þ
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Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
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For the fiscal year ended December 31, 2018
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o
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Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
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LOUISIANA
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72-0717400
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(State or other jurisdiction of
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(I.R.S. Employer Identification No.)
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incorporation or organization)
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Title of each class
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Name of each exchange on which registered
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Common Stock, No Par Value
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The NASDAQ Global Select Market
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Page
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PART I
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PART II
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PART III
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PART IV
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||
•
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AzaSite®
— (azithromycin ophthalmic solution), a prescription sterile eye drop solution used to treat bacterial conjunctivitis;
|
•
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Cosopt®
— (dorzolamide hydrochloride and timolol maleate ophthalmic solution), a prescription sterile eye drop solution that is used to reduce intraocular pressure in patients with open-angle glaucoma or ocular hypertension; and
|
•
|
Cosopt® PF
, supplied in sterile, single-use containers.
|
•
|
AK-FLUOR® (fluorescein injection, USP).
We market our branded fluorescein injection as AK-FLUOR® 10% (100 mg/mL) and 25% (250 mg/mL). AK-FLUOR® is indicated in diagnostic fluorescein angiography or angioscopy of the retina and iris vasculature.
|
•
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Atropine Sulfate Ophthalmic Solution
. We received approval of our NDA for Atropine Sulfate Ophthalmic Solution, USP, 1% in July 2014. We had previously been marketing this product as an unapproved product.
|
•
|
Cosopt® PF.
We acquired the rights to the U.S. NDA for Cosopt® PF (2% Dorzolamide Hydrochloride 0.5% and Timolol Maleate supplied in sterile, single-use containers), a preservative-free prescription ophthalmic eye drop indicated for the reduction of elevated intraocular pressure (IOP) in patients with open-angle glaucoma or ocular hypertension who are insufficiently responsive to beta-blockers, through the Merck Products Acquisition on November 15, 2013.
|
•
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Dehydrated Alcohol Injection.
We began marketing Dehydrated Alcohol Injection, USP in 1997. Our Dehydrated Alcohol Injection is not an FDA approved product and to date our product has not been found by the FDA to be safe and effective.
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•
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Ephedrine Sulfate Injection
. We originally began marketing Ephedrine Sulfate Injection, USP, 50 mg/mL in 1 mL single-dose ampules in 1997 as an unapproved product. In March 2017, we received FDA approval of our NDA for Ephedrine Sulfate Injection.
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•
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Myorisan™ (isotretinoin capsules, USP)
. We acquired Myorisan™ isotretinoin capsules, USP, in 10 mg, 20 mg and 40 mg strengths through the VersaPharm Acquisition. We subsequently received approval for the 30 mg strength in 2015.
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•
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Nembutal® Sodium Solution (pentobarbital sodium injection, USP)
. We market our pentobarbital sodium injection as Nembutal® Sodium Solution. Nembutal® is a DEA Schedule II controlled drug.
|
•
|
Phenylephrine Hydrochloride Ophthalmic Solution.
We began marketing Phenylephrine Hydrochloride Ophthalmic Solution, USP, 2.5% shortly after FDA approval of our NDA in January 2015.
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•
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TheraTears® Dry Eye Therapy Lubricant Eye Drops.
TheraTears® is an over-the-counter eye drop that is used as a lubricant to relieve dryness of the eye. TheraTears® unique hypotonic and electrolyte balanced formula replicates healthy tears.
|
•
|
Zioptan™
.
We acquired the rights to the U.S. NDA for Zioptan™ (tafluprost ophthalmic solution) 0.0015%, a preservative-free prescription ophthalmic eye drop indicated for reducing elevated intraocular pressure in patients with open-angle glaucoma or ocular hypertension, from Merck, in April 2014.
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(1)
|
field sales teams focused on branded ophthalmology products;
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(2)
|
field sales teams focused on institutional markets;
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(3)
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inside sales team focused on customers in smaller markets, and;
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(4)
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national accounts sales team focused on wholesalers, distributors, retail pharmacy chain and group purchasing organizations (“GPOs”).
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•
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AmerisourceBergen Corporation (“Amerisource”);
|
•
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Cardinal Health, Inc. (“Cardinal”); and
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•
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McKesson Corporation (“McKesson”).
|
•
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Somerset, New Jersey —
sterile ophthalmic solutions, ointments and gels
|
•
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Decatur, Illinois —
sterile liquid and lyophilized injectables and sterile ophthalmic solutions
|
•
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Amityville, New York —
sterile ophthalmic and otic solutions, sterile gels, and non-sterile nasal sprays, topical ointments and creams, oral liquids, and liquid unit dose cups
|
•
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Hettlingen, Switzerland —
sterile ophthalmic solutions, suspensions, gels and ointments
|
•
|
Paonta Sahib, Himachal Pradesh, India —
sterile liquid injectables including cephalosporins, carbapenems, hormones and general injectables
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•
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Federal Civil False Claims Act.
We are also subject to the provisions of the federal civil False Claims Act and, in particular, actions brought pursuant to the False Claims Act’s whistleblower or
qui tam
provisions. The civil False Claims Act imposes liability on any person or entity that, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment by a federal healthcare program. The
qui tam
provisions of the False Claims Act allow a private individual to bring civil actions on behalf of the federal government alleging that the defendant has submitted or caused the submission of a false claim to the federal government, and to share in any monetary recovery. In recent years, the number of suits brought by private individuals has increased dramatically. In addition, various states have enacted false claim laws analogous to the False Claims Act. Many of these state laws apply where a claim is submitted to any third-party payer and not merely a federal healthcare program.
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•
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HIPAA.
Fraud provisions in the Health Insurance Portability and Accountability Act (“HIPAA”) of 1996 prohibits knowingly and willingly executing a scheme to defraud any healthcare benefit program, including those of private third-party payers. Also, false statement provisions within HIPAA prohibits knowingly and willingly falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
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•
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Federal Physician Payments Sunshine Act.
The Federal Physician Payments Sunshine Act mandates annual reporting of various types of payments to physicians and teaching hospitals. Under the regulations, applicable drug, biological, device, and medical supply manufacturers are required to report to CMS payments or other transfers of value made to healthcare professionals and teaching hospitals, and the regulations also require the manufacturers and GPOs to report ownership and investment interests held by physicians or their immediate family members. The rule sets forth a reporting process that permits physicians, teaching hospitals, and physician owners and investors to dispute information reported by applicable manufacturers and GPOs. Under the regulations, information that is the subject of a dispute not resolved within the initial allotted 60-day review and dispute resolution period will be posted on CMS’s public website in the manner in which it was submitted by the manufacturer or GPO, rather than in a manner that includes the version provided by the disputing physician, teaching hospital, or physician owner or investor. Failure to comply with required reporting requirements could subject pharmaceutical manufacturers and others to substantial civil monetary penalties.
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Country
|
|
Full-Time
|
|
Part-Time or Temp
|
|
||
United States of America
|
|
1,667
|
|
|
3
|
|
|
India
|
|
360
|
|
|
—
|
|
|
Switzerland
|
|
164
|
|
|
26
|
|
|
Total
|
|
2,191
|
|
|
29
|
|
|
•
|
The litigations may involve significant defense costs and indemnification liabilities and may result in significant monetary judgments against Akorn, which may adversely affect our business, financial condition and results of operations;
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•
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The litigations, whether or not resolved favorably, may damage our long-term reputation, attract adverse media coverage, interfere with our relationships with key stakeholders and/or interfere with our ability to attract and retain employees; and
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•
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The litigations may divert the attention of our employees and management, which may affect our business operations.
|
•
|
costs incurred to combine the operations of companies we acquire, such as transitional employee expenses and employee retention, redeployment or relocation expenses;
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•
|
impairment of goodwill or intangible assets;
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•
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amortization of intangible assets acquired;
|
•
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a reduction in the useful lives of intangible assets acquired;
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•
|
identification of or changes to assumed contingent liabilities, including, but not limited to, contingent purchase price consideration, income tax contingencies and other non-income tax contingencies, after our final determination of the amounts for these contingencies or the conclusion of the measurement period (generally up to one year from the acquisition date), whichever comes first;
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•
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charges to our operating results to eliminate certain duplicative pre-acquisition activities, to restructure our operations or to reduce our cost structure;
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•
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charges to our operating results resulting from expenses incurred to effect the acquisition;
|
•
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changes to contingent consideration liabilities, including accretion and fair value adjustments. A significant portion of these adjustments could be accounted for as expenses that will decrease our net income and earnings per share for the periods in which those costs are incurred.
|
•
|
42,000 square-foot facility dedicated to liquid and semi-solid production,
|
•
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29,000 square-foot facility housing a sterile manufacturing facility, DEA manufacturing, chemistry and microbiology laboratories,
|
•
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65,000 square-foot facility used for warehousing finished goods,
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•
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22,000 square-foot facility with 4,000 square feet of office space and 18,000 square feet of warehouse space,
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•
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8,000 square-foot office building utilized for administrative functions,
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•
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35,000 square-foot facility with mixed office, laboratory and manufacturing space,
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•
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18,000 square-foot building with mixed office and laboratory space. (Operations relocated to Cranbury)
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Period
|
Total Number of Shares Repurchased
|
Average Price Paid per Share (including commission costs)
|
Cumulative Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
Dollar Value of Shares that may yet be Purchased under the Plans or Programs
|
||||||
September 1-30, 2016
|
901,382
|
|
$
|
27.74
|
|
901,382
|
|
$
|
174,995,663
|
|
November 1-30, 2016
|
906,451
|
|
$
|
22.06
|
|
1,807,833
|
|
$
|
154,999,354
|
|
Total
|
1,807,833
|
|
$
|
24.89
|
|
1,807,833
|
|
$
|
154,999,354
|
|
Total Return Chart
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
2018
|
|
NASDAQ Composite Index (^IXIC)
|
100
|
|
|
113
|
|
|
120
|
|
|
129
|
|
|
153
|
|
|
159
|
|
NASDAQ Health Care Index (^IXHC)
|
100
|
|
|
128
|
|
|
137
|
|
|
114
|
|
|
138
|
|
|
133
|
|
Akorn, Inc. (AKRX)
|
100
|
|
|
147
|
|
|
152
|
|
|
89
|
|
|
131
|
|
|
14
|
|
|
Years Ended December 31,
|
||||||||||||||||||
|
2018 (2)
|
|
2017
|
|
2016
|
|
2015 (1)
|
|
2014 (1)
|
||||||||||
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
694,018
|
|
|
$
|
841,045
|
|
|
$
|
1,116,843
|
|
|
$
|
985,076
|
|
|
$
|
555,048
|
|
Gross profit
|
246,016
|
|
|
432,206
|
|
|
673,512
|
|
|
595,243
|
|
|
261,360
|
|
|||||
Operating (loss) income
|
(388,426
|
)
|
|
(22,884
|
)
|
|
322,858
|
|
|
288,172
|
|
|
60,816
|
|
|||||
Interest expense, net, amortization of deferred financing costs and other non-operating income (expense), net
|
(49,756
|
)
|
|
(36,314
|
)
|
|
(51,558
|
)
|
|
(56,016
|
)
|
|
(35,474
|
)
|
|||||
Pretax (loss) income from operations
|
(438,182
|
)
|
|
(59,198
|
)
|
|
271,300
|
|
|
232,156
|
|
|
25,342
|
|
|||||
Income tax (benefit) provision from operations
|
(36,273
|
)
|
|
(34,648
|
)
|
|
87,057
|
|
|
81,358
|
|
|
10,954
|
|
|||||
(Loss) income from operations
|
$
|
(401,909
|
)
|
|
$
|
(24,550
|
)
|
|
$
|
184,243
|
|
|
$
|
150,798
|
|
|
$
|
14,388
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
125,383
|
|
|
124,790
|
|
|
122,869
|
|
|
116,980
|
|
|
103,480
|
|
|||||
Diluted
|
125,383
|
|
|
124,790
|
|
|
125,801
|
|
|
125,762
|
|
|
109,588
|
|
|||||
PER SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity, per diluted share
|
$
|
3.54
|
|
|
$
|
6.66
|
|
|
$
|
6.51
|
|
|
$
|
4.94
|
|
|
$
|
3.25
|
|
(Loss) income from operations per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
$
|
(3.21
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
1.50
|
|
|
$
|
1.29
|
|
|
$
|
0.14
|
|
Diluted
|
$
|
(3.21
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
1.47
|
|
|
$
|
1.22
|
|
|
$
|
0.13
|
|
Share Price: High
|
$
|
33.63
|
|
|
$
|
34.00
|
|
|
$
|
39.46
|
|
|
$
|
57.10
|
|
|
$
|
45.25
|
|
Low
|
$
|
3.16
|
|
|
$
|
17.74
|
|
|
$
|
17.57
|
|
|
$
|
19.08
|
|
|
$
|
20.52
|
|
BALANCE SHEET DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current assets
|
$
|
583,819
|
|
|
$
|
730,151
|
|
|
$
|
685,811
|
|
|
$
|
708,132
|
|
|
$
|
437,750
|
|
Net property, plant & equipment
|
334,853
|
|
|
313,418
|
|
|
238,404
|
|
|
179,614
|
|
|
144,196
|
|
|||||
Total assets
|
$
|
1,495,257
|
|
|
$
|
1,909,511
|
|
|
$
|
1,973,720
|
|
|
$
|
2,042,545
|
|
|
$
|
1,832,150
|
|
Current liabilities
|
$
|
170,823
|
|
|
$
|
171,089
|
|
|
$
|
175,555
|
|
|
$
|
231,376
|
|
|
$
|
150,853
|
|
Long-term obligations, less current installments
|
880,568
|
|
|
907,177
|
|
|
978,981
|
|
|
1,189,604
|
|
|
1,324,990
|
|
|||||
Shareholders’ equity
|
$
|
443,866
|
|
|
$
|
831,245
|
|
|
$
|
819,184
|
|
|
$
|
621,565
|
|
|
$
|
356,307
|
|
CASH FLOW DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash (used in) provided by operating activities
|
$
|
(68,894
|
)
|
|
$
|
247,633
|
|
|
$
|
166,690
|
|
|
$
|
299,031
|
|
|
$
|
43,390
|
|
Cash used in investing activities
|
$
|
(69,131
|
)
|
|
$
|
(90,555
|
)
|
|
$
|
(72,922
|
)
|
|
$
|
(53,718
|
)
|
|
$
|
(966,874
|
)
|
Cash (used in) provided by financing activities
|
$
|
(5,038
|
)
|
|
$
|
7,594
|
|
|
$
|
(240,333
|
)
|
|
$
|
31,908
|
|
|
$
|
963,116
|
|
Effect of changes in exchange rates
|
$
|
(1,032
|
)
|
|
$
|
1,183
|
|
|
$
|
2
|
|
|
$
|
(251
|
)
|
|
$
|
(183
|
)
|
Decrease/(increase) in cash and cash equivalents
|
$
|
(144,095
|
)
|
|
$
|
165,855
|
|
|
$
|
(146,563
|
)
|
|
$
|
276,970
|
|
|
$
|
39,449
|
|
•
|
Prescription Pharmaceuticals
, we manufacture and market generic and branded prescription pharmaceuticals including ophthalmics, injectables, oral liquids, otics, topical, inhalants, and nasal sprays.
|
•
|
Consumer Health
, we manufacture and market branded and private-label animal health and OTC products.
|
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
|
Amount
|
|
% of Revenue
|
|
Amount
|
|
% of Revenue
|
|
Amount
|
|
% of Revenue
|
|||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Prescription Pharmaceuticals
|
$
|
620,669
|
|
|
89.4
|
%
|
|
$
|
772,524
|
|
|
91.9
|
%
|
|
$
|
1,053,579
|
|
|
94.3
|
%
|
Consumer Health
|
73,349
|
|
|
10.6
|
%
|
|
68,521
|
|
|
8.1
|
%
|
|
63,264
|
|
|
5.7
|
%
|
|||
Total revenues
|
694,018
|
|
|
100.0
|
%
|
|
841,045
|
|
|
100.0
|
%
|
|
1,116,843
|
|
|
100.0
|
%
|
|||
Gross profit and gross margin percentage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Prescription Pharmaceuticals
|
213,560
|
|
|
34.4
|
%
|
|
402,082
|
|
|
52.0
|
%
|
|
644,319
|
|
|
61.2
|
%
|
|||
Consumer Health
|
32,456
|
|
|
44.2
|
%
|
|
30,124
|
|
|
44.0
|
%
|
|
29,193
|
|
|
46.1
|
%
|
|||
Total gross profit
|
246,016
|
|
|
35.4
|
%
|
|
432,206
|
|
|
51.4
|
%
|
|
673,512
|
|
|
60.3
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Selling, general & administrative expenses
|
279,628
|
|
|
40.3
|
%
|
|
216,324
|
|
|
25.7
|
%
|
|
197,631
|
|
|
17.7
|
%
|
|||
Acquisition-related costs
|
121
|
|
|
—
|
%
|
|
159
|
|
|
—
|
%
|
|
364
|
|
|
—
|
%
|
|||
Research and development expenses
|
47,321
|
|
|
6.8
|
%
|
|
44,988
|
|
|
5.3
|
%
|
|
38,753
|
|
|
3.5
|
%
|
|||
Amortization of intangibles
|
53,472
|
|
|
7.7
|
%
|
|
61,443
|
|
|
7.3
|
%
|
|
65,713
|
|
|
5.9
|
%
|
|||
Impairment of intangible assets
|
231,086
|
|
|
33.3
|
%
|
|
128,127
|
|
|
15.2
|
%
|
|
44,369
|
|
|
4.0
|
%
|
|||
Litigation rulings and settlements
|
22,814
|
|
|
3.3
|
%
|
|
4,049
|
|
|
0.5
|
%
|
|
3,824
|
|
|
0.3
|
%
|
|||
Operating (loss) income
|
$
|
(388,426
|
)
|
|
(56.0
|
)%
|
|
$
|
(22,884
|
)
|
|
(2.7
|
)%
|
|
$
|
322,858
|
|
|
28.9
|
%
|
Net (loss) income
|
$
|
(401,909
|
)
|
|
(57.9
|
)%
|
|
$
|
(24,550
|
)
|
|
(2.9
|
)%
|
|
$
|
184,243
|
|
|
16.5
|
%
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net (loss) income
|
$
|
(401,909
|
)
|
|
$
|
(24,550
|
)
|
|
$
|
184,243
|
|
Adjustments to reconcile consolidated net (loss) income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization
|
82,805
|
|
|
85,173
|
|
|
87,963
|
|
|||
Impairment of intangible assets
|
231,086
|
|
|
128,127
|
|
|
44,369
|
|
|||
Fixed asset impairment
|
6,135
|
|
|
—
|
|
|
—
|
|
|||
Amortization of deferred financing fees
|
5,216
|
|
|
5,216
|
|
|
10,760
|
|
|||
Non-cash stock compensation expense
|
21,503
|
|
|
21,018
|
|
|
15,412
|
|
|||
Non-cash interest expense
|
—
|
|
|
—
|
|
|
777
|
|
|||
Income from available-for-sale securities
|
—
|
|
|
(3,032
|
)
|
|
—
|
|
|||
Deferred income taxes, net
|
(37,396
|
)
|
|
(115,249
|
)
|
|
(32,934
|
)
|
|||
Gain on sale of available-for-sale security
|
—
|
|
|
199
|
|
|
45
|
|
|||
Other
|
421
|
|
|
(307
|
)
|
|
(4,888
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|||
Trade accounts receivable, net
|
(11,627
|
)
|
|
141,979
|
|
|
(132,617
|
)
|
|||
Inventories, net
|
9,694
|
|
|
(8,367
|
)
|
|
10,208
|
|
|||
Prepaid expenses and other current assets
|
3,847
|
|
|
(12,232
|
)
|
|
(7,262
|
)
|
|||
Other non-current assets
|
(3,120
|
)
|
|
(3,519
|
)
|
|
(301
|
)
|
|||
Trade accounts payable
|
(5,002
|
)
|
|
(9,223
|
)
|
|
6,139
|
|
|||
Accrued legal fees and contingencies
|
24,120
|
|
|
21,492
|
|
|
711
|
|
|||
FIN 48 Reserve
|
9,690
|
|
|
38,999
|
|
|
(984
|
)
|
|||
Accrued expenses and other liabilities
|
(4,357
|
)
|
|
(18,091
|
)
|
|
(14,951
|
)
|
|||
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
|
$
|
(68,894
|
)
|
|
$
|
247,633
|
|
|
$
|
166,690
|
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|||
Proceeds from disposal of assets
|
$
|
30
|
|
|
$
|
4,815
|
|
|
$
|
5,966
|
|
Payments for other intangible assets
|
(50
|
)
|
|
(200
|
)
|
|
(3,950
|
)
|
|||
Purchases of property, plant and equipment
|
(69,111
|
)
|
|
(95,170
|
)
|
|
(74,938
|
)
|
|||
NET CASH USED IN INVESTING ACTIVITIES
|
$
|
(69,131
|
)
|
|
$
|
(90,555
|
)
|
|
$
|
(72,922
|
)
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|||
Proceeds under stock option and stock purchase plans
|
$
|
546
|
|
|
$
|
9,320
|
|
|
$
|
11,291
|
|
Stock compensation plan withholdings from employee taxes
|
(777
|
)
|
|
(1,726
|
)
|
|
(1,496
|
)
|
|||
Payments of contingent acquisition liabilities
|
(4,793
|
)
|
|
—
|
|
|
—
|
|
|||
Debt financing costs
|
—
|
|
|
—
|
|
|
(5,128
|
)
|
|||
Common stock repurchases
|
—
|
|
|
—
|
|
|
(45,000
|
)
|
|||
Lease Payments
|
(14
|
)
|
|
—
|
|
|
—
|
|
|||
Debt repayment
|
—
|
|
|
—
|
|
|
(200,000
|
)
|
|||
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
|
$
|
(5,038
|
)
|
|
$
|
7,594
|
|
|
$
|
(240,333
|
)
|
Description
|
|
Total
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024 and
beyond
|
||||||||||||||
Term Loans due 2021 (1)
|
|
$
|
831,938
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
831,938
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest Payable – 8.06% existing and incremental term loan (2)
|
|
153,723
|
|
|
67,079
|
|
|
67,079
|
|
|
19,565
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Estimated future pension benefit payments (3)
|
|
14,167
|
|
|
1,477
|
|
|
1,451
|
|
|
1,316
|
|
|
1,328
|
|
|
1,278
|
|
|
7,317
|
|
|||||||
Inventory purchase commitments
|
|
8,647
|
|
|
3,452
|
|
|
2,957
|
|
|
280
|
|
|
280
|
|
|
280
|
|
|
1,398
|
|
|||||||
Leases
|
|
26,867
|
|
|
4,564
|
|
|
4,647
|
|
|
4,283
|
|
|
3,724
|
|
|
2,673
|
|
|
6,976
|
|
|||||||
Strategic partners – contingent payments (4)
|
|
12,998
|
|
|
4,658
|
|
|
3,890
|
|
|
2,650
|
|
|
1,800
|
|
|
—
|
|
|
—
|
|
|||||||
Total:
|
|
$
|
1,048,340
|
|
|
$
|
81,230
|
|
|
$
|
80,024
|
|
|
$
|
860,032
|
|
|
$
|
7,132
|
|
|
$
|
4,231
|
|
|
$
|
15,691
|
|
(1)
|
As discussed further in Item 8, Note 7 -
“Financing Arrangements,”
on February 16, 2016 the Company voluntarily prepaid $200.0 million of cumulative Term Loans principal which eliminated any further interim principal repayment obligations.
|
(3)
|
The
$7.3 million
in the 2024 and beyond column represents estimated future pension benefit payments from 2024 through 2028 only.
|
Ratings Level
|
|
Index Ratings (Moody's/S&P)
|
|
Eurodollar Spread
|
|
ABR Spread
|
Level I
|
|
B1/B+ or higher
|
|
4.25%
|
|
3.25%
|
Level II
|
|
B2/B
|
|
4.75%
|
|
3.75%
|
Level III
|
|
B3/B- or lower
|
|
5.50%
|
|
4.50%
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
||||
CURRENT ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
224,868
|
|
|
$
|
368,119
|
|
Trade accounts receivable, net
|
153,126
|
|
|
141,383
|
|
||
Inventories, net
|
173,645
|
|
|
183,568
|
|
||
Prepaid expenses and other current assets
|
32,180
|
|
|
37,081
|
|
||
TOTAL CURRENT ASSETS
|
583,819
|
|
|
730,151
|
|
||
PROPERTY, PLANT AND EQUIPMENT, NET
|
334,853
|
|
|
313,418
|
|
||
OTHER LONG-TERM ASSETS
|
|
|
|
|
|
||
Goodwill
|
283,879
|
|
|
285,310
|
|
||
Intangible assets, net
|
284,976
|
|
|
569,484
|
|
||
Deferred tax assets
|
—
|
|
|
6,521
|
|
||
Other non-current assets
|
7,730
|
|
|
4,627
|
|
||
TOTAL OTHER LONG-TERM ASSETS
|
576,585
|
|
|
865,942
|
|
||
TOTAL ASSETS
|
$
|
1,495,257
|
|
|
$
|
1,909,511
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
||
CURRENT LIABILITIES
|
|
|
|
|
|
||
Trade accounts payable
|
$
|
39,570
|
|
|
$
|
51,976
|
|
Purchase consideration payable
|
—
|
|
|
3,901
|
|
||
Income taxes payable
|
—
|
|
|
15,775
|
|
||
Accrued royalties
|
6,786
|
|
|
5,902
|
|
||
Accrued compensation
|
19,745
|
|
|
12,286
|
|
||
Accrued administrative fees
|
36,767
|
|
|
38,598
|
|
||
Accrued legal fees and contingencies
|
52,413
|
|
|
28,293
|
|
||
Accrued expenses and other liabilities
|
15,542
|
|
|
14,358
|
|
||
TOTAL CURRENT LIABILITIES
|
170,823
|
|
|
171,089
|
|
||
LONG-TERM LIABILITIES
|
|
|
|
|
|
||
Long-term debt (net of non-current deferred financing costs)
|
820,411
|
|
|
815,195
|
|
||
Deferred tax liability
|
566
|
|
|
43,404
|
|
||
FIN 48 reserve
|
49,990
|
|
|
40,300
|
|
||
Other long-term liabilities
|
9,601
|
|
|
8,278
|
|
||
TOTAL LONG-TERM LIABILITIES
|
880,568
|
|
|
907,177
|
|
||
TOTAL LIABILITIES
|
1,051,391
|
|
|
1,078,266
|
|
||
SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
||
Preferred stock, $1 par value —5,000,000 shares authorized; no shares issued or outstanding at December 31, 2018 and 2017
|
—
|
|
|
—
|
|
||
Common stock, no par value — 150,000,000 shares authorized; 125,492,373 and 125,090,522 shares issued and outstanding at December 31, 2018 and 2017
|
574,553
|
|
|
550,472
|
|
||
(Accumulated deficit) Retained earnings
|
(107,168
|
)
|
|
294,741
|
|
||
Accumulated other comprehensive loss
|
(23,519
|
)
|
|
(13,968
|
)
|
||
TOTAL SHAREHOLDERS’ EQUITY
|
443,866
|
|
|
831,245
|
|
||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
1,495,257
|
|
|
$
|
1,909,511
|
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
REVENUES
|
$
|
694,018
|
|
|
$
|
841,045
|
|
|
$
|
1,116,843
|
|
Cost of sales (exclusive of amortization of intangibles, included within operating expenses below)
|
448,002
|
|
|
408,839
|
|
|
443,331
|
|
|||
GROSS PROFIT
|
246,016
|
|
|
432,206
|
|
|
673,512
|
|
|||
Selling, general and administrative expenses
|
279,628
|
|
|
216,324
|
|
|
197,631
|
|
|||
Acquisition-related costs
|
121
|
|
|
159
|
|
|
364
|
|
|||
Research and development expenses
|
47,321
|
|
|
44,988
|
|
|
38,753
|
|
|||
Amortization of intangibles
|
53,472
|
|
|
61,443
|
|
|
65,713
|
|
|||
Impairment of intangible assets
|
231,086
|
|
|
128,127
|
|
|
44,369
|
|
|||
Litigation rulings and settlements
|
22,814
|
|
|
4,049
|
|
|
3,824
|
|
|||
TOTAL OPERATING EXPENSES
|
634,442
|
|
|
455,090
|
|
|
350,654
|
|
|||
OPERATING (LOSS) INCOME
|
(388,426
|
)
|
|
(22,884
|
)
|
|
322,858
|
|
|||
Amortization of deferred financing costs
|
(5,216
|
)
|
|
(5,216
|
)
|
|
(10,791
|
)
|
|||
Interest expense, net
|
(45,900
|
)
|
|
(38,070
|
)
|
|
(42,734
|
)
|
|||
Other non-operating income (expense), net
|
1,360
|
|
|
6,972
|
|
|
1,967
|
|
|||
(LOSS) INCOME BEFORE INCOME TAXES
|
(438,182
|
)
|
|
(59,198
|
)
|
|
271,300
|
|
|||
Income tax (benefit) provision
|
(36,273
|
)
|
|
(34,648
|
)
|
|
87,057
|
|
|||
NET (LOSS) INCOME
|
$
|
(401,909
|
)
|
|
$
|
(24,550
|
)
|
|
$
|
184,243
|
|
NET (LOSS) INCOME PER COMMON SHARE:
|
|
|
|
|
|
|
|
|
|||
NET (LOSS) INCOME, BASIC
|
$
|
(3.21
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
1.50
|
|
NET (LOSS) INCOME, DILUTED
|
$
|
(3.21
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
1.47
|
|
SHARES USED IN COMPUTING NET (LOSS) INCOME PER COMMON SHARE:
|
|
|
|
|
|
|
|
|
|||
BASIC
|
125,383
|
|
|
124,790
|
|
|
122,869
|
|
|||
DILUTED
|
125,383
|
|
|
124,790
|
|
|
125,801
|
|
|||
COMPREHENSIVE (LOSS) INCOME:
|
|
|
|
|
|
|
|
|
|||
Net (loss) income
|
$
|
(401,909
|
)
|
|
$
|
(24,550
|
)
|
|
$
|
184,243
|
|
Unrealized holding (loss) gain on available-for-sale securities, net of tax of $6, ($157) and ($436) for the years ended December 31, 2018, 2017 and 2016, respectively.
|
(21
|
)
|
|
267
|
|
|
740
|
|
|||
Foreign currency translation (loss) gain for the years ended December 31, 2018, 2017 and 2016, respectively.
|
(8,001
|
)
|
|
6,150
|
|
|
(1,941
|
)
|
|||
Pension liability adjustment, net of tax of $389, ($403) and $694 for the year ended December 31, 2018, 2017 and 2016, respectively.
|
(1,529
|
)
|
|
1,582
|
|
|
(3,624
|
)
|
|||
COMPREHENSIVE (LOSS) INCOME
|
$
|
(411,460
|
)
|
|
$
|
(16,551
|
)
|
|
$
|
179,418
|
|
|
Common Stock
|
|
Retained
Earnings
(Accumulated Deficit)
|
|
Other
Compre-hensive Loss
|
|
Total
|
|||||||||||
|
Shares
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|||||||||
BALANCES AT DECEMBER 31, 2015
|
119,427
|
|
|
$
|
458,659
|
|
|
$
|
180,048
|
|
|
$
|
(17,142
|
)
|
|
$
|
621,565
|
|
Net income
|
—
|
|
|
—
|
|
|
184,243
|
|
|
—
|
|
|
184,243
|
|
||||
Common stock repurchases
|
(1,808
|
)
|
|
—
|
|
|
(45,000
|
)
|
|
—
|
|
|
(45,000
|
)
|
||||
Exercise of stock options
|
1,792
|
|
|
13,953
|
|
|
—
|
|
|
—
|
|
|
13,953
|
|
||||
Restricted stock units
|
184
|
|
|
4,091
|
|
|
—
|
|
|
—
|
|
|
4,091
|
|
||||
Stock-based compensation expense
|
—
|
|
|
11,321
|
|
|
—
|
|
|
—
|
|
|
11,321
|
|
||||
Foreign currency translation loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,941
|
)
|
|
(1,941
|
)
|
||||
Excess tax benefit – stock compensation
|
(138
|
)
|
|
(4,158
|
)
|
|
—
|
|
|
—
|
|
|
(4,158
|
)
|
||||
Unrealized holding loss on available-for-sale securities
|
—
|
|
|
—
|
|
|
—
|
|
|
740
|
|
|
740
|
|
||||
Convertible note conversions
|
4,933
|
|
|
43,215
|
|
|
—
|
|
|
—
|
|
|
43,215
|
|
||||
Akorn AG pension liability adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,624
|
)
|
|
(3,624
|
)
|
||||
Other
|
—
|
|
|
(5,221
|
)
|
|
—
|
|
|
—
|
|
|
(5,221
|
)
|
||||
BALANCES AT DECEMBER 31, 2016
|
124,390
|
|
|
$
|
521,860
|
|
|
$
|
319,291
|
|
|
$
|
(21,967
|
)
|
|
$
|
819,184
|
|
Net loss
|
—
|
|
|
—
|
|
|
(24,550
|
)
|
|
—
|
|
|
(24,550
|
)
|
||||
Exercise of stock options
|
625
|
|
|
9,673
|
|
|
—
|
|
|
—
|
|
|
9,673
|
|
||||
Restricted stock units
|
138
|
|
|
7,736
|
|
|
—
|
|
|
—
|
|
|
7,736
|
|
||||
Stock-based compensation expense
|
—
|
|
|
13,282
|
|
|
—
|
|
|
—
|
|
|
13,282
|
|
||||
Foreign currency translation gain
|
—
|
|
|
—
|
|
|
—
|
|
|
6,150
|
|
|
6,150
|
|
||||
Stock compensation plan withholdings
for employee taxes |
(62
|
)
|
|
(2,079
|
)
|
|
—
|
|
|
—
|
|
|
(2,079
|
)
|
||||
Unrealized holding loss on available-for-sale securities
|
—
|
|
|
—
|
|
|
—
|
|
|
267
|
|
|
267
|
|
||||
Akorn AG pension liability adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
1,582
|
|
|
1,582
|
|
||||
BALANCES AT DECEMBER 31, 2017
|
125,091
|
|
|
$
|
550,472
|
|
|
$
|
294,741
|
|
|
$
|
(13,968
|
)
|
|
$
|
831,245
|
|
Net loss
|
—
|
|
|
—
|
|
|
(401,909
|
)
|
|
—
|
|
|
(401,909
|
)
|
||||
Exercise of stock options
|
22
|
|
|
546
|
|
|
—
|
|
|
—
|
|
|
546
|
|
||||
Employee stock purchase plan issuances
|
146
|
|
|
2,809
|
|
|
—
|
|
|
—
|
|
|
2,809
|
|
||||
Compensation and share issuances related to restricted stock awards
|
288
|
|
|
11,673
|
|
|
—
|
|
|
—
|
|
|
11,673
|
|
||||
Stock-based compensation expense
|
—
|
|
|
9,830
|
|
|
—
|
|
|
—
|
|
|
9,830
|
|
||||
Foreign currency translation loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,001
|
)
|
|
(8,001
|
)
|
||||
Stock compensation plan withholdings
for employee taxes |
(55
|
)
|
|
(777
|
)
|
|
—
|
|
|
—
|
|
|
(777
|
)
|
||||
Unrealized holding loss on available-for-sale securities
|
—
|
|
|
—
|
|
|
—
|
|
|
(21
|
)
|
|
(21
|
)
|
||||
Akorn AG pension liability adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,529
|
)
|
|
(1,529
|
)
|
||||
BALANCES AT DECEMBER 31, 2018
|
125,492
|
|
|
$
|
574,553
|
|
|
$
|
(107,168
|
)
|
|
$
|
(23,519
|
)
|
|
$
|
443,866
|
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net (loss) income
|
$
|
(401,909
|
)
|
|
$
|
(24,550
|
)
|
|
$
|
184,243
|
|
Depreciation and amortization
|
82,805
|
|
|
85,173
|
|
|
87,963
|
|
|||
Impairment of intangible assets
|
231,086
|
|
|
128,127
|
|
|
44,369
|
|
|||
Fixed asset impairment
|
6,135
|
|
|
—
|
|
|
—
|
|
|||
Amortization of deferred financing fees
|
5,216
|
|
|
5,216
|
|
|
10,760
|
|
|||
Non-cash stock compensation expense
|
21,503
|
|
|
21,018
|
|
|
15,412
|
|
|||
Non-cash interest expense
|
—
|
|
|
—
|
|
|
777
|
|
|||
Income from available-for-sale securities
|
—
|
|
|
(3,032
|
)
|
|
—
|
|
|||
Deferred income taxes, net
|
(37,396
|
)
|
|
(115,249
|
)
|
|
(32,934
|
)
|
|||
Gain on sale of available-for-sale security
|
—
|
|
|
199
|
|
|
45
|
|
|||
Other
|
421
|
|
|
(307
|
)
|
|
(4,888
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|||
Trade accounts receivable, net
|
(11,627
|
)
|
|
141,979
|
|
|
(132,617
|
)
|
|||
Inventories, net
|
9,694
|
|
|
(8,367
|
)
|
|
10,208
|
|
|||
Prepaid expenses and other current assets
|
3,847
|
|
|
(12,232
|
)
|
|
(7,262
|
)
|
|||
Other non-current assets
|
(3,120
|
)
|
|
(3,519
|
)
|
|
(301
|
)
|
|||
Trade accounts payable
|
(5,002
|
)
|
|
(9,223
|
)
|
|
6,139
|
|
|||
Accrued legal fees and contingencies
|
24,120
|
|
|
21,492
|
|
|
711
|
|
|||
FIN 48 Reserve
|
9,690
|
|
|
38,999
|
|
|
(984
|
)
|
|||
Accrued expenses and other liabilities
|
(4,357
|
)
|
|
(18,091
|
)
|
|
(14,951
|
)
|
|||
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
|
(68,894
|
)
|
|
247,633
|
|
|
166,690
|
|
|||
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|||
Proceeds from disposal of assets
|
30
|
|
|
4,815
|
|
|
5,966
|
|
|||
Payments for other intangible assets
|
(50
|
)
|
|
(200
|
)
|
|
(3,950
|
)
|
|||
Purchases of property, plant and equipment
|
(69,111
|
)
|
|
(95,170
|
)
|
|
(74,938
|
)
|
|||
NET CASH USED IN INVESTING ACTIVITIES
|
(69,131
|
)
|
|
(90,555
|
)
|
|
(72,922
|
)
|
|||
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|||
Proceeds under stock option and stock purchase plans
|
546
|
|
|
9,320
|
|
|
11,291
|
|
|||
Stock compensation plan withholdings from employee taxes
|
(777
|
)
|
|
(1,726
|
)
|
|
(1,496
|
)
|
|||
Payments of contingent acquisition liabilities
|
(4,793
|
)
|
|
—
|
|
|
—
|
|
|||
Debt financing costs
|
—
|
|
|
—
|
|
|
(5,128
|
)
|
|||
Common stock repurchases
|
—
|
|
|
—
|
|
|
(45,000
|
)
|
|||
Lease Payments
|
(14
|
)
|
|
—
|
|
|
—
|
|
|||
Debt repayment
|
—
|
|
|
—
|
|
|
(200,000
|
)
|
|||
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
|
(5,038
|
)
|
|
7,594
|
|
|
(240,333
|
)
|
|||
Effect of changes in exchange rates on cash and cash equivalents
|
(1,032
|
)
|
|
1,183
|
|
|
2
|
|
|||
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
(144,095
|
)
|
|
165,855
|
|
|
(146,563
|
)
|
|||
CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF YEAR
|
369,889
|
|
|
204,034
|
|
|
350,597
|
|
|||
CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF YEAR
|
$
|
225,794
|
|
|
$
|
369,889
|
|
|
$
|
204,034
|
|
Cash, Cash Equivalents, and Restricted Cash
|
Year Ended
December 31, |
||||||
|
2018
|
|
2017
|
||||
Cash and cash equivalents
|
$
|
224,868
|
|
|
$
|
368,119
|
|
Restricted cash
|
926
|
|
|
1,770
|
|
||
Total cash, cash equivalents, and restricted cash
|
$
|
225,794
|
|
|
$
|
369,889
|
|
Asset category
|
|
Depreciable Life (years)
|
Buildings
|
|
30 - 50
|
Building and leasehold improvements
|
|
10 - 20
|
Furniture and equipment
|
|
7 - 20
|
Automobiles
|
|
5 - 7
|
Computer hardware and software
|
|
3 - 5
|
-
|
Level 1
—Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. The carrying value of the Company's cash and cash equivalents are considered Level 1 assets.
|
-
|
Level 2
—Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as directly or indirectly observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. The Company has no Level 2 assets or liabilities in any of the periods presented.
|
-
|
Level 3
—Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. The portion of the fair valuation of the available-for-sale investment held in shares of Nicox stock that is subject to a lock-up provision is considered a Level 3 asset. The additional consideration payable as a result of prior years' acquisitions and other insignificant contingent amounts are considered Level 3 liabilities.
|
Description
|
December 31,
2017
|
|
Quoted Prices
in Active
Markets for
Identical Items
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Cash and cash equivalents
|
$
|
368,119
|
|
|
$
|
368,119
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Nicox stock with lockup provisions
|
35
|
|
|
—
|
|
|
—
|
|
|
35
|
|
||||
Total assets
|
$
|
368,154
|
|
|
$
|
368,119
|
|
|
$
|
—
|
|
|
$
|
35
|
|
Purchase consideration payable
|
3,901
|
|
|
—
|
|
|
—
|
|
|
3,901
|
|
||||
Total liabilities
|
$
|
3,901
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,901
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Gross accounts receivable (1)
|
$
|
308,305
|
|
|
$
|
378,759
|
|
Less reserves for:
|
|
|
|
||||
Chargebacks (2)
|
(55,312
|
)
|
|
(73,984
|
)
|
||
Rebates (2)
|
(55,963
|
)
|
|
(111,945
|
)
|
||
Product returns
|
(35,146
|
)
|
|
(41,687
|
)
|
||
Discounts and allowances
|
(6,561
|
)
|
|
(7,779
|
)
|
||
Advertising and promotions
|
(1,574
|
)
|
|
(1,301
|
)
|
||
Doubtful accounts
|
(623
|
)
|
|
(680
|
)
|
||
Trade accounts receivable, net
|
$
|
153,126
|
|
|
$
|
141,383
|
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Gross sales
|
$
|
1,887,862
|
|
|
$
|
2,351,071
|
|
|
$
|
2,891,267
|
|
Less adjustments for:
|
|
|
|
|
|
||||||
Chargebacks (1)
|
(830,038
|
)
|
|
(953,326
|
)
|
|
(1,218,560
|
)
|
|||
Rebates, administrative fees and others (1)
|
(297,802
|
)
|
|
(476,601
|
)
|
|
(463,724
|
)
|
|||
Product returns
|
(20,162
|
)
|
|
(26,874
|
)
|
|
(28,285
|
)
|
|||
Discounts and allowances
|
(36,933
|
)
|
|
(45,292
|
)
|
|
(55,494
|
)
|
|||
Advertising, promotions, and others
|
(8,909
|
)
|
|
(7,933
|
)
|
|
(8,361
|
)
|
|||
Revenues, net
|
$
|
694,018
|
|
|
$
|
841,045
|
|
|
$
|
1,116,843
|
|
|
Returns
|
|
Chargebacks
|
|
Rebates (1)
|
|
Discounts
|
|
Doubtful Accounts
|
|
Advertising & Promotions
|
|
Total
|
||||||||||||||
Balance at December 31, 2015
|
$
|
48,333
|
|
|
$
|
91,844
|
|
|
$
|
162,596
|
|
|
$
|
10,079
|
|
|
$
|
1,579
|
|
|
$
|
1,518
|
|
|
$
|
315,949
|
|
Provision
|
28,285
|
|
|
1,218,560
|
|
|
384,074
|
|
|
55,494
|
|
|
—
|
|
|
8,361
|
|
|
1,694,774
|
|
|||||||
Charges processed
|
(32,929
|
)
|
|
(1,230,044
|
)
|
|
(448,735
|
)
|
|
(53,184
|
)
|
|
(619
|
)
|
|
(9,191
|
)
|
|
(1,774,702
|
)
|
|||||||
Balance at December 31, 2016
|
$
|
43,689
|
|
|
$
|
80,360
|
|
|
$
|
97,935
|
|
|
$
|
12,389
|
|
|
$
|
960
|
|
|
$
|
688
|
|
|
$
|
236,021
|
|
Provision
|
26,874
|
|
|
953,326
|
|
|
416,125
|
|
|
45,292
|
|
|
—
|
|
|
7,933
|
|
|
1,449,550
|
|
|||||||
Charges processed
|
(28,876
|
)
|
|
(959,702
|
)
|
|
(402,115
|
)
|
|
(49,902
|
)
|
|
(280
|
)
|
|
(7,320
|
)
|
|
(1,448,195
|
)
|
|||||||
Balance at December 31, 2017
|
$
|
41,687
|
|
|
$
|
73,984
|
|
|
$
|
111,945
|
|
|
$
|
7,779
|
|
|
$
|
680
|
|
|
$
|
1,301
|
|
|
$
|
237,376
|
|
Provision
|
20,162
|
|
|
830,038
|
|
|
257,417
|
|
|
36,933
|
|
|
—
|
|
|
8,909
|
|
|
1,153,459
|
|
|||||||
Charges processed
|
(26,703
|
)
|
|
(848,710
|
)
|
|
(313,399
|
)
|
|
(38,151
|
)
|
|
(57
|
)
|
|
(8,636
|
)
|
|
(1,235,656
|
)
|
|||||||
Balance at December 31, 2018
|
$
|
35,146
|
|
|
$
|
55,312
|
|
|
$
|
55,963
|
|
|
$
|
6,561
|
|
|
$
|
623
|
|
|
$
|
1,574
|
|
|
$
|
155,179
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Finished goods
|
$
|
76,981
|
|
|
$
|
79,226
|
|
Work in process
|
13,870
|
|
|
15,447
|
|
||
Raw materials and supplies
|
82,794
|
|
|
88,895
|
|
||
|
$
|
173,645
|
|
|
$
|
183,568
|
|
|
Years Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
Balance at beginning of year
|
$
|
34,402
|
|
|
$
|
33,532
|
|
Provision
|
27,341
|
|
|
21,369
|
|
||
Charges processed
|
(15,238
|
)
|
|
(20,499
|
)
|
||
Balance at end of year
|
$
|
46,505
|
|
|
$
|
34,402
|
|
|
Goodwill
|
||
December 31, 2016
|
$
|
284,293
|
|
Foreign currency translation
|
1,017
|
|
|
December 31, 2017
|
$
|
285,310
|
|
Foreign currency translation
|
(1,431
|
)
|
|
December 31, 2018
|
$
|
283,879
|
|
|
Gross Carrying Amount (2)
|
|
Accumulated
Amortization
|
|
Reclassifications
|
|
Impairment (1)
|
|
Net
Carrying
Amount
|
|
Weighted Average
Remaining Amortization Period (years) |
||||||||||
Product licensing rights
|
$
|
597,960
|
|
|
$
|
(203,323
|
)
|
|
$
|
5,300
|
|
|
$
|
(131,306
|
)
|
|
$
|
268,631
|
|
|
9.2
|
IPR&D
|
149,161
|
|
|
—
|
|
|
(5,300
|
)
|
|
(139,461
|
)
|
|
4,400
|
|
|
N/A - Indefinite lived
|
|||||
Trademarks
|
16,000
|
|
|
(6,304
|
)
|
|
—
|
|
|
—
|
|
|
9,696
|
|
|
17.5
|
|||||
Customer relationships
|
4,225
|
|
|
(2,318
|
)
|
|
—
|
|
|
—
|
|
|
1,907
|
|
|
7.3
|
|||||
Other intangibles
|
11,235
|
|
|
(5,658
|
)
|
|
—
|
|
|
(5,235
|
)
|
|
342
|
|
|
0.3
|
|||||
|
$
|
778,581
|
|
|
$
|
(217,603
|
)
|
|
$
|
—
|
|
|
$
|
(276,002
|
)
|
|
$
|
284,976
|
|
|
|
|
Product
licensing
rights
|
|
IPR&D
|
|
Trademarks
|
|
Customer
relationships
|
|
Other
intangibles
|
||||||||||
December 31, 2016
|
$
|
564,005
|
|
|
$
|
173,757
|
|
|
$
|
11,756
|
|
|
$
|
2,427
|
|
|
$
|
6,909
|
|
Acquisitions
|
200
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Amortization
|
(58,335
|
)
|
|
—
|
|
|
(1,132
|
)
|
|
(260
|
)
|
|
(1,717
|
)
|
|||||
Impairments
|
(103,530
|
)
|
|
(24,596
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
December 31, 2017
|
$
|
402,340
|
|
|
$
|
149,161
|
|
|
$
|
10,624
|
|
|
$
|
2,167
|
|
|
$
|
5,192
|
|
Acquisitions
|
50
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Amortization
|
(50,567
|
)
|
|
—
|
|
|
(928
|
)
|
|
(260
|
)
|
|
(1,717
|
)
|
|||||
Impairments
|
(88,492
|
)
|
|
(139,461
|
)
|
|
—
|
|
|
—
|
|
|
(3,133
|
)
|
|||||
Reclassifications
|
5,300
|
|
|
(5,300
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
December 31, 2018
|
$
|
268,631
|
|
|
$
|
4,400
|
|
|
$
|
9,696
|
|
|
$
|
1,907
|
|
|
$
|
342
|
|
Year ending December 31,
|
|
Amortization Expense
|
||
2019
|
|
$
|
40,404
|
|
2020
|
|
31,594
|
|
|
2021
|
|
31,594
|
|
|
2022
|
|
31,594
|
|
|
2023 and thereafter
|
|
145,390
|
|
|
Total
|
|
$
|
280,576
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Land
|
$
|
17,608
|
|
|
$
|
17,846
|
|
Buildings and leasehold improvements
|
138,126
|
|
|
106,316
|
|
||
Furniture and equipment
|
240,080
|
|
|
202,897
|
|
||
|
395,814
|
|
|
327,059
|
|
||
Accumulated depreciation
|
(158,824
|
)
|
|
(130,814
|
)
|
||
|
236,990
|
|
|
196,245
|
|
||
Construction in progress
|
97,863
|
|
|
117,173
|
|
||
Property, plant and equipment, net
|
$
|
334,853
|
|
|
$
|
313,418
|
|
Ratings Level
|
Index Ratings
(Moody’s/S&P)
|
Adjusted LIBOR (Eurodollar) Spread
|
Adjusted prime/federal funds rate (ABR) Spread
|
Level I
|
B1/B+ or higher
|
4.25%
|
3.25%
|
Level II
|
B2/B
|
4.75%
|
3.75%
|
Level III
|
B3/B- or lower
|
5.50%
|
4.50%
|
(a)
|
85%
of eligible accounts receivable;
|
(b)
|
The lesser of:
|
a.
|
65%
of the lower of cost or market value of eligible raw materials and work in process inventory, valued on a first in first out basis, and
|
b.
|
85%
of the orderly liquidation value of eligible raw materials and work in process inventory, valued on a first in first out basis;
|
(c)
|
The lesser of:
|
a.
|
75%
of the lower of cost or market value of eligible finished goods inventory, valued on a first in first out basis, and
|
b.
|
85%
of the orderly liquidation value of eligible finished goods inventory, valued on a first in first out basis up to
85%
of the liquidation value of eligible inventory (or
75%
of market value finished goods inventory); and
|
(d)
|
Less any reserves deemed necessary by the administrative agent, and allowed in its permitted discretion.
|
Fixed Charge
Coverage Ratio
|
Revolver ABR
Spread
|
Revolver
Eurodollar
Spread
|
Category 1
> 1.50 to 1.0 |
0.50%
|
1.50%
|
Category 2
> 1.25 to 1.00 but < 1.50 to 1.00 |
0.75%
|
1.75%
|
Category 3
< 1.25 to 1.00 |
1.00%
|
2.00%
|
(a)
|
Minimum Liquidity, as defined in the JPM Credit Agreement, of not less than (a)
$120.0 million
plus (b)
25%
of the JPM Revolving Facility commitments during the three-month period preceding the June 1, 2016 maturity date of the Company’s senior convertible notes.
|
(b)
|
Ratio of EBITDA to fixed charges of no less than
1.00
to
1.00
(measured quarterly for the trailing
4
quarters).
|
|
2016
|
||
Interest expense at 3.50% coupon rate (1)
|
$
|
687
|
|
Debt discount amortization
|
750
|
|
|
Deferred financing cost amortization
|
136
|
|
|
|
$
|
1,573
|
|
(1)
|
As a result of the restatement of the 2014 financial data and the resultant delays in filings of the 2015 financial statements, the Company was required to remit an additional
0.5%
interest penalty to all holders of the convertible notes from January 1, 2016 to April 5, 2016 and a lump sum payment equal to
0.25%
of the principal balance held by consenting holders of the convertible notes as of April 6, 2016.
|
(In thousands)
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
||||||||
Maturities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
831,938
|
|
|
$
|
—
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
(Loss) income from operations used for basic earnings per share
|
$
|
(401,909
|
)
|
|
$
|
(24,550
|
)
|
|
$
|
184,243
|
|
Convertible debt income adjustments, net of tax
|
—
|
|
|
—
|
|
|
1,049
|
|
|||
(Loss) income from operations adjusted for convertible debt as used for diluted earnings per share
|
$
|
(401,909
|
)
|
|
$
|
(24,550
|
)
|
|
$
|
185,292
|
|
(Loss) income from operations per share:
|
|
|
|
|
|
|
|
|
|||
Basic
|
$
|
(3.21
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
1.50
|
|
Diluted (1)
|
$
|
(3.21
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
1.47
|
|
Shares used in computing (loss) income per share:
|
|
|
|
|
|
|
|
|
|||
Weighted average basic shares outstanding
|
125,383
|
|
|
124,790
|
|
|
122,869
|
|
|||
Dilutive securities:
|
|
|
|
|
|
|
|
|
|||
Stock options and unvested RSUs
|
—
|
|
|
—
|
|
|
914
|
|
|||
Shares issuable on conversion of the Notes
|
—
|
|
|
—
|
|
|
2,018
|
|
|||
Total dilutive securities
|
—
|
|
|
—
|
|
|
2,932
|
|
|||
Weighted average diluted shares outstanding
|
125,383
|
|
|
124,790
|
|
|
125,801
|
|
(1)
|
As a result of the Company's expectation that it would likely settle all future note conversions in shares of the Company's common stock, the diluted income from operations per share calculation for the periods prior to the complete conversion of the convertible debt on June 1, 2016, included the dilutive effect of convertible debt and was offset by the exclusion of interest expense and deferred financing fees related to the convertible debt of
$1.0 million
, after-tax for the year ended December 31, 2016.
|
|
2017
|
|
2016
|
||||
Expected volatility
|
50%
|
—
|
50%
|
|
46%
|
—
|
50%
|
Expected life (in years)
|
|
4.8
|
|
|
|
4.7
|
|
Risk-free interest rate
|
1.7%
|
—
|
1.7%
|
|
0.9%
|
—
|
1.8%
|
Dividend yield
|
|
—
|
|
|
|
—
|
|
Weighted-average grant date fair value per stock option
|
|
$9.25
|
|
|
|
$11.13
|
|
|
|
Number of
Shares
(in thousands)
|
|
Weighted
Average
Exercise Price
|
|
Weighted Average Remaining Contractual Term (Years)
|
|
Aggregate
Intrinsic Value
(in thousands) (1)
|
|||||
Outstanding at December 31, 2015
|
|
4,762
|
|
|
$
|
20.33
|
|
|
|
|
|
|
|
Granted
|
|
2,089
|
|
|
26.61
|
|
|
|
|
|
|
||
Exercised
|
|
(1,794
|
)
|
|
7.78
|
|
|
|
|
|
|
||
Forfeited or expired
|
|
(291
|
)
|
|
28.96
|
|
|
|
|
|
|
||
Outstanding at December 31, 2016
|
|
4,766
|
|
|
$
|
27.27
|
|
|
|
|
|
|
|
Granted
|
|
66
|
|
|
21.28
|
|
|
|
|
|
|
||
Exercised
|
|
(623
|
)
|
|
15.53
|
|
|
|
|
|
|
||
Forfeited or expired
|
|
(156
|
)
|
|
28.20
|
|
|
|
|
|
|
||
Outstanding at December 31, 2017
|
|
4,053
|
|
|
$
|
28.95
|
|
|
|
|
|
|
|
Granted
|
|
—
|
|
|
—
|
|
|
|
|
|
|
||
Exercised
|
|
(22
|
)
|
|
24.99
|
|
|
|
|
|
|
||
Forfeited or expired
|
|
(613
|
)
|
|
31.28
|
|
|
|
|
|
|
||
Outstanding at December 31, 2018
|
|
3,418
|
|
|
$
|
28.55
|
|
|
3.69
|
|
$
|
—
|
|
Exercisable at December 31, 2018
|
|
2,350
|
|
|
$
|
29.00
|
|
|
3.41
|
|
$
|
—
|
|
(1)
|
Includes only those options that were in-the-money as of December 31, 2018. Fluctuations in the intrinsic value of both outstanding and exercisable options may result from changes in underlying stock price and the timing and volume of option grants, exercises and forfeitures.
|
|
Number of Shares
(in thousands)
|
|
Weighted Average Per Share
Grant Date Fair Value
|
|||
Unvested at December 31, 2015
|
253
|
|
|
$
|
35.31
|
|
Granted
|
303
|
|
|
29.50
|
|
|
Vested
|
(118
|
)
|
|
34.95
|
|
|
Forfeited
|
(22
|
)
|
|
28.85
|
|
|
Unvested at December 31, 2016
|
416
|
|
|
$
|
31.52
|
|
Granted
|
666
|
|
|
33.10
|
|
|
Vested
|
(137
|
)
|
|
32.55
|
|
|
Forfeited
|
(57
|
)
|
|
31.34
|
|
|
Unvested at December 31, 2017
|
888
|
|
|
$
|
32.55
|
|
Granted (1)
|
1,711
|
|
|
16.07
|
|
|
Vested
|
(408
|
)
|
|
30.22
|
|
|
Forfeited (1)
|
(548
|
)
|
|
24.00
|
|
|
Unvested at December 31, 2018
|
1,643
|
|
|
$
|
19.85
|
|
(1)
|
RSUs granted and forfeited include
0.4 million
RSUs held by the Company’s former CEO and COO that were modified to accelerate vesting. This modification was treated as forfeiture of the old awards and granting of new awards with modified vesting terms.
|
|
Current
|
|
Deferred
|
|
Total
|
||||||
Year ended December 31, 2018
|
|
|
|
|
|
||||||
Federal
|
$
|
2,768
|
|
|
$
|
(40,345
|
)
|
|
$
|
(37,577
|
)
|
State
|
(1,677
|
)
|
|
(2,093
|
)
|
|
(3,770
|
)
|
|||
Foreign
|
32
|
|
|
5,042
|
|
|
5,074
|
|
|||
|
$
|
1,123
|
|
|
$
|
(37,396
|
)
|
|
$
|
(36,273
|
)
|
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
|||
Federal
|
$
|
78,806
|
|
|
$
|
(105,006
|
)
|
|
$
|
(26,200
|
)
|
State
|
1,706
|
|
|
(9,785
|
)
|
|
(8,079
|
)
|
|||
Foreign
|
89
|
|
|
(458
|
)
|
|
(369
|
)
|
|||
|
$
|
80,601
|
|
|
$
|
(115,249
|
)
|
|
$
|
(34,648
|
)
|
Year ended December 31, 2016
|
|
|
|
|
|
|
|
|
|||
Federal
|
$
|
107,818
|
|
|
$
|
(26,377
|
)
|
|
$
|
81,441
|
|
State
|
11,247
|
|
|
(4,325
|
)
|
|
6,922
|
|
|||
Foreign
|
—
|
|
|
(1,306
|
)
|
|
(1,306
|
)
|
|||
|
$
|
119,065
|
|
|
$
|
(32,008
|
)
|
|
$
|
87,057
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Computed “expected” tax provision
|
$
|
(92,018
|
)
|
|
$
|
(20,719
|
)
|
|
$
|
94,955
|
|
Change in income taxes resulting from:
|
|
|
|
|
|
||||||
State income taxes, net of Federal income tax
|
(11,667
|
)
|
|
(537
|
)
|
|
4,501
|
|
|||
Change in state income tax rate, net of Federal income tax
|
(16
|
)
|
|
(4,714
|
)
|
|
—
|
|
|||
Foreign income tax (benefit) provision
|
(1,658
|
)
|
|
2,206
|
|
|
1,580
|
|
|||
Deduction for domestic production activities
|
—
|
|
|
(2,527
|
)
|
|
(7,280
|
)
|
|||
Stock compensation
|
2,480
|
|
|
(1,316
|
)
|
|
(11,395
|
)
|
|||
R&D tax credits
|
(750
|
)
|
|
(1,200
|
)
|
|
(825
|
)
|
|||
Nondeductible acquisition fees
|
(1,165
|
)
|
|
1,974
|
|
|
39
|
|
|||
Interest and penalties from Federal audit
|
7,935
|
|
|
15,650
|
|
|
—
|
|
|||
Federal rate change
|
(3,027
|
)
|
|
(26,902
|
)
|
|
—
|
|
|||
Discrete adjustments to prior year
|
570
|
|
|
1,561
|
|
|
—
|
|
|||
162(m) Officers Compensation Limitation
|
1,483
|
|
|
—
|
|
|
—
|
|
|||
Other expense, net
|
934
|
|
|
1,201
|
|
|
2,564
|
|
|||
Valuation allowance change
|
60,626
|
|
|
675
|
|
|
2,918
|
|
|||
Income tax (benefit) provision
|
$
|
(36,273
|
)
|
|
$
|
(34,648
|
)
|
|
$
|
87,057
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Pre-tax (loss) income from U.S. operations
|
$
|
(428,299
|
)
|
|
$
|
(49,572
|
)
|
|
$
|
287,880
|
|
Pre-tax loss from foreign operations
|
(9,883
|
)
|
|
(9,626
|
)
|
|
(16,580
|
)
|
|||
Total pre-tax (loss) income
|
$
|
(438,182
|
)
|
|
$
|
(59,198
|
)
|
|
$
|
271,300
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carry-forward
|
$
|
48,766
|
|
|
$
|
25,100
|
|
Stock-based compensation
|
9,071
|
|
|
7,668
|
|
||
Chargeback reserves
|
14,173
|
|
|
17,802
|
|
||
Reserve for product returns
|
8,012
|
|
|
9,479
|
|
||
Inventory valuation reserve
|
9,688
|
|
|
10,207
|
|
||
Long-term debt
|
2,226
|
|
|
3,084
|
|
||
Interest greater than 30% of EBITDA
|
13,930
|
|
|
—
|
|
||
Other
|
16,444
|
|
|
10,806
|
|
||
Total deferred tax assets
|
$
|
122,310
|
|
|
$
|
84,146
|
|
Valuation allowance
|
(71,157
|
)
|
|
(10,531
|
)
|
||
Net deferred tax assets
|
$
|
51,153
|
|
|
$
|
73,615
|
|
Deferred tax liabilities:
|
|
|
|
|
|
||
Prepaid expenses
|
$
|
(2,137
|
)
|
|
$
|
(1,709
|
)
|
Depreciation & amortization – tax over book
|
(49,547
|
)
|
|
(108,788
|
)
|
||
Other
|
$
|
(35
|
)
|
|
$
|
—
|
|
Total deferred tax liabilities
|
$
|
(51,719
|
)
|
|
$
|
(110,497
|
)
|
Net deferred income tax (liability)
|
$
|
(566
|
)
|
|
$
|
(36,882
|
)
|
Balance at December 31, 2015
|
$
|
2,285
|
|
Additions relating to current year
|
303
|
|
|
Payments of amounts relating to prior years
|
(1,287
|
)
|
|
Balance at December 31, 2016
|
$
|
1,301
|
|
Additions relating to 2017
|
416
|
|
|
Additions relating to prior years
|
24,297
|
|
|
Terminations of exposures relating to prior years
|
(619
|
)
|
|
Balance at December 31, 2017
|
$
|
25,395
|
|
Additions relating to 2018
|
269
|
|
|
Additions relating to prior years
|
4,425
|
|
|
Terminations of exposures relating to prior years
|
(702
|
)
|
|
Balance at December 31, 2018
|
$
|
29,387
|
|
•
|
Prescription Pharmaceuticals
|
•
|
Consumer Health
|
|
Years ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
REVENUES, NET:
|
|
|
|
|
|
||||||
Prescription Pharmaceuticals
|
$
|
620,669
|
|
|
$
|
772,524
|
|
|
$
|
1,053,579
|
|
Consumer Health
|
73,349
|
|
|
68,521
|
|
|
63,264
|
|
|||
Total revenues, net
|
$
|
694,018
|
|
|
$
|
841,045
|
|
|
$
|
1,116,843
|
|
GROSS PROFIT:
|
|
|
|
|
|
|
|
|
|||
Prescription Pharmaceuticals
|
$
|
213,560
|
|
|
$
|
402,082
|
|
|
$
|
644,319
|
|
Consumer Health
|
32,456
|
|
|
30,124
|
|
|
29,193
|
|
|||
Total gross profit
|
$
|
246,016
|
|
|
$
|
432,206
|
|
|
$
|
673,512
|
|
|
Prescription Pharmaceuticals
|
|
Consumer Health
|
|
Total
|
||||||
December 31, 2016
|
$
|
267,576
|
|
|
$
|
16,717
|
|
|
$
|
284,293
|
|
Acquisitions and other adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|||
Impairments
|
—
|
|
|
—
|
|
|
—
|
|
|||
Dispositions
|
—
|
|
|
—
|
|
|
—
|
|
|||
Foreign currency translations
|
1,017
|
|
|
—
|
|
|
1,017
|
|
|||
December 31, 2017
|
$
|
268,593
|
|
|
$
|
16,717
|
|
|
$
|
285,310
|
|
Acquisitions and other adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|||
Impairments
|
—
|
|
|
—
|
|
|
—
|
|
|||
Dispositions
|
—
|
|
|
—
|
|
|
—
|
|
|||
Foreign currency translations
|
(1,431
|
)
|
|
—
|
|
|
(1,431
|
)
|
|||
December 31, 2018
|
$
|
267,162
|
|
|
$
|
16,717
|
|
|
$
|
283,879
|
|
Year ending December 31,
|
|
Milestone Payments
|
||
2019
|
|
$
|
4,658
|
|
2020
|
|
3,890
|
|
|
2021
|
|
2,650
|
|
|
2022 and beyond
|
|
1,800
|
|
|
Total
|
|
$
|
12,998
|
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Amount paid for interest
|
$
|
57,144
|
|
|
$
|
45,472
|
|
|
$
|
44,063
|
|
Amount paid for income taxes, net
|
9,261
|
|
|
42,003
|
|
|
132,695
|
|
|||
Non-cash conversion of convertible notes to common shares
|
—
|
|
|
—
|
|
|
43,215
|
|
|||
Accrued capital expenditures
|
$
|
6,492
|
|
|
$
|
13,824
|
|
|
$
|
12,391
|
|
Gross Accounts Receivable as of December 31,
|
||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
Disaggregation of gross A/R by major customers
|
Gross
Accounts
Receivable
|
|
Gross
Accounts
Receivable %
|
|
Gross
Accounts
Receivable
|
|
Gross
Accounts
Receivable %
|
|
Gross
Accounts
Receivable
|
|
Gross
Accounts
Receivable %
|
|||||||||
Amerisource
|
$
|
55,160
|
|
|
17.9
|
%
|
|
$
|
99,771
|
|
|
26.3
|
%
|
|
$
|
184,623
|
|
|
35.6
|
%
|
Cardinal
|
59,443
|
|
|
19.3
|
%
|
|
79,731
|
|
|
21.1
|
%
|
|
78,344
|
|
|
15.1
|
%
|
|||
McKesson
|
149,000
|
|
|
48.3
|
%
|
|
146,321
|
|
|
38.6
|
%
|
|
172,468
|
|
|
33.2
|
%
|
|||
Combined Total
|
263,603
|
|
|
85.5
|
%
|
|
325,823
|
|
|
86.0
|
%
|
|
435,435
|
|
|
83.9
|
%
|
|||
Other
|
44,702
|
|
|
14.5
|
%
|
|
52,936
|
|
|
14.0
|
%
|
|
83,740
|
|
|
16.1
|
%
|
|||
Grand Total
|
$
|
308,305
|
|
|
100.0
|
%
|
|
$
|
378,759
|
|
|
100.0
|
%
|
|
$
|
519,175
|
|
|
100.0
|
%
|
Gross Sales YTD
|
||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
Disaggregation of gross sales by major customers
|
Gross Sales
|
|
Gross Sales %
|
|
Gross Sales
|
|
Gross Sales %
|
|
Gross Sales
|
|
Gross Sales %
|
|||||||||
Amerisource
|
$
|
386,543
|
|
|
20.5
|
%
|
|
$
|
554,690
|
|
|
23.6
|
%
|
|
$
|
852,924
|
|
|
29.5
|
%
|
Cardinal
|
390,438
|
|
|
20.7
|
%
|
|
411,458
|
|
|
17.5
|
%
|
|
445,255
|
|
|
15.4
|
%
|
|||
McKesson
|
789,620
|
|
|
41.8
|
%
|
|
918,157
|
|
|
39.1
|
%
|
|
939,662
|
|
|
32.5
|
%
|
|||
Combined Total
|
1,566,601
|
|
|
83.0
|
%
|
|
1,884,305
|
|
|
80.2
|
%
|
|
2,237,841
|
|
|
77.4
|
%
|
|||
Other
|
321,261
|
|
|
17.0
|
%
|
|
466,766
|
|
|
19.8
|
%
|
|
653,426
|
|
|
22.6
|
%
|
|||
Grand Total
|
$
|
1,887,862
|
|
|
100.0
|
%
|
|
$
|
2,351,071
|
|
|
100.0
|
%
|
|
$
|
2,891,267
|
|
|
100.0
|
%
|
Net Revenue YTD
|
||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
Disaggregation of net revenues by major customers
|
Net
Revenue
|
|
Net Revenue %
|
|
Net
Revenue
|
|
Net Revenue %
|
|
Net
Revenue
|
|
Net Revenue %
|
|||||||||
Amerisource
|
$
|
144,776
|
|
|
20.9
|
%
|
|
$
|
160,671
|
|
|
19.1
|
%
|
|
$
|
260,225
|
|
|
23.3
|
%
|
Cardinal
|
109,747
|
|
|
15.8
|
%
|
|
150,257
|
|
|
17.9
|
%
|
|
182,045
|
|
|
16.3
|
%
|
|||
McKesson
|
173,363
|
|
|
25.0
|
%
|
|
222,715
|
|
|
26.5
|
%
|
|
270,276
|
|
|
24.2
|
%
|
|||
Combined Total
|
427,886
|
|
|
61.7
|
%
|
|
533,643
|
|
|
63.5
|
%
|
|
712,546
|
|
|
63.8
|
%
|
|||
Other
|
266,132
|
|
|
38.3
|
%
|
|
307,402
|
|
|
36.5
|
%
|
|
404,297
|
|
|
36.2
|
%
|
|||
Grand Total
|
$
|
694,018
|
|
|
100.0
|
%
|
|
$
|
841,045
|
|
|
100.0
|
%
|
|
$
|
1,116,843
|
|
|
100.0
|
%
|
|
|
|
Net (Loss) Income
|
||||||||||||||||||||
(In thousands, except per share amounts)
|
Revenues
|
|
Gross
Profit
|
|
Operating
(Loss) Income (1)(2)
|
|
Amount
|
|
Per Basic
Share
|
|
Per Diluted
Share
|
||||||||||||
Year Ended December 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
4th Quarter
|
$
|
153,386
|
|
|
$
|
25,247
|
|
|
$
|
(195,865
|
)
|
|
$
|
(215,038
|
)
|
|
$
|
(1.71
|
)
|
|
$
|
(1.71
|
)
|
3rd Quarter
|
165,625
|
|
|
57,262
|
|
|
(75,980
|
)
|
|
(70,140
|
)
|
|
(0.56
|
)
|
|
(0.56
|
)
|
||||||
2nd Quarter
|
190,944
|
|
|
81,279
|
|
|
(91,166
|
)
|
|
(87,984
|
)
|
|
(0.70
|
)
|
|
(0.70
|
)
|
||||||
1st Quarter
|
184,063
|
|
|
82,228
|
|
|
(25,415
|
)
|
|
(28,747
|
)
|
|
(0.23
|
)
|
|
(0.23
|
)
|
||||||
Year Ended December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
4th Quarter
|
$
|
186,057
|
|
|
$
|
82,905
|
|
|
$
|
(121,601
|
)
|
|
$
|
(65,217
|
)
|
|
$
|
(0.52
|
)
|
|
$
|
(0.52
|
)
|
3rd Quarter
|
202,428
|
|
|
97,763
|
|
|
8,760
|
|
|
(2,897
|
)
|
|
(0.02
|
)
|
|
(0.02
|
)
|
||||||
2nd Quarter
|
199,140
|
|
|
102,769
|
|
|
14,244
|
|
|
2,537
|
|
|
0.02
|
|
|
0.02
|
|
||||||
1st Quarter
|
253,420
|
|
|
148,769
|
|
|
75,713
|
|
|
41,027
|
|
|
0.33
|
|
|
0.33
|
|
Consolidated Financial Statement Position:
|
($ in thousands)
|
|||||
|
December 31,
|
|||||
|
2018
|
|
2017
|
|
||
Fair value of plan assets
|
$
|
23,610
|
|
$
|
24,281
|
|
Less: Benefit obligation
|
30,772
|
|
30,185
|
|
||
Funded status - Benefit obligation in excess of plan assets
|
$
|
(7,162
|
)
|
$
|
(5,904
|
)
|
Change in plan assets:
|
($ in thousands)
|
|||||
|
2018
|
|
2017
|
|
||
Fair value of plan assets, beginning of year
|
$
|
24,281
|
|
$
|
24,906
|
|
Actual return on plan assets
|
(409
|
)
|
1,245
|
|
||
Participant contributions
|
753
|
|
646
|
|
||
Employer contributions
|
1,503
|
|
1,292
|
|
||
Benefits paid
|
(2,446
|
)
|
(4,767
|
)
|
||
Translation adjustments and other
|
(72
|
)
|
959
|
|
||
Fair value of plan assets, end of year
|
$
|
23,610
|
|
$
|
24,281
|
|
Change in benefit obligation:
|
($ in thousands)
|
|||||
|
2018
|
|
2017
|
|
||
Benefit obligation, beginning of year
|
$
|
30,185
|
|
$
|
32,594
|
|
Service cost
|
2,166
|
|
1,982
|
|
||
Interest cost
|
197
|
|
253
|
|
||
Actuarial losses (gains)
|
771
|
|
(1,129
|
)
|
||
Benefits paid
|
(2,446
|
)
|
(4,767
|
)
|
||
Translation adjustments and other
|
(101
|
)
|
1,252
|
|
||
Benefit obligation, end of year
|
$
|
30,772
|
|
$
|
30,185
|
|
Changes in Unrecognized pension cost, pre-tax
|
($ in thousands)
|
|||||
|
2018
|
|
2017
|
|
||
Unrecognized pension cost, pre-tax, beginning of year
|
$
|
(2,561
|
)
|
$
|
(4,546
|
)
|
Amortization during year
|
(19
|
)
|
120
|
|
||
Actuarial (losses) gains
|
(771
|
)
|
1,129
|
|
||
Asset (losses) gains
|
(1,140
|
)
|
472
|
|
||
Translation adjustments and other
|
$
|
12
|
|
$
|
264
|
|
Unrecognized pension cost, pre-tax, end of year
|
$
|
(4,479
|
)
|
$
|
(2,561
|
)
|
Estimated amortization from Other Comprehensive Income into net periodic benefit cost in 2019:
|
($ in thousands)
|
||
Amortization of actuarial (losses)
|
$
|
(197
|
)
|
Amortization of prior service credit
|
19
|
|
|
Estimated net (loss)
|
$
|
(178
|
)
|
Components of net periodic benefit cost
|
($ in thousands)
|
||||||||
|
2018
|
|
2017
|
|
2016
|
|
|||
Service cost
|
$
|
2,166
|
|
$
|
1,982
|
|
$
|
2,087
|
|
Interest cost
|
197
|
|
253
|
|
238
|
|
|||
Expected return on plan assets
|
(731
|
)
|
(773
|
)
|
(741
|
)
|
|||
Amortization of:
|
|
|
|
||||||
Prior service cost (benefit)
|
(19
|
)
|
(19
|
)
|
—
|
|
|||
Net actuarial loss
|
—
|
|
139
|
|
212
|
|
|||
Participant contributions
|
(753
|
)
|
(625
|
)
|
(598
|
)
|
|||
Net periodic benefit cost
|
$
|
860
|
|
$
|
957
|
|
$
|
1,198
|
|
Key assumptions used to determine the benefit obligation:
|
2018
|
|
2017
|
|
Discount rate
|
0.80
|
%
|
0.65
|
%
|
Rate of increase in compensation levels
|
0.75
|
%
|
0.75
|
%
|
Year
|
($ in thousands)
|
||
2019
|
$
|
1,477
|
|
2020
|
1,451
|
|
|
2021
|
1,316
|
|
|
2022
|
1,328
|
|
|
2023
|
1,278
|
|
|
Years 2024 - 2028
|
$
|
7,317
|
|
•
|
Review the processes related to the interpretation and calculation of Stock Award Accelerated Vesting to ensure compliance with GAAP.
|
•
|
Evaluate, design, document, and implement additional control procedures related to the interpretation of calculation of awards with respect to accelerated vesting in conjunction with separation packages.
|
•
|
Test and evaluate the design and operating effectiveness of the control procedures.
|
•
|
Assess the effectiveness of the remediation plan.
|
(a)
|
Documents filed as part of this report.
|
(1)
|
Financial Statements
. The consolidated financial statements listed on the index to Item 8 of this Annual Report on Form 10-K are filed as a part of this Annual Report.
|
(2)
|
Financial Statement Schedules.
All financial statement schedules have been omitted since the information is either not applicable or required or is included in the financial statements or notes thereof.
|
(3)
|
Exhibits
. Those exhibits marked with a (*) refer to exhibits filed herewith. The other exhibits are incorporated herein by reference, as indicated in the following list. Those exhibits marked with a (†) refer to management contracts or compensatory plans or arrangements. Portions of the exhibits marked with a (Ω) are the subject of a Confidential Treatment Request under 17 C.F.R. §§ 200.80(b)(4), 200.83 and 240.24b-2. Omitted material for which confidential treatment has been requested has been filed separately with the SEC.
|
Exhibit No.
|
|
Description
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|
101
|
|
The financial statements and footnotes from the Akorn, Inc. Annual Report on Form 10-K for the year ended December 31, 2018, filed on March 1, 2019 formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statement of Shareholders’ Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements.
|
|
AKORN, INC.
|
|
|
|
|
|
By:
|
/s/ DOUGLAS S. BOOTHE
|
|
|
Douglas S. Boothe
President and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
DOUGLAS S. BOOTHE
|
|
President and Chief Executive Officer and Director
|
|
March 1, 2019
|
Douglas S. Boothe
|
|
|
|
|
|
|
|
|
|
/s/ DUANE A. PORTWOOD
|
|
Executive Vice President and Chief Financial Officer
|
|
March 1, 2019
|
Duane A. Portwood
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/ RANDALL E. POLLARD
|
|
Senior Vice President, Finance and Chief Accounting Officer
|
|
March 1, 2019
|
Randall E. Pollard
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/ ALAN WEINSTEIN
|
|
Director, Chairman of the Board
|
|
March 1, 2019
|
Alan Weinstein
|
|
|
|
|
|
|
|
|
|
/s/ KENNETH S. ABRAMOWITZ
|
|
Director
|
|
March 1, 2019
|
Kenneth S. Abramowitz
|
|
|
|
|
|
|
|
|
|
/s/ ADRIENNE L. GRAVES
|
|
Director
|
|
March 1, 2019
|
Adrienne L. Graves
|
|
|
|
|
|
|
|
|
|
/s/ RONALD M. JOHNSON
|
|
Director
|
|
March 1, 2019
|
Ronald M. Johnson
|
|
|
|
|
|
|
|
|
|
/s/ STEVEN J. MEYER
|
|
Director
|
|
March 1, 2019
|
Steven J. Meyer
|
|
|
|
|
|
|
|
|
|
/s/ THOMAS G. MOORE
|
|
Director
|
|
March 1, 2019
|
Thomas G. Moore
|
|
|
|
|
|
|
|
|
|
/s/ TERRY ALLISON RAPPUHN
|
|
Director
|
|
March 1, 2019
|
Terry Allison Rappuhn
|
|
|
|
|
|
|
|
|
|
/s/ BRIAN TAMBI
|
|
Director
|
|
March 1, 2019
|
Brian Tambi
|
|
|
|
|
|
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
|
21.1
|
|
Listing of Subsidiaries of Akorn, Inc.
|
|
|
|
23.1
|
|
Consent of BDO USA, LLP, Independent Registered Public Accounting Firm
|
|
|
|
31.1
|
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a).
|
|
|
|
31.2
|
|
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a).
|
|
|
|
32.1
|
|
Certification of the Chief Executive Officer pursuant to 18 USC Section 1350.
|
|
|
|
32.2
|
|
Certification of the Chief Financial Officer pursuant to 18 USC Section 1350.
|
1.
|
Defined Terms
. All capitalized terms used in this Amendment shall have the same meanings given such terms in the Agreement, unless otherwise defined in this Amendment, and all terms defined in this Amendment and not defined in the Agreement are hereby incorporated into the Agreement for all pertinent purposes, unless otherwise stated.
|
2.
|
Amendment of Agreement. The Agreement is hereby amended as follows:
|
A.
|
In Section 4.1(b)(iii), the phrase “until the first (1
st
) anniversary” is deleted and replaced with “until the second (2
nd
) anniversary”.
|
B.
|
The title for Section 5.1 and the first paragraph of Section 5.1 are deleted and replaced in their entirety with the following:
|
C.
|
Section 5.1(a) is deleted and replaced in its entirety with the following:
|
D.
|
Section 5.1(b)(ii) is deleted and replaced in its entirety with the following:
|
E.
|
Section 5.1(b)(iii) is deleted and replaced in its entirety with the following
|
3.
|
Miscellaneous.
|
A.
|
Rai and the Company each represent and warrant to the other that the person signing this Amendment on its respective behalf has the requisite authority and power to do so, and to thereby bind the Party on whose behalf such person is signing.
|
B.
|
This Amendment may be executed in a number of identical counterparts which, taken together, shall constitute collectively one agreement.
|
C.
|
Except as herein expressly modified, all terms, conditions and provisions of the Agreement shall remain in full force and effect. To the extent of any inconsistency between the terms and conditions of the Agreement and the terms and conditions of this Amendment, the terms and conditions of this Amendment shall govern.
|
Akorn, Inc.
|
Rajat Rai
|
/s/ Joseph Bonaccorsi
Name: Joseph Bonaccorsi
Title: General Counsel and Secretary
Date: February 5, 2019
|
/s/ Raj Rai
Date: 2/7/2019
|
AKORN, INC.
|
|
|
|
By:
|
/s/ Joseph Bonaccorsi
|
|
Name: Joseph Bonaccorsi
|
|
Title: General Counsel
|
|
|
|
|
|
RAJAT RAI
|
|
|
|
/s/ Raj Rai
|
|
|
AKORN, INC.
|
|
|
|
By:
|
/s/ Joseph Bonaccorsi
|
|
Name: Joseph Bonaccorsi
|
|
Title: General Counsel
|
|
|
|
|
|
BRUCE KUTINSKY
|
|
|
|
/s/ Bruce Kutinsky
|
|
|
Legal Entity Name
|
|
Incorporation
|
|
Ownership
|
|
|
|
|
|
Registrant / Parent Corporation:
|
|
|
|
|
Akorn, Inc.
|
|
Louisiana
|
|
Shareholders (NASDAQ: AKRX)
|
|
|
|
|
|
U.S. subsidiaries of Akorn, Inc.:
|
|
|
|
|
Advanced Vision Research, Inc.
|
|
Delaware
|
|
Akorn, Inc. (LA)
|
Akorn (New Jersey), Inc.
|
|
Illinois
|
|
Akorn, Inc. (LA)
|
Akorn Animal Health, Inc.
|
|
Delaware
|
|
Akorn, Inc. (LA)
|
Akorn Ophthalmics, Inc.
|
|
Delaware
|
|
Akorn, Inc. (LA)
|
Akorn Sales, Inc.
|
|
Delaware
|
|
Akorn, Inc. (LA)
|
Inspire Pharmaceuticals, Inc.
|
|
Delaware
|
|
Oak Pharmaceuticals, Inc. (DE)
|
Oak Pharmaceuticals, Inc.
|
|
Delaware
|
|
Akorn, Inc. (LA)
|
Hi-Tech Pharmacal Co., Inc.
|
|
Delaware
|
|
Akorn, Inc. (LA)
|
10 Edison Street LLC
|
|
Delaware
|
|
Hi-Tech Pharmacal Co., Inc. (DE)
|
13 Edison Street LLC
|
|
Delaware
|
|
Hi-Tech Pharmacal Co., Inc. (DE)
|
VPI Holdings Corp.
|
|
Delaware
|
|
Akorn, Inc. (LA)
|
VPI Holdings Sub, LLC.
|
|
Delaware
|
|
VPI Holdings Corp. (DE)
|
VersaPharm Incorporated
|
|
Georgia
|
|
VPI Holdings Sub, LLC. (DE)
|
Covenant Pharma, Inc.
|
|
Georgia
|
|
VPI Holdings Sub, LLC. (DE)
|
Olta Pharmaceuticals Corp.
|
|
Delaware
|
|
VersaPharm Incorporated (GA)
|
Clover Pharmaceuticals Corp.
|
|
Delaware
|
|
VersaPharm Incorporated (GA)
|
|
|
|
|
|
Foreign subsidiaries of Akorn, Inc.:
|
|
|
|
|
WorldAkorn Pharma Mauritius
|
|
Mauritius
|
|
Akorn, Inc. (LA)
|
Akorn India Private Limited
|
|
India
|
|
WorldAkorn Pharma Mauritius
|
Akorn Canada, Inc.
|
|
Canada
|
|
Akorn, Inc. (LA)
|
Akorn International S.à r.l.
|
|
Luxembourg
|
|
Oak Pharmaceuticals, Inc. (DE)
|
Akorn AG (formerly Excelvision AG)
|
|
Switzerland
|
|
Akorn International S.à r.l. (LUX)
|
/s/ DOUGLAS S. BOOTHE
|
Douglas S. Boothe
|
President and Chief Executive Officer
|
/s/ DUANE A. PORTWOOD
|
Duane A. Portwood
|
Executive Vice President and Chief Financial Officer
|
/s/ DOUGLAS S. BOOTHE
|
Douglas S. Boothe
|
President and Chief Executive Officer
|
/s/ DUANE A. PORTWOOD
|
Duane A. Portwood
|
Executive Vice President and Chief Financial Officer
|