Amneal Reports Second Quarter 2021 Financial Results

‒ Q2 2021 Net Revenue of $535 million; GAAP Net Income of $15 million; Diluted Income per Share of $0.10 ‒

‒ Adjusted EBITDA ⁽¹⁾ of $151 million; Adjusted Diluted EPS ⁽¹⁾ of $0.25 ‒

‒ Maintaining 2021 Full Year Financial Outlook ‒

BRIDGEWATER, N.J.–(BUSINESS WIRE)–Amneal Pharmaceuticals, Inc. (NYSE:AMRX) (the “Company”) announced its results today for the second quarter ended June 30, 2021.

“Our strong second quarter results reflect the durability and diversity of our business. At a time when drug prices are rising and more people are seeking affordable health care solutions, we are proud to consistently be first or second to market with new and complex generic drugs. Together with our robust pipeline of specialty products, this quarter we achieved Amneal’s highest level of net revenues with adjusted EBITDA reaching its highest level since 2018. Our talented teams are innovating and executing well and we are excited about the opportunities to come,” said Chirag and Chintu Patel, Co-Chief Executive Officers.

Net revenue in the second quarter of 2021 was $535 million, an increase of 15% compared to $465 million in the second quarter of 2020. The increase was driven by Generic product launches, growth in our promoted Specialty products Rytary® and Unithroid®, and overall volume growth within our Generics and AvKARE segments.

Net income attributable to Amneal Pharmaceuticals, Inc. was $15 million in the second quarter of 2021 compared to a net loss of $12 million in the second quarter of 2020. The increase in net income was primarily attributable to growth in net revenue and gross profit, which was driven by strong gross margin improvement in our Generics segment.

Adjusted EBITDA⁽¹⁾ in the second quarter of 2021 was $151 million, an increase of 50% compared to the second quarter of 2020, reflective of net income growth. Adjusted diluted EPS⁽¹⁾ in the second quarter of 2021 was $0.25, an increase of 92% from $0.13 in the second quarter of 2020, reflective mostly of growth in adjusted EBITDA⁽¹⁾.

(1)

See “Non-GAAP Financial Measures” below.

Maintaining Full Year 2021 Financial Outlook

Amneal is maintaining its previously provided guidance.

		Full Year 2021 Financial Guidance
Net revenue		$2.1 billion – $2.2 billion
Adjusted EBITDA (1)		$500 million – $540 million
Adjusted diluted EPS (2)		$0.70 – $0.85
Operating cash flow		$220 million – $250 million
Capital expenditures		$60 million – $70 million
Weighted average diluted shares outstanding (3)		Approximately 303 million

(1)		Includes 100% of EBITDA from the AvKARE acquisition.
(2)		Accounts for 35% non-controlling interest in AvKARE and reflects the current federal tax rate of 21%.
(3)		Assumes the weighted average diluted shares outstanding of class A and class B common stock under the if-converted method.

Conference Call Information

Amneal will host a conference call and live webcast at 8:00 am Eastern Time on August 9, 2021 to discuss its results. The live webcast and presentation will be accessible through the Investor Relations section of the Company’s website at https://investors.amneal.com. To access the call through a conference line, dial (844) 746-0741 (in the U.S.) or (412) 317-5273 (international callers). 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 (877) 344-7529 (in the U.S.) or (412) 317-0088 (international callers). The access code for the replay is 10158095.

About Amneal

Amneal Pharmaceuticals, Inc. (NYSE:AMRX), headquartered in Bridgewater, NJ, is a fully-integrated pharmaceutical company focused on the development, manufacturing and distribution of generic and specialty drug products. The Company has operations in North America, Asia, and Europe, working together to bring high-quality medicines to patients primarily within the United States.

Amneal has an extensive portfolio of approximately 250 product families and is expanding its portfolio to include complex dosage forms, including biosimilars, in a broad range of therapeutic areas. The Company also markets a portfolio of branded pharmaceutical products through its Specialty segment focused principally on central nervous system and endocrine disorders.

The Company also owns 65% of AvKARE. AvKARE provides pharmaceuticals, medical and surgical products, and services, primarily to governmental agencies. AvKARE is a re-packager of bottle and unit dose pharmaceuticals, which services the Department of Defense and the Department of Veterans Affairs as well as institutional customers. AvKARE is also a wholesale distributor of pharmaceuticals, over the counter products and medical supplies to institutional customers which are located throughout the United States focused primarily on offering 340b-qualified entities products to provide consistency in care and pricing.

For more information, visit www.amneal.com.

Cautionary Statement on Forward-Looking Statements

Certain statements contained herein, regarding matters that are not historical facts, may be forward-looking statements (as defined in the U.S. Private Securities Litigation Reform Act of 1995). Such forward-looking statements include statements regarding management’s intentions, plans, beliefs, expectations or forecasts for the future, including among other things: discussions of future operations; expected operating results and financial performance; impact of planned acquisitions and dispositions; the Company’s strategy for growth; product development; regulatory approvals; market position and expenditures. Words such as “plans,” “expects,” “will,” “anticipates,” “estimates” and similar words are intended to identify estimates and forward-looking statements.

The reader is cautioned not to rely on these forward-looking statements. These forward-looking statements are based on current expectations of future events. If the underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the expectations and projections of the Company.

Such risks and uncertainties include, but are not limited to: the impact of the COVID-19 pandemic; the impact of global economic conditions; our ability to successfully develop, license, acquire and commercialize new products on a timely basis; our ability to obtain exclusive marketing rights for our products; 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 through acquisitions and otherwise; our dependence on the sales of a limited number of products for a substantial portion of our total revenues; 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 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; 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; our dependence on third-party agreements for a portion of our product offerings; our ability to identify and make acquisitions of or investments in complementary businesses and products on advantageous terms; 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; 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, adjusted net income per diluted share, adjusted gross profit, adjusted gross margin, adjusted operating income, adjusted cost of goods sold, adjusted selling general and administrative expense, and adjusted research and development expense, which are intended as supplemental measures of the Company’s performance that are not required by or presented in accordance with U.S. General Accepted Accounting Principles (“GAAP”). The calculation of non-GAAP adjusted diluted earnings per share assumes the conversion of all outstanding shares of class B Common Stock to shares of class A Common Stock.

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 operation and trends while viewing the information through the eyes of management.

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

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

Amneal’s full year 2021 estimates are based on management’s current expectations, including with respect to prescription trends, pricing levels, inventory levels, the costs incurred and benefits realized of restructuring activities and the anticipated timing of future product launches and events. The Company cannot provide a reconciliation between non-GAAP projections and the most directly comparable 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 and benefits, asset impairments 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 2021.

Amneal Pharmaceuticals, Inc.
Consolidated Statements of Operations
(Unaudited; In thousands, except per share amounts)
		Three Months Ended June 30,								Six Months Ended June 30,
		2021				2020				2021				2020
Net revenue		$	535,075			$	464,662			$	1,028,180			$	963,195
Cost of goods sold		322,577				319,666				624,120				633,244
Cost of goods sold impairment charges		—				759				—				2,215
Gross profit		212,498				144,237				404,060				327,736
Selling, general and administrative		86,157				80,944				176,883				158,920
Research and development		52,864				45,572				101,046				81,951
In-process research and development impairment charges		710				—				710				960
Intellectual property legal development expenses		1,365				3,550				4,947				4,820
Acquisition, transaction-related and integration expenses		4,283				1,787				7,085				4,362
Charges related to legal matters, net		—				1,300				—				5,800
Restructuring and other charges		—				333				363				2,381
Operating income		67,119				10,751				113,026				68,542
Other (expense) income:
Interest expense, net		(34,083		)		(36,669		)		(67,968		)		(76,568		)
Foreign exchange (loss) gain, net		(2,244		)		3,466				(156		)		(1,715		)
Gain on sale of international businesses, net		—				123				—				123
Other income, net		4,032				571				4,826				1,204
Total other expense, net		(32,295		)		(32,509		)		(63,298		)		(76,956		)
Income (loss) before income taxes		34,824				(21,758		)		49,728				(8,414		)
Provision for (benefit from) income taxes		2,648				2,186				3,007				(105,987		)
Net income (loss)		32,176				(23,944		)		46,721				97,573
Less: Net (income) loss attributable to non-controlling interests		(17,644		)		11,948				(25,483		)		5,498
Net income (loss) attributable to Amneal Pharmaceuticals, Inc.		$	14,532			$	(11,996	)		$	21,238			$	103,071
Net income (loss) per share attributable to Amneal Pharmaceuticals, Inc.’s class A common stockholders:
Basic		$	0.10			$	(0.08	)		$	0.14			$	0.70
Diluted		$	0.10			$	(0.08	)		$	0.14			$	0.69
Weighted-average common shares outstanding:
Basic		148,996				147,392				148,507				147,286
Diluted		151,986				147,392				151,606				148,309

Amneal Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets
(Unaudited; In thousands)
		June 30, 2021				December 31, 2020
Assets
Current assets:
Cash and cash equivalents		$	278,306			$	341,378
Restricted cash		4,847				5,743
Trade accounts receivable, net		652,015				638,895
Inventories		523,385				490,649
Prepaid expenses and other current assets		103,798				73,467
Related party receivables		1,124				1,407
Total current assets		1,563,475				1,551,539
Property, plant and equipment, net		468,415				477,754
Goodwill		549,091				522,814
Intangible assets, net		1,293,325				1,304,626
Operating lease right-of-use assets		41,065				33,947
Operating lease right-of-use assets – related party		21,689				24,792
Financing lease right-of-use assets		66,777				9,541
Financing lease right-of-use assets – related party		—				58,676
Other assets		19,216				22,344
Total assets		$	4,023,053			$	4,006,033
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses		$	596,227			$	611,867
Current portion of long-term debt, net		30,461				44,228
Current portion of operating lease liabilities		8,237				6,474
Current portion of operating and financing lease liabilities – related party		2,201				3,978
Current portion of financing lease liabilities		2,806				1,794
Current portion of note payable – related party		—				1,000
Related party payable – short term		32,930				7,561
Total current liabilities		672,862				676,902
Long-term debt, net		2,720,117				2,735,264
Note payable – related party		37,224				36,440
Operating lease liabilities		34,723				30,182
Operating lease liabilities – related party		20,131				23,049
Financing lease liabilities		61,643				2,318
Financing lease liabilities – related party		—				60,193
Related party payable – long term		8,714				1,584
Other long-term liabilities		63,255				83,365
Total long-term liabilities		2,945,807				2,972,395
Redeemable non-controlling interests		14,112				11,804
Total stockholders’ equity		390,272				344,932
Total liabilities and stockholders’ equity		$	4,023,053			$	4,006,033

Amneal Pharmaceuticals, Inc.
Consolidated Statements of Cash Flows
(Unaudited; In thousands)
		Six Months Ended June 30,
		2021				2020
Cash flows from operating activities:
Net income		$	46,721			$	97,573
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		112,037				116,155
Unrealized foreign currency loss		124				1,251
Amortization of debt issuance costs and discount		4,473				4,214
Gain on sale of international businesses, net		—				(123		)
Intangible asset impairment charges		710				3,175
Stock-based compensation		12,962				10,202
Inventory provision		25,805				34,708
Other operating charges and credits, net		2,764				4,156
Changes in assets and liabilities:
Trade accounts receivable, net		(13,167		)		75,769
Inventories		(54,580		)		(33,182		)
Income taxes receivable associated with the CARES Act		—				(110,069		)
Prepaid expenses, other current assets and other assets		(23,988		)		8,772
Related party receivables		7,383				633
Accounts payable, accrued expenses and other liabilities		(21,137		)		15,172
Related party payables		(3,912		)		(139		)
Net cash provided by operating activities		96,195				228,267
Cash flows from investing activities:
Purchases of property, plant and equipment		(19,585		)		(15,919		)
Deposits for future acquisition of property, plant, and equipment		(1,667		)		—
Acquisition of intangible assets		(500		)		(1,050		)
Acquisitions, net of cash acquired		(73,828		)		(254,000		)
Net cash used in investing activities		(95,580		)		(270,969		)
Cash flows from financing activities:
Proceeds from issuance of debt		—				180,000
Payments of principal on debt, financing leases and other		(33,876		)		(17,072		)
Payments of deferred financing costs		—				(4,102		)
Proceeds from exercise of stock options		681				158
Employee payroll tax withholding on restricted stock unit vesting		(2,378		)		(557		)
Tax distributions to non-controlling interests		(27,551		)		—
Payments of principal on financing lease – related party		(93		)		(530		)
Repayment of related party note		(1,000		)		—
Net cash (used in) provided by financing activities		(64,217		)		157,897
Effect of foreign exchange rate on cash		(366		)		255
Net (decrease) increase in cash, cash equivalents, and restricted cash		(63,968		)		115,450
Cash, cash equivalents, and restricted cash – beginning of period		347,121				152,822
Cash, cash equivalents, and restricted cash – end of period		$	283,153			$	268,272
Cash and cash equivalents – end of period		$	278,306			$	266,143
Restricted cash – end of period		4,847				2,129
Cash, cash equivalents, and restricted cash – end of period		$	283,153			$	268,272

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,
	2021				2020				2021				2020
Net income (loss)	$	32,176			$	(23,944	)		$	46,721			$	97,573
Adjusted to add (deduct):
Interest expense, net	34,083				36,669				67,968				76,568
Income tax expense (benefit)	2,648				2,186				3,007				(105,987		)
Depreciation and amortization	56,487				58,072				112,037				116,155
EBITDA (Non-GAAP)	$	125,394			$	72,983			$	229,733			$	184,309
Adjusted to add (deduct):
Stock-based compensation expense	7,632				5,663				12,962				10,202
Acquisition and site closure expenses (1)	5,964				5,650				11,756				12,628
Restructuring and other charges (2)	—				333				363				2,381
Inventory related charges (3)	87				5,125				201				5,125
Charges related to legal matters (4)	—				3,050				—				5,550
Asset impairment charges (5)	741				2,299				1,064				4,774
Foreign exchange loss (gain)	2,244				(3,466		)		156				1,715
Gain on sale of international businesses, net	—				(123		)		—				(123		)
Research and development milestone payments	7,847				6,841				18,733				8,841
Other	807				2,431				1,806				(238		)
Adjusted EBITDA (Non-GAAP)	$	150,716			$	100,786			$	276,774			$	235,164

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 EPS
		Three Months Ended June 30,								Six Months Ended June 30,
		2021				2020				2021				2020
Net income (loss)		$	32,176			$	(23,944	)		$	46,721			$	97,573
Adjusted to add (deduct):
Non-cash interest		2,077				1,998				4,049				3,864
GAAP Income tax (benefit) expense		2,648				2,186				3,007				(105,987		)
Amortization		41,361				41,181				80,875				81,495
Stock-based compensation expense		7,632				5,663				12,962				10,202
Acquisition and site closure expenses (1)		5,964				5,650				11,756				12,628
Restructuring and other charges (2)		—				333				363				2,381
Inventory related charges (3)		87				5,125				201				5,125
Charges related to legal matters (4)		—				3,050				—				5,550
Asset impairment charges (5)		741				2,299				1,064				4,774
Foreign exchange (gain) loss (6)		—				(3,466		)		—				1,715
Gain on sale of international businesses, net		—				(123		)		—				(123		)
Research and development milestone payments		7,847				6,841				18,733				8,841
Other		807				2,431				1,806				(238		)
Income tax at 21%		(21,779		)		(10,969		)		(39,118		)		(27,974		)
Net income attributable to non-controlling interests not associated with our Class B common stock		(2,054		)		(305		)		(3,850		)		(1,544		)
Adjusted net income (Non-GAAP)		$	77,507			$	37,950			$	138,569			$	98,282
Adjusted diluted EPS (Non-GAAP) (7)		$	0.25			$	0.13			$	0.46			$	0.33

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 EPS

Contacts

Anthony DiMeo

Senior Director, Investor Relations

[email protected]

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