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Amneal Reports Fourth Quarter and Full Year 2023 Financial Results

Friday, March 01, 2024 06:00 AM | Business Wire via QuoteMedia

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Amneal Reports Fourth Quarter and Full Year 2023 Financial Results

‒ Full Year 2023 Performance Met or Exceeded Financial Guidance Metrics –

‒ Q4 2023 Net Revenue of $617 million; GAAP Net Loss of $99 million; Diluted Loss per Share of $0.40 ‒
‒ Q4 2023 Adjusted Net Income (1) of $44 million, Adjusted EBITDA (1) of $142 million; Adjusted Diluted EPS (1) of $0.14 ‒

‒ Full Year 2023 Net Revenue of $2.39 billion; GAAP Net Loss of $84 million; Diluted Loss per Share of $0.48 ‒
‒ Full Year 2023 Adjusted Net Income (1) of $198 million; Adjusted EBITDA (1) of $558 million; Adjusted Diluted EPS (1) of $0.64 ‒

‒ Provides 2024 Financial Guidance of $2.55 to $2.65 billion in net revenue and $580 to $620 million in Adjusted EBITDA (1)

Amneal Pharmaceuticals, Inc. (Nasdaq: AMRX) (“Amneal” or the “Company”) today announced its results for the fourth quarter and full year ended December 31, 2023.

“Amneal had a very successful year in 2023 as we delivered strong execution and growth across our diversified pharmaceutical business. We are starting 2024 with substantial momentum and key catalysts, including complex high-value products, biosimilars and specialty, to further expand our reach. Against the macro backdrop of a global aging population, significant unmet patient needs and ongoing supply issues, Amneal’s mission to provide access to high-quality, affordable, essential medicines has never been more important or more aligned with industry dynamics. Our durable business is ideally positioned to drive sustainable, profitable growth and create value for all our stakeholders, this year and beyond,” said Chirag and Chintu Patel, Co-Chief Executive Officers.

Net revenue in the fourth quarter of 2023 was $617 million, an increase of 1% compared to $610 million in the fourth quarter of 2022. The increase was driven by AvKARE revenues growing 38% due to new launches and Specialty revenues growing 2% driven by key branded products, partially offset by Generics revenues declining 9% as strong performance of biosimilars and complex generics was offset by the timing of orders. Net loss attributable to Amneal Pharmaceuticals, Inc. was $99 million in the fourth quarter of 2023 compared to a net loss of $4 million in the fourth quarter of 2022, primarily due to non-cash intangible asset impairment charges and costs associated with our term loan refinancing. Adjusted EBITDA (1) in the fourth quarter of 2023 was $142 million, a decrease of 8% compared to the fourth quarter of 2022, primarily due to investments in research and development and commercial to drive future growth. Diluted loss per share in the fourth quarter of 2023 was $0.40, an increase of $0.37 from a loss of $0.03 for the fourth quarter of 2022, due to the aforementioned factors, partially offset by an increase in the weighted-average common shares outstanding as a result of our previously announced reorganization. Adjusted diluted EPS (1) in the fourth quarter of 2023 was $0.14, a decrease of 39% from $0.23 in the fourth quarter of 2022.

Net revenue for the year ended December 31, 2023 was $2.39 billion, an increase of 8% compared to $2.21 billion for the year ended December 31, 2022. Revenue growth was driven by all three business segments with AvKARE growing 31%, Generics growing 3% due to strong performance of our complex portfolio and biosimilars, and Specialty growing 4%. Net loss attributable to Amneal Pharmaceuticals, Inc. was $84 million for the year ended December 31, 2023, an improvement of $41 million compared to a net loss of $130 million for the year ended December 31, 2022. Adjusted EBITDA (1) for the year ended December 31, 2023 was $558 million, an increase of $44 million compared to the year ended December 31, 2022, reflective of strong revenue growth and continued operating expense leverage. Diluted loss per share for the year ended December 31, 2023 was $0.48, a decrease of 44% compared to diluted loss per share of $0.86 for the year ended December 31, 2022. Adjusted diluted EPS (1) in the year ended December 31, 2023 was $0.64, a decrease of 6% from $0.68 for the year ended December 31, 2022, due to higher EBITDA offset by higher interest expense.

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

2024 Financial Guidance

Full Year 2024 Guidance

Full Year 2023 Actuals

Net revenue

$2.55 billion - $2.65 billion

$2.39 billion

Adjusted EBITDA (1)

$580 million - $620 million

$558 million

Adjusted diluted EPS (2)

$0.53 - $0.63

$0.64

Operating cash flow (3)

$260 million - $300 million

$346 million

Capital expenditures

$60 million - $70 million

$43 million

(1) Includes 100% of Adjusted EBITDA from the AvKARE acquisition. See also “Non-GAAP Financial Measures” below.
(2) Accounts for 35% non-controlling interest in AvKARE. Assumes weighted-average diluted shares outstanding of approximately 317 million for the year ending December 31, 2024, compared to weighted-average diluted shares outstanding of 310 million for the year ended December 31, 2023. See also “Non-GAAP Financial Measures” below for assumptions used in calculation.
(3) 2024 does not contemplate one time and non-recurring items such as legal settlements and other discrete items. 2023 includes the impact of a payment of $85.5 million for the Opana ER® antitrust litigation settlement, including interest.

Amneal’s 2024 estimates are based on management’s current expectations, including with respect to prescription trends, pricing levels, the timing of future product launches, the costs incurred and benefits realized of restructuring activities, and our long-term strategy. The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company cannot provide a reconciliation between non-GAAP projections and the most directly comparable measures in accordance with GAAP without unreasonable efforts because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items required for the reconciliation. The items include, but are not limited to, acquisition-related expenses, restructuring expenses and benefits, asset impairments, legal settlements, and other gains and losses. These items are uncertain, depend on various factors, and could have a material impact on GAAP reported results.

Conference Call Information

Amneal will host a conference call and live webcast at 8:30 am Eastern Time today, March 1, 2024, to discuss its results. The live webcast and presentation will be accessible through the Investor Relations section of the Company’s website at https://investors.amneal.com . To access the call through a conference line, dial (833) 470-1428 (in the U.S.) with access code 743629. A replay of the conference call will be posted shortly after the call and will be available for seven days. For a list of toll-free international numbers, visit this website: https://www.netroadshow.com/events/global-numbers?confId=52762 .

About Amneal

Amneal Pharmaceuticals, Inc. (Nasdaq: AMRX), headquartered in Bridgewater, NJ, is a fully integrated global pharmaceutical company. We make healthy possible through the development, manufacturing, and distribution of a diverse portfolio of over 270 pharmaceutical products, primarily within the United States. In its Generics segment, the Company is expanding across a broad range of complex product categories and therapeutic areas, including injectables and biosimilars. In its Specialty segment, Amneal has a growing portfolio of branded pharmaceuticals focused primarily on central nervous system and endocrine disorders, with a pipeline focused on unmet needs. Through its AvKARE segment, the Company is a distributor of pharmaceuticals and other products for the U.S. federal government, retail, and institutional markets. For more information, please visit www.amneal.com .

Cautionary Statement on Forward-Looking Statements

Certain statements contained herein, regarding matters that are not historical facts, may be forward-looking statements (as defined in the U.S. Private Securities Litigation Reform Act of 1995). Such forward-looking statements include statements regarding management’s intentions, plans, beliefs, expectations, financial results, or forecasts for the future, including among other things: discussions of future operations; expected or estimated operating results and financial performance; and statements regarding our positioning, including our ability to drive sustainable long-term growth, and other non-historical statements. Words such as “plans,” “expects,” “will,” “anticipates,” “estimates,” and similar words, or the negatives thereof, are intended to identify estimates and forward-looking statements.

The reader is cautioned not to rely on these forward-looking statements. These forward-looking statements are based on current expectations of future events, including with respect to future market conditions, company performance and financial results, operational investments, business prospects, new strategies and growth initiatives, the competitive environment, and other events. If the underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the expectations and projections of the Company.

Such risks and uncertainties include, but are not limited to: our ability to successfully develop, license, acquire and commercialize new products on a timely basis; the competition we face in the pharmaceutical industry from brand and generic drug product companies, and the impact of that competition on our ability to set prices; our ability to obtain exclusive marketing rights for our products; our revenues are derived from the sales of a limited number of products, a substantial portion of which are through a limited number of customers; the impact of a prolonged business interruption within our supply chain; the continuing trend of consolidation of certain customer groups; our dependence on third-party suppliers and distributors for raw materials for our products and certain finished goods; legal, regulatory and legislative efforts by our brand competitors to deter competition from our generic alternatives; our dependence on information technology systems and infrastructure and the potential for cybersecurity incidents; our ability to attract, hire and retain highly skilled personnel; risks related to federal regulation of arrangements between manufacturers of branded and generic products; our reliance on certain licenses to proprietary technologies from time to time; the significant amount of resources we expend on research and development; the risk of claims brought against us by third parties; risks related to changes in the regulatory environment, including U.S. federal and state laws related to healthcare fraud abuse and health information privacy and security and changes in such laws; changes to Food and Drug Administration product approval requirements; the impact of healthcare reform and changes in coverage and reimbursement levels by governmental authorities and other third-party payers; our dependence on third-party agreements for a portion of our product offerings; our substantial amount of indebtedness and our ability to generate sufficient cash to service our indebtedness in the future, and the impact of interest rate fluctuations on such indebtedness; our potential expansion into additional international markets subjecting us to increased regulatory, economic, social and political uncertainties, including recent events affecting the financial services industry; our ability to identify, make and integrate acquisitions or investments in complementary businesses and products on advantageous terms; the impact of global economic, political or other catastrophic events; our obligations under a tax receivable agreement may be significant; and the high concentration of ownership of our class A common stock and the fact that we are controlled by the Amneal Group. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the Company’s filings with the Securities and Exchange Commission, including under Item 1A, “Risk Factors” in the Company’s most recent Annual Report on Form 10-K and in its subsequent reports on Forms 10-Q and 8-K. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. Forward-looking statements included herein speak only as of the date hereof and we undertake no obligation to revise or update such statements to reflect the occurrence of events or circumstances after the date hereof.

Non-GAAP Financial Measures

This release includes certain non-GAAP financial measures, including EBITDA, adjusted EBITDA, adjusted net income and adjusted diluted EPS, which are intended as supplemental measures of the Company’s performance that are not required by or presented in accordance with GAAP. Adjusted diluted EPS reflects diluted earnings per share based on adjusted net income, which is net loss adjusted to (A) exclude (i) non-cash interest, (ii) GAAP provision for (benefit from) income taxes, (iii) amortization, (iv) stock-based compensation, (v) acquisition, site closure expenses, and idle facility expenses, (vi) restructuring and other charges, (vii) loss on refinancing, (viii) charges related to certain legal matters, including interest, net, (ix) asset impairment charges, (x) regulatory approval milestone, (xi) change in fair value of contingent consideration, (xii) insurance recoveries for property losses and associated expenses (xiii) increase in tax receivable agreement liability, (xiv) system implementation expense, (xv) reorganization expenses, (xvi) other and (xvii) net income attributable to non-controlling interests not associated with class B common stock, and (B) include non-GAAP provision for income taxes. Non-GAAP adjusted diluted EPS was calculated assuming (i) the weighted average diluted shares outstanding of class A common stock and (ii) as if all shares of class B common stock were converted to shares of class A common stock as of January 1, 2022.

Management uses these non-GAAP measures internally to evaluate and manage the Company’s operations and to better understand its business because they facilitate a comparative assessment of the Company’s operating performance relative to its performance based on results calculated under GAAP. These non-GAAP measures also isolate the effects of some items that vary from period to period without any correlation to core operating performance and eliminate certain charges that management believes do not reflect the Company’s operations and underlying operational performance. The compensation committee of the Company’s board of directors also uses certain of these measures to evaluate management’s performance and set its compensation. The Company believes that these non-GAAP measures also provide useful information to investors regarding certain financial and business trends relating to the Company’s financial condition and operating results facilitates an evaluation of the financial performance of the Company and its operations on a consistent basis. Providing this information therefore allows investors to make independent assessments of the Company’s financial performance, results of operations and trends while viewing the information through the eyes of management.

These non-GAAP measures are subject to limitations. The non-GAAP measures presented in this release may not be comparable to similarly titled measures used by other companies because other companies may not calculate one or more in the same manner. Additionally, the non-GAAP performance measures exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements; do not reflect changes in, or cash requirements for, working capital needs; and do not reflect interest expense, or the requirements necessary to service interest or principal payments on debt. Further, our historical adjusted results are not intended to project our adjusted results of operations or financial position for any future period. To compensate for these limitations, management presents and considers these non-GAAP measures in conjunction with the Company’s GAAP results; no non-GAAP measure should be considered in isolation from or as alternatives to any measure determined in accordance with GAAP. Readers should review the reconciliations included below, and should not rely on any single financial measure to evaluate the Company’s business.

A reconciliation of each historical non-GAAP measure to the most directly comparable GAAP measure is set forth below.

Amneal Pharmaceuticals, Inc.
Consolidated Statements of Operations
(unaudited; in thousands, except per share amounts)

Three Months Ended December 31,

Year Ended
December 31,

2023

2022

2023

2022

Net revenue

$

616,981

$

609,759

$

2,393,607

$

2,212,304

Cost of goods sold

427,154

394,371

1,573,042

1,427,596

Gross profit

189,827

215,388

820,565

784,708

Selling, general and administrative

109,003

102,158

429,675

399,700

Research and development

46,086

41,907

163,950

195,688

In-process research and development impairment charges

30,800

12,970

30,800

12,970

Intellectual property legal development expenses

478

1,362

3,828

4,358

Acquisition, transaction-related and integration (credit) expenses

(5

)

709

Restructuring and other charges

114

109

1,749

1,421

Change in fair value of contingent consideration

(13,710

)

2,226

(14,497

)

731

Insurance recoveries for property losses and associated expenses, net

(1,911

)

Charges related to legal matters, net

2,863

20,094

1,824

269,930

Other operating income

(1,465

)

(1,138

)

(3,960

)

Operating income (loss)

14,193

36,032

204,374

(94,928

)

Other (expense) income:

Interest expense, net

(59,548

)

(47,028

)

(210,629

)

(158,377

)

Foreign exchange gain (loss), net

2,288

569

1,671

(12,364

)

Loss on refinancing

(40,805

)

(40,805

)

(291

)

Other income, net

411

2,772

5,119

17,833

Total other expense, net

(97,654

)

(43,687

)

(244,644

)

(153,199

)

Loss before income taxes

(83,461

)

(7,655

)

(40,270

)

(248,127

)

Provision for (benefit from) income taxes

9,883

(1,797

)

8,452

6,662

Net loss

(93,344

)

(5,858

)

(48,722

)

(254,789

)

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

(5,305

)

1,525

(35,271

)

125,241

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

(98,649

)

(4,333

)

(83,993

)

(129,548

)

Accretion of redeemable non-controlling interest

(438

)

Net loss attributable to Amneal Pharmaceuticals, Inc.

$

(98,649

)

$

(4,333

)

$

(83,993

)

$

(129,986

)

Net loss per share attributable to Amneal Pharmaceuticals, Inc.'s Class A common stockholders:

Basic and diluted

$

(0.40

)

$

(0.03

)

$

(0.48

)

$

(0.86

)

Weighted-average common shares outstanding:

Basic and diluted

243,711

151,476

176,136

150,944

Amneal Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets
(unaudited; in thousands)

December 31,
2023

December 31,
2022

Assets

Current assets:

Cash and cash equivalents

$

91,542

$

25,976

Restricted cash

7,565

9,251

Trade accounts receivable, net

613,732

741,791

Inventories

581,384

530,735

Prepaid expenses and other current assets

82,685

103,565

Related party receivables

955

500

Total current assets

1,377,863

1,411,818

Property, plant and equipment, net

447,574

469,815

Goodwill

598,629

598,853

Intangible assets, net

890,423

1,096,093

Operating lease right-of-use assets

30,329

38,211

Operating lease right-of-use assets - related party

12,954

17,910

Financing lease right-of-use assets

59,280

63,424

Other assets

55,517

103,217

Total assets

$

3,472,569

$

3,799,341

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable and accrued expenses

$

534,662

$

538,199

Current portion of liabilities for legal matters

76,988

107,483

Revolving credit facility

179,000

60,000

Current portion of long-term debt, net

34,125

29,961

Current portion of operating lease liabilities

9,207

8,321

Current portion of operating lease liabilities - related party

2,825

2,869

Current portion of financing lease liabilities

2,467

3,488

Related party payables - short term

7,321

2,479

Total current liabilities

846,595

752,800

Long-term debt, net

2,386,004

2,591,981

Note payable - related party

41,447

39,706

Operating lease liabilities

24,095

32,126

Operating lease liabilities - related party

12,787

15,914

Financing lease liabilities

58,566

60,769

Related party payable - long term

11,776

9,649

Other long-term liabilities

29,995

87,468

Total long-term liabilities

2,564,670

2,837,613

Redeemable non-controlling interests

41,293

24,949

Total stockholders' equity

20,011

183,979

Total liabilities and stockholders' equity

$

3,472,569

$

3,799,341

Amneal Pharmaceuticals, Inc.
Consolidated Statements of Cash Flows
(unaudited; in thousands)

Years Ended December 31,

2023

2022

Cash flows from operating activities:

Net loss

$

(48,722

)

$

(254,789

)

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

Depreciation and amortization

229,400

240,175

Unrealized foreign currency (gain) loss

(768

)

15,190

Amortization of debt issuance costs and discount

8,182

8,595

Loss on refinancing

40,805

291

Intangible asset impairment charges

66,932

24,081

Change in fair value of contingent consideration

(14,497

)

731

Stock-based compensation

26,822

31,847

Inventory provision

74,686

51,096

Insurance recoveries for property and equipment losses

(1,000

)

Other operating charges and credits, net

9,923

8,828

Changes in assets and liabilities:

Trade accounts receivable, net

126,289

(79,717

)

Inventories

(126,182

)

(102,396

)

Prepaid expenses, other current assets and other assets

37,814

9,882

Related party receivables

(490

)

646

Accounts payable, accrued expenses and other liabilities

(94,446

)

109,568

Related party payables

9,829

2,072

Net cash provided by operating activities

345,577

65,100

Cash flows from investing activities:

Purchases of property, plant and equipment

(43,216

)

(46,407

)

Acquisition of intangible assets

(22,388

)

(41,800

)

Deposits for future acquisition of property, plant, and equipment

(3,585

)

(2,388

)

Acquisition of business

(84,714

)

Proceeds from insurance recoveries for property and equipment losses

1,000

Net cash used in investing activities

(69,189

)

(174,309

)

Cash flows from financing activities:

Payments of deferred financing and refinancing costs

(162,415

)

(1,663

)

Payments of principal on debt, revolving credit facility, financing leases and other

(414,080

)

(123,272

)

Proceeds from issuance of debt

217,732

Borrowings on revolving credit facility

219,000

85,000

Proceeds from exercise of stock options

451

662

Employee payroll tax withholding on restricted stock unit vesting

(2,378

)

(3,571

)

Payments of deferred consideration for acquisitions - related party

(44,498

)

Acquisition of redeemable non-controlling interests

(1,722

)

Tax distributions to non-controlling interest

(70,883

)

(17,556

)

Net cash used in financing activities

(212,573

)

(106,620

)

Effect of foreign exchange rate on cash

65

(5,683

)

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

63,880

(221,512

)

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

35,227

256,739

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

$

99,107

$

35,227

Cash and cash equivalents - end of period

$

91,542

$

25,976

Restricted cash - end of period

$

7,565

$

9,251

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

$

99,107

$

35,227

Amneal Pharmaceuticals, Inc.
Non-GAAP Reconciliations
(unaudited, in thousands)

Reconciliation of Net Loss to EBITDA and Adjusted EBITDA

Three Months Ended December 31,

Year Ended December 31,

2023

2022

2023

2022

Net loss

$

(93,344

)

$

(5,858

)

$

(48,722

)

$

(254,789

)

Adjusted to add (deduct):

Interest expense, net

59,548

47,028

210,629

158,377

Provision for (benefit from) income taxes

9,883

(1,797

)

8,452

6,662

Depreciation and amortization

56,933

61,056

229,400

240,175

EBITDA (Non-GAAP)

$

33,020

$

100,429

$

399,759

$

150,425

Adjusted to add (deduct):

Stock-based compensation expense

5,974

7,831

26,822

31,847

Acquisition, site closure, and idle facility expenses (1)

1,186

3,452

7,017

15,682

Restructuring and other charges

114

109

1,650

1,378

Loss on refinancing

40,805

40,805

291

Charges related to legal matters, net (2)

2,863

20,094

11,824

269,930

Asset impairment charges (3)

67,228

18,551

70,107

26,909

Foreign exchange (gain) loss

(2,288

)

(569

)

(1,671

)

12,364

Change in fair value of contingent consideration

(13,710

)

2,226

(14,497

)

731

Insurance recoveries for property losses and

associated expenses

(1,911

)

Regulatory approval milestone

5,000

Increase in tax receivable agreement liability

1,217

631

3,124

631

System implementation expense (4)

934

727

5,363

2,818

Reorganization expenses (5)

4,630

5,927

393

Other

175

551

1,984

(2,378

)

Adjusted EBITDA (Non-GAAP)

$

142,148

$

154,032

$

558,214

$

514,110

Amneal Pharmaceuticals, Inc.

Non-GAAP Reconciliations

(unaudited; in thousands, except per share amounts)

Reconciliation of Net Loss to Adjusted Net Income and Calculation of Adjusted Diluted Earnings per Share

Three Months Ended December 31,

Year Ended December 31,

2023

2022

2023

2022

Net loss

$

(93,344

)

$

(5,858

)

$

(48,722

)

$

(254,789

)

Adjusted to add (deduct):

Non-cash interest

1,016

1,885

7,017

7,715

GAAP provision for (benefit from) income taxes

9,883

(1,797

)

8,452

6,662

Amortization

39,208

42,851

157,219

164,997

Stock-based compensation expense

5,974

7,831

26,822

31,847

Acquisition, site closure expenses, and idle facility

expenses (1)

1,186

3,452

7,017

15,682

Restructuring and other charges

114

109

1,650

1,378

Loss on refinancing

40,805

40,805

291

Charges related to legal matters, including interest,

net (2)

3,580

21,564

14,784

273,226

Asset impairment charges (3)

67,143

18,485

70,015

26,843

Regulatory approval milestone

5,000

Change in fair value of contingent consideration

(13,710

)

2,226

(14,497

)

731

Insurance recoveries for property losses and

associated expenses

(1,911

)

Increase in tax receivable agreement liability

1,217

631

3,124

631

System implementation expense (4)

934

727

5,363

2,818

Reorganization expenses (5)

4,630

5,927

393

Other

323

552

2,466

(2,235

)

Provision for income taxes (6)

(17,563

)

(15,297

)

(60,014

)

(56,450

)

Net income attributable to non-controlling interests

not associated with our class B common stock

(7,831

)

(5,958

)

(29,873

)

(15,121

)

Adjusted net income (Non-GAAP)

$

43,565

$

71,403

$

197,555

$

207,708

Weighted average diluted shares outstanding (Non-GAAP) (7)

314,986

305,145

310,234

304,598

Adjusted diluted earnings per share (Non-GAAP)

$

0.14

$

0.23

$

0.64

$

0.68

Amneal Pharmaceuticals, Inc.
Non-GAAP Reconciliations
(unaudited)

Explanations for Reconciliations of Net Loss to EBITDA and Adjusted EBITDA and
Net Loss to Adjusted Net Income and Calculation of Adjusted Diluted Earnings per Share

(1)

Acquisition, site closure, and idle facility expenses for the three months and year ended December 31, 2023 primarily included site closure costs associated with the planned cessation of manufacturing at our Hauppauge, NY facility. Acquisition, site closure, and idle facility expenses for the three months ended December 31, 2022 primarily included site closure costs associated with the planned cessation of manufacturing at our Hauppauge, NY facility. Acquisition, site closure, and idle facility expenses for the year ended December 31, 2022 primarily included (i) transaction and integration costs associated with the acquisition of the baclofen franchise from certain entities affiliated with Saol International Limited, which closed on February 9, 2022; (ii) integration costs associated with the acquisition of Puniska Healthcare Pvt. Ltd., which closed on November 2, 2021; and (iii) site closure costs associated with the planned cessation of manufacturing at our Hauppauge, NY facility.

(2)

For the three months ended December 31, 2023, charges related to legal matters, net were primarily comprised of a settlement of commercial antitrust litigation. For the year ended December 31, 2023, charges related to legal matters, net were primarily comprised of (i) charges associated with civil prescription opioid litigation, (ii) a settlement of a customer claim, (iii) a settlement of commercial antitrust litigation, and (iv) a settlement of a stockholder derivative lawsuit. For the three months ended December 31, 2022, charges related to legal matters, net primarily related to prescription opioid litigation. For the year ended December 31, 2022, charges related to legal matters, net, primarily included charges for (i) the settlements of the Opana ER® antitrust litigation and (ii) prescription opioid litigation, offset in part by insurance recoveries associated with class action shareholder lawsuits.

(3)

Asset impairment charges for the three months and year ended December 31, 2023 were primarily associated with the write-offs of intangibles assets. Asset impairment charges for the three months and year ended December 31, 2022 were associated with the write-offs of intangibles assets and equipment.

(4)

System implementation expense for the three months ended December 31, 2023 was primarily for the implementation of sales deduction software and indirect procurement software. System implementation expense for the three months ended December 31, 2022 was primarily for indirect procurement software. System implementation expense for the years ended December 31, 2023 and 2022 was primarily for the implementation of indirect procurement software, sales deduction software, and financial statement consolidation software.  System implementation expenses were associated with the further integration of our acquired businesses.

(5)

On November 7, 2023, the Company implemented a plan to reorganize and simplify its corporate structure by eliminating its umbrella partnership-C-corporation structure and converting to a more traditional C-corporation structure, whereby all stockholders hold their voting and economic interests directly through the public company (“Reorganization”). For the three months ended December 31, 2023 and the years ended December 31, 2023 and 2022, Reorganization expenses were comprised of professional fees.

(6)

The non-GAAP effective tax rates for the three months and year ended December 31, 2023 were 28.7% and 23.3%, respectively. The non-GAAP effective tax rates for the three months and year ended December 31, 2022 were 17.6% and 21.4%, respectively.

(7)

Weighted average diluted shares outstanding consisted of class A common stock and class B common stock, as if all shares of class B common stock were converted to class A common stock as of January 1, 2022.

Amneal Pharmaceuticals, Inc.
Generics Segment

Reconciliation of GAAP to Non-GAAP Operating Results (1)
(unaudited; $ in thousands)

Three Months Ended December 31, 2023

Three Months Ended December 31, 2022

As Reported

Adjustments

Non-GAAP

As Reported

Adjustments

Non-GAAP

Net revenue

$

363,037

$

$

363,037

$

399,165

$

$

399,165

Cost of goods sold (2)

221,861

(14,167

)

207,694

249,795

(16,875

)

232,920

Gross profit

141,176

14,167

155,343

149,370

16,875

166,245

Gross margin %

38.9

%

42.8

%

37.4

%

41.6

%

Selling, general and administrative (3)

30,734

(1,849

)

28,885

25,371

(1,319

)

24,052

Research and development (4)

33,663

(654

)

33,009

38,127

(1,112

)

37,015

In-process research and development impairment charges

26,500

(26,500

)

12,970

(12,970

)

Intellectual property legal development expenses

468

468

1,332

1,332

Acquisition, transaction-related and integration expenses

1

(1

)

Restructuring and other charges

108

(108

)

Charges related to legal matters, net

2,863

(2,863

)

19,958

(19,958

)

Other operating income

(1,465

)

(1,465

)

Operating income

$

46,948

$

46,033

$

92,981

$

52,968

$

52,343

$

105,311

(1)

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

(2)

Adjustments for the three months ended December 31, 2023 and 2022, respectively, were comprised of stock-based compensation expense ($0.6 million and $1.2 million), amortization expense ($10.7 million and $12.4 million), site closure and idle facility expenses ($0.7 million and $2.7 million), asset impairment charges ($2.3 million and $0.3 million), and other ($(0.1) million and $0.3 million).

(3)

Adjustments for the three months ended December 31, 2023 and 2022, respectively, were comprised of stock-based compensation expense ($1.2 million and $0.5 million) and site closure costs ($0.6 million and $0.8 million).

(4)

Adjustments for the three months ended December 31, 2023 and 2022 were comprised of stock-based compensation expense.

Amneal Pharmaceuticals, Inc.

Generics Segment

Reconciliation of GAAP to Non-GAAP Operating Results (1)

(unaudited; $ in thousands)

Year Ended December 31, 2023

Year Ended December 31, 2022

As Reported

Adjustments

Non-GAAP

As Reported

Adjustments

Non-GAAP

Net revenue

$

1,471,401

$

$

1,471,401

$

1,432,073

$

$

1,432,073

Cost of goods sold (2)

913,869

(56,450

)

857,419

896,031

(70,080

)

825,951

Gross profit

557,532

56,450

613,982

536,042

70,080

606,122

Gross margin %

37.9

%

41.7

%

37.4

%

42.3

%

Selling, general and administrative (3)

119,912

(7,411

)

112,501

109,781

(9,960

)

99,821

Research and development (4)

132,233

(2,555

)

129,678

167,509

(4,819

)

162,690

In-process research and development impairment charges

26,500

(26,500

)

12,970

(12,970

)

Intellectual property legal development expenses

3,708

3,708

4,251

4,251

Acquisition, transaction-related and integration expenses

25

(25

)

Restructuring and other charges

211

(112

)

99

821

(821

)

Insurance recoveries for property losses and associated expenses, net

(1,911

)

1,911

(Credit) charges related to legal matters, net

(64

)

(9,936

)

(10,000

)

22,400

(22,400

)

Other operating income

(1,138

)

(1,138

)

(3,960

)

(3,960

)

Operating income

$

276,170

$

102,964

$

379,134

$

224,156

$

119,164

$

343,320

(1)

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

(2)

Adjustments for the years ended December 31, 2023 and 2022, respectively, were comprised of stock-based compensation expense ($3.5 million and $4.8 million), amortization expense ($42.8 million and $44.2 million), site closure and idle facility expenses ($4.9 million and $12.5 million), asset impairment charges ($5.2 million and $8.6 million), and other ($0.1 million and none).

(3)

Adjustments for the years ended December 31, 2023 and 2022, respectively, were comprised of stock-based compensation expense ($5.2 million, and $2.5 million), site closure expenses ($2.2 million and $2.5 million), and a regulatory approval milestone (none and $5.0 million).

(4)

Adjustments for the years ended December 31, 2023 and 2022 were comprised of stock-based compensation expense.

Amneal Pharmaceuticals, Inc.

Specialty Segment

Reconciliation of GAAP to Non-GAAP Operating Results

(unaudited; $ in thousands)

Three Months Ended December 31, 2023

Three Months Ended December 31, 2022

As Reported

Adjustments

Non-GAAP

As Reported

Adjustments

Non-GAAP

Net revenue

$

104,481

$

$

104,481

$

102,550

$

$

102,550

Cost of goods sold (1)

79,023

(59,940

)

19,083

52,069

(32,652

)

19,417

Gross profit

25,458

59,940

85,398

50,481

32,652

83,133

Gross margin %

24.4

%

81.7

%

49.2

%

81.1

%

Selling, general and administrative (2)

20,243

(39

)

20,204

20,259

(119

)

20,140

Research and development (2)

12,423

(451

)

11,972

3,780

(372

)

3,408

In-process research and development impairment charges

4,300

(4,300

)

Intellectual property legal development expenses

10

10

30

30

Acquisition, transaction-related and integration expenses

2

(2

)

Restructuring and other charges

92

(92

)

Change in fair value of contingent consideration (3)

(13,710

)

13,710

2,226

(2,226

)

Operating income

$

2,100

$

51,112

$

53,212

$

24,184

$

35,371

$

59,555

(1)

Adjustments for the three months ended December 31, 2023 and 2022, respectively, were comprised of amortization expense ($25.8 million and $27.4 million) and asset impairment charges ($34.1 million and $5.3 million).

(2)

Adjustments for the three months ended December 31, 2023 and 2022 were comprised of stock-based compensation expense.

(3)

Contingent consideration was recorded in connection with the acquisitions of (i) the baclofen franchise from certain entities affiliated with Saol International Limited and (ii) Kashiv Specialty Pharmaceuticals, LLC.

Amneal Pharmaceuticals, Inc.

Specialty Segment

Reconciliation of GAAP to Non-GAAP Operating Results

(unaudited; $ in thousands)

Year Ended December 31, 2023

Year Ended December 31, 2022

As Reported

Adjustments

Non-GAAP

As Reported

Adjustments

Non-GAAP

Net revenue

$

390,457

$

$

390,457

$

374,121

$

$

374,121

Cost of goods sold (1)

214,277

(137,811

)

76,466

182,432

(113,512

)

68,920

Gross profit

176,180

137,811

313,991

191,689

113,512

305,201

Gross margin %

45.1

%

80.4

%

51.2

%

81.6

%

Selling, general and administrative (2)

88,137

(688

)

87,449

90,031

(913

)

89,118

Research and development (2)

31,717

(1,785

)

29,932

28,179

(1,471

)

26,708

In-process research and development impairment charges

4,300

(4,300

)

Intellectual property legal development expenses

120

120

107

107

Acquisition, transaction-related and integration expenses

49

(49

)

Restructuring and other charges

1,105

(1,105

)

Change in fair value of contingent consideration (3)

(14,497

)

14,497

731

(731

)

Operating income

$

65,298

$

131,192

$

196,490

$

72,592

$

116,676

$

189,268

(1)

Adjustments for the years ended December 31, 2023 and 2022, respectively, were comprised of amortization expense ($103.7 million and $108.2 million) and asset impairment charges ($34.1 million and $5.3 million).

(2)

Adjustments for the years ended December 31, 2023 and 2022 were comprised of stock-based compensation expense.

(3)

Contingent consideration was recorded in connection with the acquisitions of (i) the baclofen franchise from certain entities affiliated with Saol International Limited and (ii) Kashiv Specialty Pharmaceuticals, LLC.

Amneal Pharmaceuticals, Inc.

AvKARE Segment

Reconciliation of GAAP to Non-GAAP Operating Results (1)

(unaudited; $ in thousands)

Three Months Ended December 31, 2023

Three Months Ended December 31, 2022

As Reported

Adjustments

Non-GAAP

As Reported

Adjustments

Non-GAAP

Net revenue

$

149,463

$

$

149,463

$

108,044

$

$

108,044

Cost of goods sold

126,270

126,270

92,507

92,507

Gross profit

23,193

23,193

15,537

15,537

Gross margin %

15.5

%

15.5

%

14.4

%

14.4

%

Selling, general and administrative (2)

14,073

(3,764

)

10,309

14,298

(4,932

)

9,366

Operating income

$

9,120

$

3,764

$

12,884

$

1,239

$

4,932

$

6,171

(1)

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

(2)

Adjustments for the three months ended December 31, 2023 and 2022, respectively, were comprised of amortization expense ($4.2 million and $4.9 million) and other ($(0.4) million and none).

Amneal Pharmaceuticals, Inc.

AvKARE Segment

Reconciliation of GAAP to Non-GAAP Operating Results (1)

(unaudited; $ in thousands)

Year Ended December 31, 2023

Year Ended December 31, 2022

As Reported

Adjustments

Non-GAAP

As Reported

Adjustments

Non-GAAP

Net revenue

$

531,749

$

$

531,749

$

406,110

$

$

406,110

Cost of goods sold

444,896

444,896

349,133

349,133

Gross profit

86,853

86,853

56,977

56,977

Gross margin %

16.3

%

16.3

%

14.0

%

14.0

%

Selling, general and administrative (2)

55,341

(15,373

)

39,968

53,659

(19,324

)

34,335

Operating income

$

31,512

$

15,373

$

46,885

$

3,318

$

19,324

$

22,642

(1)

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

(2)

Adjustments for the years ended December 31, 2023 and 2022, respectively, were comprised of amortization ($16.8 million and $19.7 million) and other ($(1.4) million and $(0.4) million).

Anthony DiMeo
Head of Investor Relations
anthony.dimeo@amneal.com

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