Amneal Reports Second Quarter 2023 Financial Results

2023-08-04

财报

Q2 2023 Net Revenue of $599 million; GAAP Net Income of $12 million; Diluted EPS of $0.08 Q2 2023 Adjusted Net Income(1) of $57 million; Adjusted EBITDA (1) of $146 million; Adjusted Diluted EPS (1) of $0.19 Raising 2023 Full Year Guidance BRIDGEWATER, N.J.--(BUSINESS WIRE)-- Amneal Pharmaceuticals, Inc. (NYSE: AMRX) (“Amneal” or the “Company”) announced its results today for the second quarter ended June 30, 2023. “We are pleased to raise our full year 2023 guidance following another strong quarter. Our momentum in the first half of the year underscores the solid execution of our strategy and ability to drive continued growth across our diversified portfolio. We expect many key catalysts ahead, including complex generics launches, an expanded injectables portfolio, strong biosimilars uptake, continued specialty growth, expansion across AvKARE distribution channels, and an emerging presence internationally. As one of the largest domestic pharmaceutical manufacturers, we are focused on doing our part in addressing the ongoing drug shortages in the U.S. market. As we accelerate growth and profitability, we are also extending the reach and impact of Amneal in making essential medicines more accessible for patients around the world,” said Chirag and Chintu Patel, Co-Chief Executive Officers. Net revenue in the second quarter of 2023 was $599 million, an increase of 7% compared to $559 million in the second quarter of 2022. The increase was driven by Generics growth due to the durability of our diversified, complex portfolio and new product launches, including biosimilars, as well as continued expansion across AvKARE, with solid Specialty revenue performance. Net income attributable to Amneal Pharmaceuticals, Inc. was $12 million in the second quarter of 2023 compared to a net loss of $121 million in the second quarter of 2022. Adjusted EBITDA(1) in the second quarter of 2023 was $146 million, an increase of 9% compared to the second quarter of 2022, reflective of strong revenue performance, durable adjusted gross margins and operating expense leverage. Diluted EPS in the second quarter of 2023 was $0.08 compared to a loss of $0.80 for the second quarter of 2022. Adjusted diluted EPS(1) in the second quarter of 2023 was $0.19, in line with the second quarter of 2022. (1) See “Non-GAAP Financial Measures” below. Raising Full Year 2023 Guidance The Company is raising its previously provided full year 2023 guidance. Updated 2023 Guidance Prior Full Year 2023 Guidance Net revenue $2.30 billion - $2.40 billion $2.25 billion - $2.35 billion Adjusted EBITDA (1) $525 million - $540 million $500 million - $530 million Adjusted diluted EPS (2) $0.45 - $0.55 $0.40 - $0.50 Operating cash flow (3) $220 million - $250 million $200 million - $230 million Capital expenditures $50 million - $60 million $50 million - $60 million Weighted average diluted shares outstanding (4) Approximately 307 million Approximately 307 million (1) Includes 100% of EBITDA from the AvKARE acquisition. See also “Non-GAAP Financial Measures” below. (2) Accounts for 35% non-controlling interest in AvKARE. See also “Non-GAAP Financial Measures” below. (3) Represents cash provided by operating activities. Guidance does not contemplate one time and non-recurring items such as legal settlements and other discrete items. (4) Assumes the weighted average diluted shares outstanding of class A and class B common stock under the if-converted method. Amneal’s 2023 estimates are based on management’s current expectations, including with respect to prescription trends, pricing levels, the timing of future product launches, the costs incurred and benefits realized of restructuring activities, and our long-term strategy. The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company cannot provide a reconciliation between non-GAAP projections and the most directly comparable measures in accordance with GAAP without unreasonable efforts because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items required for the reconciliation. The items include, but are not limited to, acquisition-related expenses, restructuring expenses and benefits, asset impairments, legal settlements, and other gains and losses. These items are uncertain, depend on various factors, and could have a material impact on GAAP reported results. Conference Call Information Amneal will host a conference call and live webcast at 8:30 am Eastern Time on August 4, 2023 to discuss its results. The live webcast and presentation will be accessible through the Investor Relations section of the Company’s website at . To access the call through a conference line, dial 1 (833) 470-1428 (in the U.S.) with access code 977620. A replay of the conference call will be posted shortly after the call and will be available for seven days. To access the replay, dial 1 (866) 813-9403 (in the U.S.) with access code 301025. For a list of toll-free international numbers, visit this website: . About Amneal Amneal Pharmaceuticals, Inc. (NYSE: AMRX), headquartered in Bridgewater, NJ, is a fully integrated global pharmaceuticals company. We make healthy possible through the development, manufacturing, and distribution of a diverse portfolio of approximately 270 generic and specialty pharmaceuticals, 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 . 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, including international expansion; expected or estimated operating results and financial performance; the Company’s growth prospects and opportunities as well as its strategy for growth; product development and launches; the successful commercialization and market acceptance of new products, and other non-historical statements. Words such as “plans,” “expects,” “will,” “anticipates,” “estimates,” and similar words, or the negatives thereof, are intended to identify estimates and forward-looking statements. The reader is cautioned not to rely on these forward-looking statements. These forward-looking statements are based on current expectations of future events, including with respect to future market conditions, company performance and financial results, operational investments, business prospects, new strategies and growth initiatives, the competitive environment, and other events. If the underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the expectations and projections of the Company. Such risks and uncertainties include, but are not limited to: our ability to successfully develop, license, acquire and commercialize new products on a timely basis; the competition we face in the pharmaceutical industry from brand and generic drug product companies, and the impact of that competition on our ability to set prices; our ability to obtain exclusive marketing rights for our products; our ability to manage our growth through acquisitions and otherwise; our revenues are derived from the sales of a limited number of products, a substantial portion of which are through a limited number of customers; the continuing trend of consolidation of certain customer groups; our dependence on third-party suppliers and distributors for raw materials for our products and certain finished goods; our substantial amount of indebtedness and our ability to generate sufficient cash to service our indebtedness in the future, and the impact of interest rate fluctuations on such indebtedness; our ability to secure satisfactory terms when negotiating a refinancing or other new indebtedness; our dependence on third-party agreements for a portion of our product offerings; legal, regulatory and legislative efforts by our brand competitors to deter competition from our generic alternatives; risks related to federal regulation of arrangements between manufacturers of branded and generic products; our reliance on certain licenses to proprietary technologies from time to time; the significant amount of resources we expend on research and development; the risk of product liability and other claims against us by consumers and other third parties; risks related to changes in the regulatory environment, including U.S. federal and state laws related to healthcare fraud abuse and health information privacy and security and changes in such laws; changes to Food and Drug Administration product approval requirements; the impact of healthcare reform and changes in coverage and reimbursement levels by governmental authorities and other third-party payers; our potential expansion into additional international markets subjecting us to increased regulatory, economic, social and political uncertainties, 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 ability to attract, hire and retain highly skilled personnel; our obligations under a tax receivable agreement may be significant; and the high concentration of ownership of our Class A Common Stock and the fact that we are controlled by the Amneal Group. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the Company’s filings with the Securities and Exchange Commission, including under Item 1A, “Risk Factors” in the Company’s most recent Annual Report on Form 10-K and in its subsequent reports on Forms 10-Q and 8-K. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. Forward-looking statements included herein speak only as of the date hereof and we undertake no obligation to revise or update such statements to reflect the occurrence of events or circumstances after the date hereof. Non-GAAP Financial Measures This release includes certain non-GAAP financial measures, including EBITDA, adjusted EBITDA, 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 income (loss) adjusted to (A) exclude (i) non-cash interest, (ii) GAAP (benefit from) provision for income taxes, (iii) amortization, (iv) stock-based compensation, (v) acquisition, site closure expenses, and idle facility expenses, (vi) restructuring and other charges, (vii) loss on refinancing, (viii) charges related to legal matters, including interest, net, (ix) asset impairment charges, (x) regulatory approval milestone, (xi) change in fair value of contingent consideration, (xii) insurance recoveries for property losses and associated expenses (xiii) other and (xiv) net income attributable to non-controlling interests not associated with class B common stock, and (B) include non-GAAP provision for income taxes. Non-GAAP adjusted EPS is calculated assuming the weighted average diluted shares outstanding of class A and class B common stock under the if-converted method. 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 June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net revenue $ 599,046 $ 559,355 $ 1,156,586 $ 1,056,988 Cost of goods sold 379,025 358,836 758,379 681,898 Gross profit 220,021 200,519 398,207 375,090 Selling, general and administrative 105,570 98,806 207,666 197,471 Research and development 37,799 50,748 76,489 103,546 Intellectual property legal development expenses 820 821 2,464 1,585 Acquisition, transaction-related and integration expenses — 241 — 675 Restructuring and other charges 82 — 592 731 Change in fair value of contingent consideration (6,364 ) (270 ) (3,907 ) (70 ) Insurance recoveries for property losses and associated expenses — (1,911 ) — (1,911 ) Charges related to legal matters, net 2,017 251,877 1,581 249,551 Other operating expense (income) 13 (1,175 ) (1,211 ) (1,175 ) Operating income (loss) 80,084 (198,618 ) 114,533 (175,313 ) Other (expense) income: Interest expense, net (50,857 ) (35,623 ) (100,172 ) (68,958 ) Foreign exchange gain (loss), net 421 (5,429 ) 2,322 (7,442 ) Other income, net 12 6,939 3,551 9,061 Total other expense, net (50,424 ) (34,113 ) (94,299 ) (67,339 ) Income (loss) before income taxes 29,660 (232,731 ) 20,234 (242,652 ) (Benefit from) provision for income taxes (23 ) 7,350 645 3,889 Net income (loss) 29,683 (240,081 ) 19,589 (246,541 ) Less: Net (income) loss attributable to non-controlling interests (17,766 ) 119,273 (14,615 ) 124,015 Net income (loss) attributable to Amneal Pharmaceuticals, Inc. before accretion of redeemable non-controlling interest 11,917 (120,808 ) 4,974 (122,526 ) Accretion of redeemable non-controlling interest — — — (438 ) Net income (loss) attributable to Amneal Pharmaceuticals, Inc. $ 11,917 $ (120,808 ) $ 4,974 $ (122,964 ) Net income (loss) per share attributable to Amneal Pharmaceuticals, Inc.'s class A common stockholders: Basic $ 0.08 $ (0.80 ) $ 0.03 $ (0.82 ) Diluted $ 0.08 $ (0.80 ) $ 0.03 $ (0.82 ) Weighted-average common shares outstanding: Basic 153,738 150,993 152,928 150,445 Diluted 154,887 150,993 154,575 150,445 Amneal Pharmaceuticals, Inc. Condensed Consolidated Balance Sheets (Unaudited; In thousands) June 30, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents $ 109,284 $ 25,976 Restricted cash 5,298 9,251 Trade accounts receivable, net 674,736 741,791 Inventories 550,558 530,735 Prepaid expenses and other current assets 81,764 103,565 Related party receivables 149 500 Total current assets 1,421,789 1,411,818 Property, plant and equipment, net 459,108 469,815 Goodwill 599,206 598,853 Intangible assets, net 1,015,376 1,096,093 Operating lease right-of-use assets 34,031 38,211 Operating lease right-of-use assets - related party 16,566 17,910 Financing lease right-of-use assets 61,570 63,424 Other assets 93,240 103,217 Total assets $ 3,700,886 $ 3,799,341 Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued expenses $ 512,719 $ 538,199 Current portion of liabilities for legal matters 77,011 107,483 Revolving credit facilities 120,000 60,000 Current portion of long-term debt, net 30,405 29,961 Current portion of operating lease liabilities 9,861 8,321 Current portion of operating lease liabilities - related party 2,992 2,869 Current portion of financing lease liabilities 3,219 3,488 Related party payables - short term 21,143 2,479 Total current liabilities 777,350 752,800 Long-term debt, net 2,549,177 2,591,981 Note payable - related party 40,560 39,706 Operating lease liabilities 28,296 32,126 Operating lease liabilities - related party 14,388 15,914 Financing lease liabilities 59,836 60,769 Related party payables - long term 9,123 9,649 Other long-term liabilities 39,282 87,468 Total long-term liabilities 2,740,662 2,837,613 Redeemable non-controlling interests 32,106 24,949 Total stockholders' equity 150,768 183,979 Total liabilities and stockholders' equity $ 3,700,886 $ 3,799,341 Amneal Pharmaceuticals, Inc. Consolidated Statements of Cash Flows (Unaudited; In thousands) Six Months Ended June 30, 2023 2022 Cash flows from operating activities: Net income (loss) $ 19,589 $ (246,541 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 115,261 117,511 Unrealized foreign currency (gain) loss (1,561 ) 8,014 Amortization of debt issuance costs and discount 4,523 4,388 Loss on refinancing - revolving credit facility — 291 Intangible asset impairment charges 1,283 5,112 Change in fair value of contingent consideration (3,907 ) (70 ) Stock-based compensation 14,157 16,327 Inventory provision 41,806 17,748 Insurance recoveries for property and equipment losses — (1,000 ) Other operating charges and credits, net 3,364 3,449 Changes in assets and liabilities: Trade accounts receivable, net 66,976 (26,561 ) Inventories (60,526 ) (65,395 ) Prepaid expenses, other current assets and other assets 31,898 (119,747 ) Related party receivables 351 (159 ) Accounts payable, accrued expenses and other liabilities (107,760 ) 273,947 Related party payables 2,913 7,508 Net cash provided by (used in) operating activities 128,367 (5,178 ) Cash flows from investing activities: Purchases of property, plant and equipment (21,691 ) (15,842 ) Saol Acquisition — (84,714 ) Acquisition of intangible assets (1,488 ) (10,000 ) Deposits for future acquisition of property, plant and equipment (842 ) (3,955 ) Proceeds from insurance recoveries for property and equipment losses — 1,000 Net cash used in investing activities (24,021 ) (113,511 ) Cash flows from financing activities: Payments of deferred financing and refinancing costs — (1,622 ) Payments of principal on debt, revolving credit facilities, financing leases and other (87,566 ) (63,010 ) Borrowings on revolving credit facilities 100,000 85,000 Proceeds from exercise of stock options — 239 Employee payroll tax withholding on restricted stock unit vesting (2,033 ) (3,291 ) Payments of deferred consideration for acquisitions - related party — (43,998 ) Acquisition of redeemable non-controlling interest — (1,722 ) Tax distributions to non-controlling interests (35,557 ) (9,917 ) Net cash used in financing activities (25,156 ) (38,321 ) Effect of foreign exchange rate on cash 165 (1,547 ) Net increase (decrease) in cash, cash equivalents, and restricted cash 79,355 (158,557 ) Cash, cash equivalents, and restricted cash - beginning of period 35,227 256,739 Cash, cash equivalents, and restricted cash - end of period $ 114,582 $ 98,182 Cash and cash equivalents - end of period $ 109,284 $ 91,979 Restricted cash - end of period 5,298 6,203 Cash, cash equivalents, and restricted cash - end of period $ 114,582 $ 98,182 Amneal Pharmaceuticals, Inc. Non-GAAP Reconciliations (Unaudited, In thousands) Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net income (loss) $ 29,683 $ (240,081 ) $ 19,589 $ (246,541 ) Adjusted to add: Interest expense, net 50,857 35,623 100,172 68,958 (Benefit from) provision for income taxes (23 ) 7,350 645 3,889 Depreciation and amortization 57,111 59,696 115,261 117,511 EBITDA (Non-GAAP) $ 137,628 $ (137,412 ) $ 235,667 $ (56,183 ) Adjusted to add (deduct): Stock-based compensation expense 6,561 8,262 14,157 16,327 Acquisition, site closure, and idle facility expenses (1) 1,579 3,173 4,280 8,762 Restructuring and other charges 82 — 493 731 Loss on refinancing — 291 — 291 Charges related to legal matters, net (2) 2,017 251,877 6,081 249,551 Asset impairment charges 1,338 5,250 2,071 5,250 Foreign exchange (gain) loss (421 ) 5,429 (2,322 ) 7,442 Change in fair value of contingent consideration (6,364 ) (270 ) (3,907 ) (70 ) Insurance recoveries for property losses and associated expenses — (1,911 ) — (1,911 ) Regulatory approval milestone — — — 5,000 Increase in tax receivable agreement liability 405 — 1,231 — Other 3,263 (104 ) 4,517 (745 ) Adjusted EBITDA (Non-GAAP) $ 146,088 $ 134,585 $ 262,268 $ 234,445 Amneal Pharmaceuticals, Inc. Non-GAAP Reconciliations (Unaudited; In thousands, except per share amounts) Reconciliation of Net Income (Loss) to Adjusted Net Income and Calculation of Adjusted Diluted Earnings Per Share Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net income (loss) $ 29,683 $ (240,081 ) $ 19,589 $ (246,541 ) Adjusted to add (deduct): Non-cash interest 2,112 1,966 3,953 3,948 GAAP (benefit from) provision for income taxes (23 ) 7,350 645 3,889 Amortization 39,309 40,216 78,920 79,368 Stock-based compensation expense 6,561 8,262 14,157 16,327 Acquisition, site closure expenses, and idle facility expenses (1) 1,579 3,173 4,280 8,762 Restructuring and other charges 82 — 493 731 Loss on refinancing — 291 — 291 Charges related to legal matters, including interest, net (2) 2,725 252,230 7,607 249,904 Asset impairment charges 1,331 5,250 2,064 5,250 Regulatory approval milestone — — — 5,000 Change in fair value of contingent consideration (6,364 ) (270 ) (3,907 ) (70 ) Insurance recoveries for property losses and associated expenses — (1,911 ) — (1,911 ) Increase in tax receivable agreement liability 405 — 1,231 — Other 3,261 (103 ) 4,664 (603 ) Provision for income taxes (3) (16,495 ) (17,451 ) (27,324 ) (27,659 ) Net income attributable to non-controlling interests not associated with our class B common stock (7,292 ) (1,889 ) (12,687 ) (4,088 ) Adjusted net income (Non-GAAP) $ 56,874 $ 57,033 $ 93,685 $ 92,598 Weighted average diluted shares outstanding (Non-GAAP) (4) 307,004 304,278 306,691 304,456 Adjusted diluted earnings per share (Non-GAAP) $ 0.19 $ 0.19 $ 0.31 $ 0.30 Amneal Pharmaceuticals, Inc. Non-GAAP Reconciliations (Unaudited; In thousands) Explanations for Reconciliations of Net Income (Loss) to EBITDA and Adjusted EBITDA and Net Income (Loss) to Adjusted Net Income and Calculation of Adjusted Diluted Earnings per Share (1) Acquisition, site closure, and idle facility expenses for the three and six months ended June 30, 2023 primarily included site closure costs associated with the planned cessation of manufacturing at our Hauppauge, NY facility. Acquisition, site closure, and idle facility expenses for the three months ended June 30, 2022 primarily included: (i) integration costs associated with the acquisition of the baclofen franchise from certain entities affiliated with Saol International Limited which closed on February 9, 2022 (the “Saol Acquisition”) and (ii) site closure costs associated with the planned cessation of manufacturing at our Hauppauge, NY facility. Acquisition, site closure, and idle facility expenses for the six months ended June 30, 2022 primarily included: (i) transaction and integration costs associated with the Saol Acquisition; (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 June 30, 2023, charges related to legal matters, net primarily related to civil prescription opioid litigation. For the six months ended June 30, 2023, charges related to legal matters, net primarily related to civil prescription opioid litigation and other legal proceedings. For the three and six months ended June 30, 2022, charges related to legal matters, net, primarily included charges for the preliminary settlement of the Opana ER® antitrust litigation, net of insurance recoveries associated with class action shareholder lawsuits. (3) The non-GAAP effective tax rates for the three and six months ended June 30, 2023 were 22.5% and 22.6%, respectively. The non-GAAP effective tax rates for the three and six months ended June 30, 2022 were 23.4% and 23.0%, respectively. (4) Weighted average diluted shares outstanding consisted of class A common stock and class B common stock under the if-converted method. Amneal Pharmaceuticals, Inc. Generics Segment Reconciliation of GAAP to Non-GAAP Operating Results (1) (Unaudited; In thousands) Three Months Ended June 30, 2023 Three Months Ended June 30, 2022 As Reported Adjustments Non-GAAP As Reported Adjustments Non-GAAP Net revenue $ 373,701 $ — $ 373,701 $ 364,895 $ — $ 364,895 Cost of goods sold (2) 225,189 (13,404 ) 211,785 228,535 (19,073 ) 209,462 Gross profit 148,512 13,404 161,916 136,360 19,073 155,433 Gross margin % 39.7 % 43.3 % 37.4 % 42.6 % Selling, general and administrative (3) 28,040 (2,597 ) 25,443 26,558 (1,200 ) 25,358 Research and development (4) 31,108 (325 ) 30,783 44,174 (1,406 ) 42,768 Intellectual property legal development expenses 801 — 801 778 — 778 Acquisition, transaction-related and integration expenses — — — 8 (8 ) — Insurance recoveries for property losses and associated expenses — — — (1,911 ) 1,911 — Charges related to legal matters, net 2,017 (2,017 ) — 483 (483 ) — Other operating loss (income) 13 — 13 (1,175 ) — (1,175 ) Operating income $ 86,533 $ 18,343 $ 104,876 $ 67,445 $ 20,259 $ 87,704 (1) Operating results for the sale of Amneal products by AvKARE were included in our Generics segment. (2) Adjustments for the three months ended June 30, 2023 and 2022, respectively, were comprised of stock-based compensation expense ($0.3 million and $1.3 million), amortization expense ($10.8 million and $10.2 million), site closure and idle facility expenses ($1.0 million and $2.4 million), and asset impairment charges ($1.3 million and $5.2 million). (3) Adjustments for the three months ended June 30, 2023 and 2022, respectively, were comprised of stock-based compensation expense ($2.0 million and $0.6 million) and site closure costs ($0.6 million in each period). (4) Adjustments for the three months ended June 30, 2023 and 2022, respectively, were comprised of stock-based compensation expense Amneal Pharmaceuticals, Inc. Generics Segment Reconciliation of GAAP to Non-GAAP Operating Results (1) (Unaudited; In thousands) Six Months Ended June 30, 2023 Six Months Ended June 30, 2022 As Reported Adjustments Non-GAAP As Reported Adjustments Non-GAAP Net revenue $ 717,507 $ — $ 717,507 $ 682,642 $ — $ 682,642 Cost of goods sold (2) 455,740 (28,846 ) 426,894 427,565 (34,164 ) 393,401 Gross profit 261,767 28,846 290,613 255,077 34,164 289,241 Gross margin % 36.5 % 40.5 % 37.4 % 42.4 % Selling, general and administrative (3) 55,640 (3,876 ) 51,764 54,151 (7,450 ) 46,701 Research and development (4) 63,467 (1,268 ) 62,199 87,395 (2,565 ) 84,830 Intellectual property legal development expenses 2,425 — 2,425 1,550 — 1,550 Acquisition, transaction-related and integration expenses — — — 8 (8 ) — Restructuring and other charges 99 — 99 206 (206 ) — Insurance recoveries for property losses and associated expenses — — — (1,911 ) 1,911 — (Credits) charges related to legal matters, net (427 ) (4,073 ) (4,500 ) 2,157 (2,157 ) — Other operating income (1,211 ) — (1,211 ) (1,175 ) — (1,175 ) Operating income $ 141,774 $ 38,063 $ 179,837 $ 112,696 $ 44,639 $ 157,335 (1) Operating results for the sale of Amneal products by AvKARE were included in our Generics segment. (2) Adjustments for the six months ended June 30, 2023 and 2022, respectively, were comprised of stock-based compensation expense ($2.0 million and $2.8 million), amortization expense ($21.6 million and $19.5 million), site closure and idle facility expenses ($3.1 million and $7.0 million), asset impairment charges ($2.0 million and $5.2 million), and other ($0.1 million and $(0.3) million). (3) Adjustments for the six months ended June 30, 2023 and 2022, respectively, were comprised of stock-based compensation expense ($2.7 million and $1.3 million), a regulatory approval milestone (none and $5.0 million), and site closure costs ($1.2 million and $1.1 million). (4) Adjustments for the six months ended June 30, 2023 and 2022, respectively, 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 June 30, 2023 Three Months Ended June 30, 2022 As Reported Adjustments Non-GAAP As Reported Adjustments Non-GAAP Net revenue $ 96,994 $ — $ 96,994 $ 97,001 $ — $ 97,001 Cost of goods sold (1) 46,512 (25,844 ) 20,668 42,791 (26,878 ) 15,913 Gross profit 50,482 25,844 76,326 54,210 26,878 81,088 Gross margin % 52.0 % 78.7 % 55.9 % 83.6 % Selling, general and administrative (2) 22,759 (228 ) 22,531 23,171 199 23,370 Research and development (2) 6,691 (487 ) 6,204 6,574 (403 ) 6,171 Intellectual property legal development expenses 19 — 19 43 — 43 Acquisition, transaction-related and integration expenses — — — 32 (32 ) — Restructuring and other charges 82 (82 ) — — — — Change in fair value of contingent consideration (3) (6,364 ) 6,364 — (270 ) 270 — Operating income $ 27,295 $ 20,277 $ 47,572 $ 24,660 $ 26,844 $ 51,504 (1) Adjustments for the three months ended June 30, 2023 and 2022 were comprised of amortization expense. (2) Adjustments for the three months ended June 30, 2023 and 2022 were comprised of stock-based compensation expense. (3) Change in fair value of contingent consideration for the three months ended June 30, 2023 was associated with the Saol Acquisition and the acquisition of Kashiv Specialty Pharmaceuticals, LLC. Amneal Pharmaceuticals, Inc. Specialty Segment Reconciliation of GAAP to Non-GAAP Operating Results (Unaudited; In thousands) Six Months Ended June 30, 2023 Six Months Ended June 30, 2022 As Reported Adjustments Non-GAAP As Reported Adjustments Non-GAAP Net revenue $ 188,672 $ — $ 188,672 $ 182,087 $ — $ 182,087 Cost of goods sold (1) 89,703 (52,027 ) 37,676 86,644 (53,532 ) 33,112 Gross profit 98,969 52,027 150,996 95,443 53,532 148,975 Gross margin % 52.5 % 80.0 % 52.4 % 81.8 % Selling, general and administrative (2) 45,138 (414 ) 44,724 47,571 (414 ) 47,157 Research and development (2) 13,022 (876 ) 12,146 16,151 (729 ) 15,422 Intellectual property legal development expenses 39 — 39 35 — 35 Acquisition, transaction-related and integration expenses — — — 32 (32 ) — Restructuring and other charges 82 (82 ) — — — — Change in fair value of contingent consideration (3) (3,907 ) 3,907 — (70 ) 70 — Operating income $ 44,595 $ 49,492 $ 94,087 $ 31,724 $ 54,637 $ 86,361 (1) Adjustments for the six months ended June 30, 2023 and 2022 were comprised of amortization expense. (2) Adjustments for the six months ended June 30, 2023 and 2022 were comprised of stock-based compensation expense. (3) Change in fair value of contingent consideration for the six months ended June 30, 2023 was associated with the Saol Acquisition and the acquisition of Kashiv Specialty Pharmaceuticals, LLC. Amneal Pharmaceuticals, Inc. AvKARE Segment Reconciliation of GAAP to Non-GAAP Operating Results (1) (Unaudited; In thousands) Three Months Ended June 30, 2023 Three Months Ended June 30, 2022 As Reported Adjustments Non-GAAP As Reported Adjustments Non-GAAP Net revenue $ 128,351 $ — $ 128,351 $ 97,459 $ — $ 97,459 Cost of goods sold 107,324 — 107,324 87,510 — 87,510 Gross profit 21,027 — 21,027 9,949 — 9,949 Gross margin % 16.4 % 16.4 % 10.2 % 10.2 % Selling, general and administrative (2) 14,015 (4,188 ) 9,827 12,735 (4,933 ) 7,802 Operating income (loss) $ 7,012 $ 4,188 $ 11,200 $ (2,786 ) $ 4,933 $ 2,147 (1) Operating results for the sale of Amneal products by AvKARE were included in our Generics segment. (2) Adjustments for the three months ended June 30, 2023 and 2022 were comprised of amortization expense. Amneal Pharmaceuticals, Inc. AvKARE Segment Reconciliation of GAAP to Non-GAAP Operating Results (1) (Unaudited; In thousands) Six Months Ended June 30, 2023 Six Months Ended June 30, 2022 As Reported Adjustments Non-GAAP As Reported Adjustments Non-GAAP Net revenue $ 250,407 $ — $ 250,407 $ 192,259 $ — $ 192,259 Cost of goods sold 212,936 — 212,936 167,689 — 167,689 Gross profit 37,471 — 37,471 24,570 — 24,570 Gross margin % 15.0 % 15.0 % 12.8 % 12.8 % Selling, general and administrative (2) 26,955 (7,952 ) 19,003 26,145 (9,459 ) 16,686 Operating income (loss) $ 10,516 $ 7,952 $ 18,468 $ (1,575 ) $ 9,459 $ 7,884 (1) Operating results for the sale of Amneal products by AvKARE were included in our Generics segment. (2) Adjustments for the six months ended June 30, 2023 and 2022, respectively, were comprised of amortization expense ($8.4 million and $9.9 million), and other (($0.4) million in each period). View source version on businesswire.com: Contacts Anthony DiMeo Head of Investor Relations anthony.dimeo@amneal.com Source: Amneal Pharmaceuticals, Inc. View this news release online at: