Amneal Reports Fourth Quarter and Full Year 2020 Financial Results

Amneal Reports Fourth Quarter and Full Year 2020 Financial Results




Amneal Reports Fourth Quarter and Full Year 2020 Financial Results

‒ Q4 2020 Net Revenue of $510 million; GAAP Net Loss of $3 million; Diluted Loss per Share of $0.02 ‒

‒ Q4 2020 Adjusted Net Income (1) of $43 million; Adjusted EBITDA (1) of $107 million; Adjusted Diluted EPS (1) of $0.14 ‒

‒ Full Year Net Revenue of $2 billion; GAAP Net Income of $91 million; Diluted Income per Share of $0.61 ‒

‒ Full Year 2020 Adjusted Net Income (1) of $191 million; Adjusted EBITDA (1) of $456 million; Adjusted Diluted EPS (1) of $0.63 ‒

‒ Provides 2021 Financial Outlook ‒

BRIDGEWATER, N.J.–(BUSINESS WIRE)–Amneal Pharmaceuticals, Inc. (NYSE: AMRX) (the “Company”) announced its results today for the fourth quarter and full year ended December 31, 2020.

“We are extremely proud of the progress our company has made since we re-joined as leaders of Amneal,” said Chirag and Chintu Patel, Co-Chief Executive Officers. “In just a year and a half, we have made significant strides towards strategically positioning Amneal, both operationally and financially, for the next phase of growth. Our strong financial performance over the course of 2020 is indicative of the successful execution of our Amneal 2.0 strategy. We reinvigorated the Generics business in the United States, continued to build our Specialty franchise, enhanced our operational execution, and diversified our distribution channels. As a result of the solid momentum we are seeing, we have introduced 2021 financial guidance, which reflects our expectations for another year of strong top and bottom line growth. We thank our global team for their dedication and commitment to providing affordable and innovative medicines to our patients; they have been an integral part of navigating the COVID-19 pandemic this year, and will continue to help drive our success in the year ahead.”

Net revenue in the fourth quarter of 2020 was $510 million, an increase of 28% compared to $397 million in the fourth quarter of 2019. This increase was primarily attributable to $82 million from our AvKARE acquisition and $44 million from new product launches including EluRyng and Sucralfate Oral Suspension. Broad generic volume growth was partially offset by pricing pressure from competition relating to Levothyroxine Sodium Tabs and Diclofenac Gel 1% as well as a reduction in non-promoted product revenues in our Specialty segment. Net loss attributable to Amneal Pharmaceuticals, Inc. was $3 million in the fourth quarter of 2020 compared to a net loss of $32 million in prior year. The year-over-year improvement was primarily driven by stronger underlying Generics operating performance, lower intangible asset impairment charges, lower interest and taxes and favorable foreign exchange. Diluted loss per share in the fourth quarter of 2020 was $0.02 compared to a loss of $0.23 in the prior year.

Net revenue for the year ended December 31, 2020 was $1,993 million, an increase of 23% compared to $1,626 million for the year ended December 31, 2019. This increase was primarily attributable to $294 million from our AvKARE acquisition, and $214 million from new product launches including EluRyng and Sucralfate Oral Suspension. Broad generic volume growth was partially offset by pricing pressure from competition mainly relating to Levothyroxine Sodium Tabs and Diclofenac Gel 1% as well as the divestiture of our international businesses in 2019. Net income attributable to Amneal Pharmaceuticals, Inc. was $91 million in the year ended December 31, 2020 compared to a net loss of $362 million in prior year. The year-over-year improvement was primarily driven by favorable year-over-year discrete tax events, a reduction in intangible asset impairment charges of $136 million as well as a stronger underlying Generics operating performance and lower interest. Diluted income per share in the year ended December 31, 2020 was $0.61 compared to a loss of $2.74 in the prior year.

Adjusted EBITDA(1) in the fourth quarter of 2020 was $107 million, an increase of 33% compared to the prior year, primarily due to higher Generic adjusted gross profit driven, which was primarily due to new launches, the addition of AvKARE and operating expense management. Adjusted net income(1) of $43 million in the fourth quarter of 2020 compared to $23 million in prior year period, reflected higher adjusted EBITDA and lower interest expense, offset in part by higher adjusted taxes and minority interest. Adjusted diluted EPS(1) in the fourth quarter of 2020 was $0.14 compared to $0.08 in the prior year.

Adjusted EBITDA(1) in the year ended December 31, 2020 was $456 million, an increase of 28% compared to the prior year, primarily due to higher Generic adjusted gross profit, which was primarily due to new launches, the addition of AvKARE and operating expense management. Adjusted net income(1) in the year ended December 31, 2020 was $191 million compared to $104 million in prior year, reflecting higher adjusted EBITDA and lower interest expense, offset in part by higher adjusted taxes and non-controlling interests. Adjusted diluted EPS(1) in the year ended December 31, 2020 was $0.63 compared to $0.35 in the prior year.

(1)

See “Non-GAAP Financial Measures” below.

2021 Financial Outlook

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.

 

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 Adjusted EBITDA from the AvKARE acquisition.

(2)  

Accounts for 35% non-controlling interest in AvKARE. EPS guidance reflects the current tax laws in effect as of February 26, 2021. Any potential increase in statutory tax rates will have an adverse impact on EPS.

(3)  

Assumes the weighted average diluted shares outstanding of Class A and Class B Common Shares under the if-converted method.

Conference Call Information

Amneal will host a conference call and live webcast at 8:30 am Eastern Time on February 26, 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 10152029.

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 generic 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, primarily focused on serving the Department of Defense and the Department of Veterans Affairs. AvKARE is also a packager and wholesale distributor of pharmaceuticals and vitamins to its retail and institutional customers who 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 adjusted EBITDA, adjusted net income, adjusted net income per diluted share, adjusted gross profit, adjusted gross margin, adjusted operating income and adjusted cost of goods sold, 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 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 Pharmaceuticals, Inc.

Consolidated Statements of Operations

(Unaudited; In thousands, except per share amounts)

 

 

Three Months Ended

December 31,

 

Year Ended
December 31,

 

2020

 

2019

 

2020

 

2019

Net revenue

$

510,034

 

 

$

397,328

 

 

$

1,992,523

 

 

$

1,626,373

 

Cost of goods sold

342,962

 

 

273,373

 

 

1,329,551

 

 

1,147,214

 

Cost of goods sold impairment charges

 

 

13,721

 

 

34,579

 

 

126,162

 

Gross profit

167,072

 

 

110,234

 

 

$

628,393

 

 

$

352,997

 

Selling, general and administrative

84,687

 

 

74,084

 

 

326,727

 

 

289,598

 

Research and development

53,460

 

 

48,050

 

 

179,930

 

 

188,049

 

In-process research and development impairment charges

1,720

 

 

450

 

 

2,680

 

 

46,619

 

Acquisition, transaction-related and integration expenses

3,585

 

 

3,706

 

 

8,988

 

 

16,388

 

Restructuring and other charges

(259)

 

 

4,412

 

 

2,398

 

 

34,345

 

(Gains) charges related to legal matters, net

 

 

(2,308)

 

 

5,860

 

 

12,442

 

Intellectual property legal development expenses

3,701

 

 

4,975

 

 

10,655

 

 

14,238

 

Operating income (loss)

20,178

 

 

(23,135)

 

 

91,155

 

 

(248,682)

 

Other (expense) income:

 

 

 

 

 

 

 

Interest expense, net

(34,535)

 

 

(38,829)

 

 

(145,998)

 

 

(168,205)

 

Foreign exchange gain (loss)

8,392

 

 

4,722

 

 

16,350

 

 

(4,962)

 

Gain on sale of international businesses

 

 

328

 

 

123

 

 

7,258

 

Gain from reduction of tax receivable agreement liability

 

 

 

 

 

 

192,884

 

Other income (expense)

488

 

 

(197)

 

 

2,590

 

 

1,465

 

Total other (expense) income, net

(25,655)

 

 

(33,976)

 

 

(126,935)

 

 

28,440

 

Loss before income taxes

(5,477)

 

 

(57,111)

 

 

(35,780)

 

 

(220,242)

 

Provision for (benefit from) income taxes

1,485

 

 

7,792

 

 

(104,358)

 

 

383,331

 

Net (loss) income

(6,962)

 

 

(64,903)

 

 

68,578

 

 

(603,573)

 

Less: Net loss attributable to non-controlling interests

3,925

 

 

32,775

 

 

22,481

 

 

241,656

 

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

$

(3,037)

 

 

$

(32,128)

 

 

$

91,059

 

 

$

(361,917)

 

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

 

 

 

 

 

 

 

Class A and Class B-1 basic

$

(0.02)

 

 

$

(0.23)

 

 

$

0.62

 

 

$

(2.74)

 

Class A and Class B-1 diluted

$

(0.02)

 

 

$

(0.23)

 

 

$

0.61

 

 

$

(2.74)

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

Class A and Class B-1 basic

147,640

 

 

141,853

 

 

147,443

 

 

132,106

 

Class A and Class B-1 diluted

147,640

 

 

141,853

 

 

148,913

 

 

132,106

 

Amneal Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(Unaudited; In thousands)

 

 

December 31,
2020

 

December 31,
2019

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

341,378

 

 

$

151,197

 

Restricted cash

5,743

 

 

1,625

 

Trade accounts receivable, net

638,895

 

 

604,390

 

Inventories

490,649

 

 

381,067

 

Prepaid expenses and other current assets

73,467

 

 

70,164

 

Related party receivables

1,407

 

 

1,767

 

Total current assets

1,551,539

 

 

1,210,210

 

Property, plant and equipment, net

477,754

 

 

477,997

 

Goodwill

522,814

 

 

419,504

 

Intangible assets, net

1,304,626

 

 

1,382,753

 

Operating lease right-of-use assets

33,947

 

 

53,344

 

Operating lease right-of-use assets – related party

24,792

 

 

16,528

 

Financing lease right-of-use assets – related party

58,676

 

 

61,284

 

Other assets

31,885

 

 

44,270

 

Total assets

$

4,006,033

 

 

$

3,665,890

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued expenses

$

613,661

 

 

$

507,483

 

Current portion of long-term debt, net

44,228

 

 

21,479

 

Current portion of operating lease liabilities

6,474

 

 

11,874

 

Current portion of operating and financing lease liabilities – related party

3,978

 

 

3,601

 

Current portion of note payable – related party

1,000

 

 

 

Related party payables – short term

7,561

 

 

5,969

 

Total current liabilities

676,902

 

 

550,406

 

Long-term debt, net

2,735,264

 

 

2,609,046

 

Note payable – related party

36,440

 

 

 

Operating lease liabilities

30,182

 

 

43,135

 

Operating lease liabilities – related party

23,049

 

 

15,469

 

Financing lease liabilities – related party

60,193

 

 

61,463

 

Related party payable – long term

1,584

 

 

 

Other long-term liabilities

85,683

 

 

39,583

 

Total long-term liabilities

2,972,395

 

 

2,768,696

 

Redeemable non-controlling interest

11,804

 

 

 

Total stockholders’ equity

344,932

 

 

346,788

 

Total liabilities and stockholders’ equity

$

4,006,033

 

 

$

3,665,890

 

 

Amneal Pharmaceuticals, Inc.

Consolidated Statements of Cash Flows

(Unaudited; In thousands)

 

 

Year Ended
December 31,

 

2020

 

2019

Cash flows from operating activities:

 

 

 

Net income (loss)

$

68,578

 

 

$

(603,573)

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

Gain from reduction of tax receivable agreement liability

 

 

(192,884)

 

Depreciation and amortization

235,387

 

 

207,235

 

Amortization of Levothyroxine Transition Agreement asset

 

 

36,393

 

Unrealized foreign currency (gain) loss

(16,728)

 

 

7,342

 

Amortization of debt issuance costs

8,678

 

 

6,478

 

Gain on sale of international businesses, net

(123)

 

 

(7,258)

 

Intangible asset impairment charges

37,259

 

 

172,781

 

Non-cash restructuring and asset-related charges

(536)

 

 

12,459

 

Deferred tax provision

 

 

371,716

 

Stock-based compensation

20,750

 

 

21,679

 

Inventory provision

75,236

 

 

82,245

 

Other operating charges and credits, net

11,818

 

 

7,309

 

Changes in assets and liabilities:

 

 

 

Trade accounts receivable, net

16,787

 

 

(132,726)

 

Inventories

(113,782)

 

 

(20,393)

 

Prepaid expenses, other current assets and other assets

33,312

 

 

38,870

 

Related party receivables

412

 

 

(939)

 

Accounts payable, accrued expenses and other liabilities

307

 

 

(10,257)

 

Related party payables

1,646

 

 

5,228

 

Net cash provided by operating activities

379,001

 

 

1,705

 

Cash flows from investing activities:

 

 

 

Purchases of property, plant and equipment

(56,445)

 

 

(47,181)

 

Acquisition of product rights and licenses

 

 

(50,250)

 

Deposits for future acquisition of property, plant, and equipment

(5,391)

 

 

 

Acquisition of intangible assets

(4,350)

 

 

 

Acquisitions, net of cash acquired

(251,360)

 

 

 

Proceeds from surrender of corporate owned life insurance

 

 

43,017

 

Proceeds from sale of international businesses, net of cash sold

 

 

34,834

 

Net cash used in investing activities

(317,546)

 

 

(19,580)

 

Cash flows from financing activities:

 

 

 

Payments of deferred financing costs and debt extinguishment costs

(4,102)

 

 

 

Proceeds from issuance of debt

180,000

 

 

 

Payments of principal on debt, financing leases and other

(35,933)

 

 

(27,000)

 

Proceeds from exercise of stock options

321

 

 

1,400

 

Employee payroll tax withholding on restricted stock unit vesting

(863)

 

 

(926)

 

Distribution of earnings to and acquisition of non-controlling interest

(3,300)

 

 

(3,543)

 

Tax distribution to non-controlling interest

(3,237)

 

 

(13,494)

 

Payments of principal on financing lease – related party

(1,079)

 

 

(2,270)

 

Net cash provided by (used in) financing activities

131,807

 

 

(45,833)

 

Effect of foreign exchange rate on cash

1,037

 

 

(2,249)

 

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

194,299

 

 

(65,957)

 

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

152,822

 

 

218,779

 

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

$

347,121

 

 

$

152,822

 

Cash and cash equivalents – end of period

$

341,378

 

 

$

151,197

 

Restricted cash – end of period

$

5,743

 

 

$

1,625

 

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

$

347,121

 

 

$

152,822

 

Contacts

Tasos Konidaris

Executive Vice President, Chief Financial Officer

invest@amneal.com

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