38,516

   

$

 

$

23,026

 

$

23,026

 

Adjusted to deduct:

             

Amortization

19,548

 

 

19,548

   

 

3,905

 

3,905

 

Inventory step-up

960

 

 

960

   

 

 

 

Restructuring and severance

 

 

   

 

5,257

 

5,257

 

Adjusted cost of goods sold

$

18,008

 

$

 

$

18,008

   

$

 

$

13,864

 

$

13,864

 
               

Adjusted gross profit

$

67,304

 

 

$

67,304

   

 

$

54,903

 

$

54,903

 

Adjusted gross margin

78.9

%

 

78.9

%

 

 

79.8

%

79.8

%

 

 

 

Nine months ended Sept. 30, 2018

 

Nine months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax/
Gemini

Combined

 

Actual

Impax/
Gemini

Combined

Cost of goods sold

$

62,474

 

$

26,731

 

$

89,205

   

$

 

$

68,103

 

$

68,103

 

Adjusted to deduct:

             

Amortization

30,199

 

6,112

 

36,311

   

 

11,573

 

11,573

 

Inventory step-up

2,910

 

 

2,910

   

 

 

 

Restructuring and severance

 

 

   

 

7,263

 

7,263

 

Adjusted cost of goods sold

$

29,365

 

$

20,619

 

$

49,984

   

$

 

$

49,267

 

$

49,267

 
               

Adjusted gross profit

$

107,964

 

$

75,626

 

$

183,590

   

 

$

144,711

 

$

144,711

 

Adjusted gross margin

78.6

%

78.6

%

78.6

%

 

 

74.6

%

74.6

%

 

 

Amneal Pharmaceutical, Inc.

Non-GAAP Financial Measures

 

The following tables reconcile the actual selling, general and administrative expenses to combined adjusted selling, general and administrative expenses: (Unaudited; In thousands)

 

Consolidated Total Company

 
 
 

Three months ended Sept. 30, 2018

 

Three months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax/
Gemini

Combined

 

Actual

Impax/
Gemini

Combined

Selling, general and administrative
expenses

$

78,075

 

$

 

$

78,075

   

$

27,440

 

$

56,663

 

$

84,103

 

Adjusted to deduct:

             

Business development expenses

 

 

   

 

2,833

 

2,833

 

Share-based compensation expense

2,836

 

 

2,836

   

 

 

 

Legal expenses

2,589

 

 

2,589

   

 

214

 

214

 

Restructuring and severance charges

 

 

   

 

511

 

511

 

Other

3,409

 

 

3,409

   

 

 

 

Adjusted selling, general and
administrative expenses

$

69,241

 

$

 

$

69,241

   

$

27,440

 

$

53,105

 

$

80,545

 

 

 

 

Nine months ended Sept. 30, 2018

 

Nine months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax/
Gemini

Combined

 

Actual

Impax/
Gemini

Combined

Selling, general and administrative
expenses

$

156,199

 

$

80,242

 

$

236,441

   

$

82,080

 

$

161,005

 

$

243,085

 

Adjusted to deduct:

             

Business development expenses

 

 

   

 

2,925

 

2,925

 

Share-based compensation expense

4,259

 

5,037

 

9,296

   

 

 

 

Legal expenses

2,589

 

 

2,589

   

 

(191)

 

(191)

 

Restructuring and severance charges

 

 

   

 

782

 

782

 

Other

6,167

 

2,006

 

8,173

   

 

 

 

Adjusted selling, general and
administrative expenses

$

143,184

 

$

73,199

 

$

216,383

   

$

82,080

 

$

157,489

 

$

239,569

 

 

 

Amneal Pharmaceutical, Inc.

Non-GAAP Financial Measures

 

The following tables reconcile the actual research and development expenses to combined adjusted research and development expenses: (Unaudited; In thousands)

 
 

Three months ended Sept. 30, 2018

 

Three months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax/
Gemini

Combined

 

Actual

Impax/
Gemini

Combined

Research and development expenses

$

42,999

 

$

 

$

42,999

   

$

41,323

 

$

15,881

 

$

57,204

 

Intellectual property legal development
expenses

4,401

 

 

4,401

   

6,693

 

1,640

 

8,333

 

Adjusted to deduct:

             

Intangible asset impairment charges

650

 

 

650

   

 

 

 

Share-based compensation expense

354

 

 

354

   

 

 

 

Restructuring and severance charges

 

 

   

 

356

 

356

 

Other

(414)

 

 

(414)

   

 

60

 

60

 

Adjusted research and development
expenses

$

46,810

 

$

 

$

46,810

   

$

48,016

 

$

17,105

 

$

65,121

 

 

 

 

Nine months ended Sept. 30, 2018

 

Nine months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax/
Gemini

Combined

 

Actual

Impax/
Gemini

Combined

Research and development expenses

$

137,543

 

$

17,287

 

$

154,830

   

$

127,926

 

$

71,296

 

$

199,222

 

Intellectual property legal development
expenses

13,024

 

23

 

13,047

   

17,786

 

3,882

 

21,668

 

Adjusted to deduct:

             

Intangible asset impairment charges

650

 

 

650

   

 

6,079

 

6,079

 

Share-based compensation expense

460

 

 

460

   

 

 

 

Restructuring and severance charges

 

 

   

 

3,281

 

3,281

 

Other

(414)

 

 

(414)

   

 

2,535

 

2,535

 

Adjusted research and development
expenses

$

149,871

 

$

17,310

 

$

167,181

   

$

145,712

 

$

63,283

 

$

208,995

 

 

 

Amneal Pharmaceutical, Inc.

Non-GAAP Financial Measures

 

The following tables reconcile the actual income (loss) from operations to combined adjusted income (loss) from operations: (Unaudited; In thousands)

 

Generics Business

 
 

Three months ended Sept. 30, 2018

 

Three months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax/
Gemini

Combined

 

Actual

Impax/
Gemini

Combined

Income (loss) from operations

$

92,238

 

$

 

$

92,238

   

$

93,434

 

$

(21,497)

 

$

71,937

 

Adjusted to deduct:

             

Amortization

6,107

 

 

6,107

   

1,278

 

13,181

 

14,459

 

Inventory related charges including
inventory step-up

16,462

 

 

16,462

   

2,677

 

20,478

 

23,155

 

Plant closure

10,199

 

 

10,199

   

 

4,334

 

4,334

 

Asset impairment charges

8,541

 

 

8,541

   

 

13,623

 

13,623

 

Share-based compensation expense

1,201

 

 

1,201

   

 

 

 

Restructuring and severance

(2,885)

 

 

(2,885)

   

 

4,601

 

4,601

 

Other

(314)

 

 

(314)

   

 

60

 

60

 

Adjusted income from operations

$

131,549

 

$

 

$

131,549

   

$

97,389

 

$

34,780

 

$

132,169

 

 

 

 

Nine months ended Sept. 30, 2018

 

Nine months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax/
Gemini

Combined

 

Actual

Impax/
Gemini

Combined

Income (loss) from operations

$

119,831

 

$

(130,640)

 

$

(10,809)

   

$

205,679

 

$

(49,642)

 

$

156,037

 

Adjusted to deduct:

             

Acquisition, transaction and
integration

114,622

 

 

114,622

   

 

 

 

Amortization

13,910

 

13,823

 

27,733

   

3,051

 

39,964

 

43,015

 

Inventory related charges including
inventory step-up

41,995

 

9,894

 

51,889

   

19,282

 

20,478

 

39,760

 

Plant closure

15,235

 

 

15,235

   

 

4,334

 

4,334

 

Asset impairment charges

8,541

 

 

8,541

   

 

58,982

 

58,982

 

Share-based compensation expense

1,422

 

 

1,422

   

 

 

 

Restructuring and severance

21,912

 

 

21,912

   

 

23,183

 

23,183

 

Litigation, settlements and related
charges

 

84,597

 

84,597

   

 

 

 

Other

(314)

 

 

(314)

   

 

2,535

 

2,535

 

Adjusted income from operations

$

337,154

 

$

(22,326)

 

$

314,828

   

$

228,012

 

$

99,834

 

$

327,846

 

 

 

Amneal Pharmaceutical, Inc.

Non-GAAP Financial Measures

 

The following tables reconcile the actual income from operations to combined adjusted income from operations: (Unaudited; In thousands)

 

Specialty Pharma Business

 
 

Three months ended Sept. 30, 2018

 

Three months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax/
Gemini

Combined

 

Actual

Impax/
Gemini

Combined

Income from operations

$

22,633

 

$

 

$

22,633

   

$

 

$

21,276

 

$

21,276

 

Adjusted to deduct:

             

Amortization

19,548

 

 

19,548

   

 

3,905

 

3,905

 

Inventory related charges including
inventory step-up

960

 

 

960

   

 

 

 

Restructuring and severance

(27)

 

 

(27)

   

 

5,257

 

5,257

 

Other

474

 

 

474

   

 

 

 

Adjusted income from operations

$

43,588

 

$

 

$

43,588

   

$

 

$

30,438

 

$

30,438

 

 

 

 

Nine months ended Sept. 30, 2018

 

Nine months ended Sept. 30, 2017

   

Add:

     

Add:

 
 

Actual

Impax/
Gemini

Combined

 

Actual

Impax/
Gemini

Combined

Income (loss) from operations

$

31,550

 

$

37,885

 

$

69,435

   

$

 

$

50,094

 

$

50,094

 

Adjusted to deduct:

             

Amortization

30,199

 

6,112

 

36,311

   

 

11,573

 

11,573

 

Inventory related charges including
inventory step-up

2,910

 

 

2,910

   

 

 

 

Restructuring and severance

2,394

 

 

2,394

   

 

8,178

 

8,178

 

Other

474

 

 

474

   

 

 

 

Adjusted income from operations

$

67,527

 

$

43,997

 

$

111,524

   

$

 

$

69,845

 

$

69,845

 

 

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/amneal-announces-solid-third-quarter-2018-financial-results-300745387.html

SOURCE Amneal Pharmaceuticals, Inc.

   
Company Codes: NYSE:AMRX  

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