x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
June 30, 2018
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
|
Amneal Pharmaceuticals, Inc.
|
||
(Exact name of registrant as specified in its charter)
|
||
Delaware
|
|
32-0546926
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
Amneal Pharmaceuticals, Inc. 400 Crossing Boulevard, Bridgewater, NJ
|
|
08807
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
(908) 947-3120
|
|
|
(Registrant’s telephone number, including area code)
|
|
|
||
(Former name, former address and former fiscal year, if changed since last report)
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
Non-accelerated filer (Do not check if a smaller reporting company)
|
x
|
Smaller reporting company
|
☐
|
|
|
Emerging growth company
|
☐
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net revenue
|
$
|
413,787
|
|
|
$
|
259,871
|
|
|
$
|
688,976
|
|
|
$
|
485,552
|
|
Cost of goods sold
|
235,492
|
|
|
136,138
|
|
|
366,086
|
|
|
245,803
|
|
||||
Gross profit
|
178,295
|
|
|
123,733
|
|
|
322,890
|
|
|
239,749
|
|
||||
Selling, general and administrative
|
53,003
|
|
|
26,938
|
|
|
78,124
|
|
|
54,640
|
|
||||
Research and development
|
50,335
|
|
|
47,184
|
|
|
94,544
|
|
|
86,603
|
|
||||
Intellectual property legal development expenses
|
4,047
|
|
|
4,926
|
|
|
8,623
|
|
|
11,093
|
|
||||
Acquisition, transaction-related and integration expenses
|
207,507
|
|
|
82
|
|
|
214,642
|
|
|
82
|
|
||||
Restructuring expenses
|
44,465
|
|
|
—
|
|
|
44,465
|
|
|
—
|
|
||||
Operating (loss) income
|
(181,062
|
)
|
|
44,603
|
|
|
(117,508
|
)
|
|
87,331
|
|
||||
Other (expense) income:
|
|
|
|
|
|
|
|
|
|||||||
Interest expense, net
|
(36,622
|
)
|
|
(17,726
|
)
|
|
(57,673
|
)
|
|
(31,887
|
)
|
||||
Foreign exchange (loss) gain
|
(25,946
|
)
|
|
15,332
|
|
|
(17,381
|
)
|
|
29,929
|
|
||||
Loss on extinguishment of debt
|
(19,667
|
)
|
|
(2,531
|
)
|
|
(19,667
|
)
|
|
(2,531
|
)
|
||||
Other income (expense)
|
791
|
|
|
(78
|
)
|
|
1,739
|
|
|
22
|
|
||||
Total other expense, net
|
(81,444
|
)
|
|
(5,003
|
)
|
|
(92,982
|
)
|
|
(4,467
|
)
|
||||
(Loss) income before income taxes
|
(262,506
|
)
|
|
39,600
|
|
|
(210,490
|
)
|
|
82,864
|
|
||||
(Benefit from) provision for income taxes
|
(12,416
|
)
|
|
1,852
|
|
|
(12,052
|
)
|
|
2,855
|
|
||||
Net (loss) income
|
(250,090
|
)
|
|
37,748
|
|
|
(198,438
|
)
|
|
80,009
|
|
||||
Less: Net loss (income) attributable to Amneal Pharmaceuticals LLC pre-Combination
|
200,341
|
|
|
(37,446
|
)
|
|
148,806
|
|
|
(79,299
|
)
|
||||
Less: Net loss (income) attributable to non-controlling interests
|
31,885
|
|
|
(302
|
)
|
|
31,768
|
|
|
(710
|
)
|
||||
Net loss attributable to Amneal Pharmaceuticals, Inc. before accretion of redeemable non-controlling interest
|
(17,864
|
)
|
|
—
|
|
|
(17,864
|
)
|
|
—
|
|
||||
Accretion of redeemable non-controlling interest
|
(1,240
|
)
|
|
—
|
|
|
(1,240
|
)
|
|
—
|
|
||||
Net loss attributable to Amneal Pharmaceuticals, Inc.
|
$
|
(19,104
|
)
|
|
$
|
—
|
|
|
$
|
(19,104
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Net loss per share attributable to Amneal Pharmaceuticals, Inc.'s common stockholders:
|
|
|
|
|
|
|
|
||||||||
Class A and Class B-1 basic and diluted
|
$(0.15)
|
|
|
|
$(0.15)
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Class A and Class B-1 basic and diluted
|
127,112
|
|
|
|
|
127,112
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net (loss) income
|
$
|
(250,090
|
)
|
|
$
|
37,748
|
|
|
$
|
(198,438
|
)
|
|
$
|
80,009
|
|
Less: Net loss (income) attributable to Amneal Pharmaceuticals LLC pre-Combination
|
200,341
|
|
|
(37,446
|
)
|
|
148,806
|
|
|
(79,299
|
)
|
||||
Less: Net loss (income) attributable to non-controlling interests
|
31,885
|
|
|
(302
|
)
|
|
31,768
|
|
|
(710
|
)
|
||||
Net loss attributable to Amneal Pharmaceuticals, Inc. before accretion of redeemable non-controlling interest
|
(17,864
|
)
|
|
—
|
|
|
(17,864
|
)
|
|
—
|
|
||||
Accretion of redeemable non-controlling interest
|
(1,240
|
)
|
|
—
|
|
|
(1,240
|
)
|
|
—
|
|
||||
Net loss attributable to Amneal Pharmaceuticals, Inc.
|
(19,104
|
)
|
|
—
|
|
|
(19,104
|
)
|
|
—
|
|
||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency translation adjustments
|
8,932
|
|
|
(11,749
|
)
|
|
(1,025
|
)
|
|
(10,944
|
)
|
||||
Less: Other comprehensive (income) loss attributable to Amneal Pharmaceuticals LLC pre-Combination
|
(11,678
|
)
|
|
11,749
|
|
|
(1,721
|
)
|
|
10,944
|
|
||||
Less: Other comprehensive loss attributable to non-controlling interests
|
1,576
|
|
|
—
|
|
|
1,576
|
|
|
—
|
|
||||
Other comprehensive loss attributable to Amneal Pharmaceuticals, Inc.
|
(1,170
|
)
|
|
—
|
|
|
(1,170
|
)
|
|
—
|
|
||||
Comprehensive loss attributable to Amneal Pharmaceuticals, Inc.
|
$
|
(20,274
|
)
|
|
$
|
—
|
|
|
$
|
(20,274
|
)
|
|
$
|
—
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
61,521
|
|
|
$
|
74,166
|
|
Restricted cash
|
7,069
|
|
|
3,756
|
|
||
Trade accounts receivable, net
|
626,491
|
|
|
351,367
|
|
||
Inventories
|
512,479
|
|
|
284,038
|
|
||
Prepaid expenses and other current assets
|
139,596
|
|
|
42,396
|
|
||
Related party receivables
|
738
|
|
|
16,210
|
|
||
Total current assets
|
1,347,894
|
|
|
771,933
|
|
||
Property, plant and equipment, net
|
569,328
|
|
|
486,758
|
|
||
Goodwill
|
386,475
|
|
|
26,444
|
|
||
Intangible assets, net
|
1,788,533
|
|
|
44,599
|
|
||
Deferred tax asset, net
|
373,705
|
|
|
898
|
|
||
Other assets
|
78,653
|
|
|
11,257
|
|
||
Total assets
|
$
|
4,544,588
|
|
|
$
|
1,341,889
|
|
Liabilities and Stockholders' Equity / Members' Deficit
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
555,634
|
|
|
$
|
194,779
|
|
Note payable-related party
|
77,549
|
|
|
—
|
|
||
Current portion of financing obligations
|
251
|
|
|
311
|
|
||
Revolving credit facility
|
—
|
|
|
75,000
|
|
||
Current portion of long-term debt, net
|
21,427
|
|
|
14,171
|
|
||
Related-party payables
|
14,875
|
|
|
12,622
|
|
||
Total current liabilities
|
669,736
|
|
|
296,883
|
|
||
Long-term debt, net
|
2,641,305
|
|
|
1,355,274
|
|
||
Long-term portion of financing obligations
|
39,220
|
|
|
39,987
|
|
||
Deferred income taxes
|
2,491
|
|
|
2,491
|
|
||
Liabilities under tax receivable agreement
|
194,825
|
|
|
—
|
|
||
Other long-term liabilities
|
45,667
|
|
|
7,793
|
|
||
Related-party payable- long term
|
—
|
|
|
15,043
|
|
||
Total long-term liabilities
|
2,923,508
|
|
|
1,420,588
|
|
||
Commitments and contingencies (Notes 5 & 17)
|
|
|
|
|
|
||
Redeemable non-controlling interest
|
11,858
|
|
|
—
|
|
||
Stockholders' equity / members' deficit:
|
|
|
|
||||
Members' equity, 189,000 units authorized, issued and outstanding at December 31, 2017
|
—
|
|
|
2,716
|
|
||
Members' accumulated deficit
|
—
|
|
|
(382,785
|
)
|
||
Preferred stock, $0.01 par value, 2,000 shares authorized; none issued and outstanding at June 30, 2018
|
—
|
|
|
—
|
|
||
Class A common stock, $0.01 par value, 900,000 shares authorized; 114,859 shares issued and outstanding at June 30, 2018
|
1,149
|
|
|
—
|
|
||
Class B common stock, $0.01 par value, 300,000 shares authorized; 171,261 shares issued and outstanding at June 30, 2018
|
1,713
|
|
|
—
|
|
||
Class B-1 common stock, $0.01 par value, 18,000 shares authorized; 12,329 shares issued and outstanding at June 30, 2018
|
123
|
|
|
—
|
|
||
Additional paid-in capital
|
517,122
|
|
|
8,562
|
|
||
Stockholders' accumulated deficit
|
(19,104
|
)
|
|
—
|
|
||
Stockholders' accumulated other comprehensive loss
|
(6,502
|
)
|
|
(14,232
|
)
|
||
Total Amneal Pharmaceuticals, Inc. stockholders' equity/ members' deficit
|
494,501
|
|
|
(385,739
|
)
|
||
Non-controlling interests
|
444,985
|
|
|
10,157
|
|
||
Total stockholders' equity/ members' deficit
|
939,486
|
|
|
(375,582
|
)
|
||
Total liabilities and stockholders' equity/ members’ deficit
|
$
|
4,544,588
|
|
|
$
|
1,341,889
|
|
|
|
|
|
Preferred Stock
|
Class A Common Stock
|
Class B Common Stock
|
Class B-1 Common Stock
|
Additional Paid-in Capital
|
|
Accumulated Other Comprehensive (Loss) Income
|
Non-Controlling Interests
|
Total Equity
|
|
Redeemable Non-Controlling Interest
|
||||||||||||||||||||||||||||||||
|
|
Members' Equity
|
Members' Accumulated Deficit
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Stockholders' Accumulated Deficit
|
|
|||||||||||||||||||||||||||||||||
Balance at January 1, 2018
|
|
$
|
2,716
|
|
$
|
(382,785
|
)
|
—
|
|
$
|
—
|
|
—
|
|
$
|
—
|
|
—
|
|
$
|
—
|
|
—
|
|
$
|
—
|
|
$
|
8,562
|
|
$
|
—
|
|
(14,232
|
)
|
$
|
10,157
|
|
$
|
(375,582
|
)
|
|
$
|
—
|
|
|
Period Prior to the Combination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|||||||||||||||||||||||||||
Net income prior
|
|
—
|
|
(148,806
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
97
|
|
(148,709
|
)
|
|
—
|
|
||||||||||||
Cumulative-effective adjustment from adoption of ASU 2014-09 (Topic 606)
|
|
—
|
|
4,977
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
4,977
|
|
|
—
|
|
||||||||||||
Capital contribution from non-controlling interest
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
360
|
|
360
|
|
|
—
|
|
||||||||||||
Distributions to members
|
|
—
|
|
(182,998
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(8,562
|
)
|
—
|
|
—
|
|
—
|
|
(191,560
|
)
|
|
—
|
|
||||||||||||
PPU expense
|
|
158,757
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
158,757
|
|
|
—
|
|
|||||||||||||
Foreign currency translation adjustment
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,721
|
|
—
|
|
1,721
|
|
|
—
|
|
||||||||||||
Capital contribution by Amneal Holdings for employee bonuses
|
|
27,742
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
27,742
|
|
|
—
|
|
||||||||||||
Period Subsequent to the Combination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
Effect of the Combination
|
|
(189,215
|
)
|
709,612
|
|
—
|
|
—
|
|
73,289
|
|
733
|
|
224,996
|
|
2,250
|
|
—
|
|
—
|
|
325,918
|
|
—
|
|
9,437
|
|
626,737
|
|
1,485,472
|
|
|
—
|
|
||||||||||||
Redemption of Class B Common Stock for PIPE
|
|
—
|
|
—
|
|
—
|
|
—
|
|
34,520
|
|
345
|
|
(46,849
|
)
|
(468
|
)
|
12,329
|
|
123
|
|
165,180
|
|
—
|
|
(1,965
|
)
|
(130,501
|
)
|
32,714
|
|
|
—
|
|
||||||||||||
Redemption of Class B Common Stock for distribution to PPU Holders
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6,886
|
|
69
|
|
(6,886
|
)
|
(69
|
)
|
—
|
|
—
|
|
24,293
|
|
—
|
|
(289
|
)
|
(19,181
|
)
|
4,823
|
|
|
—
|
|
||||||||||||
Net loss
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(17,864
|
)
|
—
|
|
(31,865
|
)
|
(49,729
|
)
|
|
—
|
|
||||||||||||
Foreign currency translation adjustment
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,170
|
)
|
(1,576
|
)
|
(2,746
|
)
|
|
—
|
|
||||||||||||
Stock-based compensation
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,644
|
|
—
|
|
—
|
|
—
|
|
1,644
|
|
|
—
|
|
||||||||||||
Exercise of stock options
|
|
—
|
|
—
|
|
—
|
|
—
|
|
164
|
|
2
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,241
|
|
—
|
|
(4
|
)
|
(262
|
)
|
1,977
|
|
|
—
|
|
||||||||||||
Reclassification of redeemable non-controlling interest
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,240
|
)
|
—
|
|
(10,618
|
)
|
(11,858
|
)
|
|
11,858
|
|
||||||||||||
Non-controlling interests from acquisition of Gemini
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3,049
|
|
3,049
|
|
|
—
|
|
||||||||||||
Other
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
(2,154
|
)
|
—
|
|
—
|
|
(1,412
|
)
|
(3,566
|
)
|
|
—
|
|
|||||||||||||||
Balance at June 30, 2018
|
|
$
|
—
|
|
$
|
—
|
|
—
|
|
$
|
—
|
|
114,859
|
|
$
|
1,149
|
|
171,261
|
|
$
|
1,713
|
|
12,329
|
|
$
|
123
|
|
$
|
517,122
|
|
$
|
(19,104
|
)
|
$
|
(6,502
|
)
|
$
|
444,985
|
|
$
|
939,486
|
|
|
$
|
11,858
|
|
|
Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net (loss) income
|
$
|
(198,438
|
)
|
|
$
|
80,009
|
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
46,897
|
|
|
21,136
|
|
||
Unrealized foreign currency loss (gain)
|
17,032
|
|
|
(33,089
|
)
|
||
Amortization of debt issuance costs
|
2,577
|
|
|
2,463
|
|
||
Loss on extinguishment and modification of debt
|
19,667
|
|
|
2,531
|
|
||
Gain termination of lease
|
(3,524
|
)
|
|
—
|
|
||
Deferred tax provision
|
(14,993
|
)
|
|
244
|
|
||
Inventory provision
|
17,426
|
|
|
2,047
|
|
||
Allowance for doubtful accounts provision
|
(7
|
)
|
|
124
|
|
||
Stock-based compensation and PPU expense
|
160,401
|
|
|
—
|
|
||
Other
|
934
|
|
|
—
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Trade accounts receivable, net
|
(60,051
|
)
|
|
28,065
|
|
||
Inventories
|
(71,655
|
)
|
|
(10,890
|
)
|
||
Prepaid expenses and other current assets
|
711
|
|
|
(5,955
|
)
|
||
Related-party receivables
|
11,017
|
|
|
3,583
|
|
||
Other assets
|
(5,818
|
)
|
|
(320
|
)
|
||
Accounts payable and accrued expenses
|
15,299
|
|
|
(3,811
|
)
|
||
Other liabilities
|
4,331
|
|
|
(1,791
|
)
|
||
Related-party payables
|
(13,356
|
)
|
|
11,063
|
|
||
Net cash (used in) provided by operating activities
|
(71,550
|
)
|
|
95,409
|
|
||
Investing activities:
|
|
|
|
||||
Purchases of property, plant and equipment
|
(36,600
|
)
|
|
(54,612
|
)
|
||
Acquisition of product rights and licenses
|
(3,000
|
)
|
|
—
|
|
||
Acquisitions, net of cash acquired
|
(321,324
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(360,924
|
)
|
|
(54,612
|
)
|
||
Financing activities:
|
|
|
|
||||
Payments of deferred financing costs and debt extinguishment costs
|
(54,955
|
)
|
|
(4,889
|
)
|
||
Proceeds from issuance of debt
|
1,325,383
|
|
|
250,000
|
|
||
Payments on capital leases
|
(8
|
)
|
|
(45
|
)
|
||
Payments on financing obligations
|
(121
|
)
|
|
(130
|
)
|
||
Net (payments) borrowings on revolving credit line
|
(75,000
|
)
|
|
25,000
|
|
||
Payments on debt
|
(603,543
|
)
|
|
(6,448
|
)
|
||
Exercise of stock options
|
1,977
|
|
|
—
|
|
||
Equity contributions
|
27,742
|
|
|
40
|
|
||
Capital contribution from non-controlling interest
|
360
|
|
|
—
|
|
||
Distributions to members
|
(182,998
|
)
|
|
(295,265
|
)
|
||
Repayment of related party note
|
(14,842
|
)
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
423,995
|
|
|
(31,737
|
)
|
||
Effect of foreign exchange rate on cash
|
(853
|
)
|
|
5,238
|
|
||
Net (decrease) increase in cash, cash equivalents, and restricted cash
|
(9,332
|
)
|
|
14,298
|
|
||
Cash, cash equivalents, and restricted cash - beginning of period
|
77,922
|
|
|
37,546
|
|
||
Cash, cash equivalents, and restricted cash - end of period
|
$
|
68,590
|
|
|
$
|
51,844
|
|
Cash and cash equivalents - end of period
|
$
|
61,521
|
|
|
$
|
48,217
|
|
Restricted cash - end of period
|
7,069
|
|
|
3,627
|
|
||
Cash, cash equivalents, and restricted cash - end of period
|
$
|
68,590
|
|
|
$
|
51,844
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
50,391
|
|
|
$
|
30,291
|
|
Income taxes paid
|
$
|
—
|
|
|
$
|
—
|
|
Supplemental disclosure of non-cash investing and financing activity:
|
|
|
|
||||
Acquisition of product rights and licenses
|
$
|
10,000
|
|
|
$
|
19,500
|
|
Distribution to members
|
$
|
8,562
|
|
|
$
|
—
|
|
|
|
Contract Charge-backs and Sales Volume Allowances
|
|
Cash Discount Allowances
|
|
Accrued Returns Allowance
|
|
Accrued Medicaid and Commercial Rebates
|
||||||||
January 1, 2018
|
|
$
|
453,703
|
|
|
$
|
20,408
|
|
|
$
|
45,175
|
|
|
$
|
12,911
|
|
Liabilities assumed from acquisitions
|
|
221,561
|
|
|
11,781
|
|
|
91,704
|
|
|
49,743
|
|
||||
Provision related to sales recorded in the period
|
|
1,401,440
|
|
|
47,607
|
|
|
24,717
|
|
|
33,546
|
|
||||
Credits issued during the period
|
|
(1,360,391
|
)
|
|
(49,495
|
)
|
|
(25,163
|
)
|
|
(26,002
|
)
|
||||
Balance at June 30, 2018
|
|
$
|
716,313
|
|
|
$
|
30,301
|
|
|
$
|
136,433
|
|
|
$
|
70,198
|
|
Asset Classification
|
|
Estimated Useful Life
|
Buildings
|
|
30 years
|
Computer equipment
|
|
5 years
|
Furniture and fixtures
|
|
7 years
|
Leasehold improvements
|
|
Shorter of asset's useful life or remaining life of lease
|
Machinery and equipment
|
|
7 years
|
Vehicles
|
|
5 years
|
Fully diluted Impax share number
(1)
|
|
73,288,792
|
|
|
Closing quoted market price of an Impax common share on May 4, 2018
|
|
$
|
18.30
|
|
Equity consideration - subtotal
|
|
$
|
1,341,185
|
|
Add: Fair value of Impax stock options as of May 4, 2018
(2)
|
|
22,610
|
|
|
Total equity consideration
|
|
1,363,795
|
|
|
Add: Extinguishment of certain Impax obligations, including accrued and unpaid interest
|
|
320,290
|
|
|
Less: Cash acquired
|
|
(37,907
|
)
|
|
Purchase price, net of cash acquired
|
|
$
|
1,646,178
|
|
(1)
Represents shares of Impax Common Stock issued and outstanding immediately prior to the Combination
|
|
|
||
(2)
Represents the fair value of 3.0 million fully vested Impax stock options valued using the Black-Scholes options pricing model.
|
|
|
|
|
Preliminary Fair Values
As of June 30, 2018 |
||
Trade accounts receivable, net
|
|
$
|
206,749
|
|
Inventories
|
|
182,546
|
|
|
Prepaid expenses and other current assets
|
|
91,415
|
|
|
Property, plant and equipment
|
|
87,472
|
|
|
Goodwill
|
|
358,813
|
|
|
Intangible assets
|
|
1,606,642
|
|
|
Other
|
|
57,084
|
|
|
Total assets acquired
|
|
2,590,721
|
|
|
Accounts payable
|
|
47,912
|
|
|
Accrued expenses and other current liabilities
|
|
262,838
|
|
|
Long-term debt
|
|
600,000
|
|
|
Other long-term liabilities
|
|
33,793
|
|
|
Total liabilities assumed
|
|
944,543
|
|
|
Net assets acquired
|
|
$
|
1,646,178
|
|
|
|
Preliminary Fair Values
|
|
Weighted Average Useful Life (Years)
|
||
Marketed product rights
|
|
$
|
1,063,040
|
|
|
12.9
|
|
|
Preliminary Fair Values
As of June 30, 2018 |
||
Trade accounts receivable, net
|
|
$
|
8,158
|
|
Inventories
|
|
1,851
|
|
|
Prepaid expenses and other current assets
|
|
3,713
|
|
|
Property, plant and equipment, net
|
|
11
|
|
|
Goodwill
|
|
2,527
|
|
|
Intangible assets
|
|
142,740
|
|
|
Other
|
|
465
|
|
|
Total assets acquired
|
|
159,465
|
|
|
|
|
|
||
Accounts payable
|
|
1,764
|
|
|
Accrued expenses and other current liabilities
|
|
15,189
|
|
|
License liability
|
|
20,000
|
|
|
Total liabilities assumed
|
|
36,953
|
|
|
Net assets acquired
|
|
$
|
122,512
|
|
|
|
Preliminary Fair Values
|
|
Weighted Average Useful Life
|
||
Product rights for licensed / developed technology
|
|
$
|
110,350
|
|
|
10 years
|
Product rights for developed technologies
|
|
5,500
|
|
|
9 years
|
|
Product rights for out-licensed generics royalty agreement
|
|
390
|
|
|
2 years
|
|
|
|
$
|
116,240
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||
|
|
2018
|
2017
|
|
2018
|
2017
|
||||||||
Net revenue
|
|
$
|
447,524
|
|
$
|
461,953
|
|
|
$
|
865,068
|
|
$
|
872,037
|
|
Net loss
|
|
$
|
(86,621
|
)
|
$
|
(4,197
|
)
|
|
$
|
(161,050
|
)
|
$
|
(340,311
|
)
|
Net loss attributable to Amneal Pharmaceuticals, Inc.
|
|
$
|
(19,759
|
)
|
$
|
(1,957
|
)
|
|
$
|
(28,454
|
)
|
$
|
(141,691
|
)
|
•
|
Adjustments to costs of goods sold related to the inventory acquired; and
|
•
|
Adjustments to selling, general and administrative expense related to transaction costs directly attributable to the transactions.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Employee separation charges
|
$
|
44,465
|
|
|
$
|
—
|
|
|
$
|
44,465
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Generic
|
24,797
|
|
|
$
|
—
|
|
|
24,797
|
|
|
$
|
—
|
|
||
Specialty
|
2,421
|
|
|
—
|
|
|
2,421
|
|
|
—
|
|
||||
Corporate
|
17,247
|
|
|
—
|
|
|
17,247
|
|
|
—
|
|
||||
Total restructuring charges
|
$
|
44,465
|
|
|
$
|
—
|
|
|
$
|
44,465
|
|
|
$
|
—
|
|
|
Employee Separation
|
||
Balance at December 31, 2017
|
$
|
—
|
|
Liabilities assumed in Impax acquisition
|
2,199
|
|
|
Charges to income
|
44,465
|
|
|
Payments
|
(6,353
|
)
|
|
Balance at June 30, 2018
|
$
|
40,311
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Acquisition, transaction-related and integration expenses
1
|
$
|
21,008
|
|
|
$
|
82
|
|
|
$
|
28,143
|
|
|
$
|
82
|
|
Profit Participation Units
2
|
158,757
|
|
|
—
|
|
|
158,757
|
|
|
—
|
|
||||
Transaction-related bonus
3
|
27,742
|
|
|
—
|
|
|
27,742
|
|
|
—
|
|
||||
Total
|
$
|
207,507
|
|
|
$
|
82
|
|
|
$
|
214,642
|
|
|
$
|
82
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||
Net loss attributable to Amneal Pharmaceuticals, Inc.
|
$
|
(19,104
|
)
|
|
—
|
|
|
$
|
(19,104
|
)
|
|
—
|
|
|
|
|
|
|
|
|
|
||||||
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
||||||
Class A and Class B-1 basic and diluted
|
127,112
|
|
|
—
|
|
|
127,112
|
|
|
—
|
|
||
|
|
|
|
|
|
|
|
||||||
Net loss per share attributable to Amneal Pharmaceuticals, Inc.'s common stockholders:
|
|
|
|
|
|
|
|
||||||
Class A and Class B-1 basic and diluted
|
$
|
(0.15
|
)
|
|
|
|
$
|
(0.15
|
)
|
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Gross accounts receivable
|
$
|
1,375,570
|
|
|
$
|
827,302
|
|
Allowance for doubtful accounts
|
(2,465
|
)
|
|
(1,824
|
)
|
||
Contract charge-backs and sales volume allowances
|
(716,313
|
)
|
|
(453,703
|
)
|
||
Cash discount allowances
|
(30,301
|
)
|
|
(20,408
|
)
|
||
Subtotal
|
(749,079
|
)
|
|
(475,935
|
)
|
||
Trade accounts receivable, net
|
$
|
626,491
|
|
|
$
|
351,367
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Raw materials
|
$
|
202,760
|
|
|
$
|
140,051
|
|
Work in process
|
59,156
|
|
|
38,146
|
|
||
Finished goods
|
250,563
|
|
|
105,841
|
|
||
Inventories
|
$
|
512,479
|
|
|
$
|
284,038
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Land
|
$
|
22,859
|
|
|
$
|
5,275
|
|
Buildings
|
234,756
|
|
|
227,864
|
|
||
Leasehold improvements
|
93,254
|
|
|
70,354
|
|
||
Machinery and equipment
|
305,899
|
|
|
260,637
|
|
||
Furniture and fixtures
|
10,713
|
|
|
18,415
|
|
||
Vehicles
|
1,511
|
|
|
1,517
|
|
||
Computer equipment
|
29,876
|
|
|
26,831
|
|
||
Construction-in-progress
|
49,920
|
|
|
32,235
|
|
||
Total property, plant, and equipment
|
748,788
|
|
|
643,128
|
|
||
Less: Accumulated depreciation
|
(179,460
|
)
|
|
(156,370
|
)
|
||
Property, plant, and equipment, net
|
$
|
569,328
|
|
|
$
|
486,758
|
|
|
Three Months
Ended June 30, |
|
Six Months
Ended June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Depreciation
|
$
|
15,453
|
|
|
$
|
9,650
|
|
|
$
|
28,443
|
|
|
$
|
19,363
|
|
|
For the six months ended June 30, 2018
|
|
For the year ended December 31, 2017
|
||||
Balance, beginning of period
|
$
|
26,444
|
|
|
$
|
28,441
|
|
Goodwill acquired during the period
|
361,340
|
|
|
—
|
|
||
Goodwill divested during the period
|
—
|
|
|
(3,895
|
)
|
||
Currency translation
|
(1,309
|
)
|
|
1,898
|
|
||
Balance, end of period
|
$
|
386,475
|
|
|
$
|
26,444
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||
|
Weighted Average Amortization Period (in years)
|
|
Cost
|
|
Accumulated Amortization
|
|
Net
|
|
Cost
|
|
Accumulated Amortization
|
|
Net
|
||||||||||||
Amortizing intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product rights
|
12.4
|
|
$
|
1,239,401
|
|
|
$
|
(34,765
|
)
|
|
$
|
1,204,636
|
|
|
$
|
49,700
|
|
|
$
|
(17,210
|
)
|
|
$
|
32,490
|
|
Customer relationships
|
14.9
|
|
7,264
|
|
|
(1,846
|
)
|
|
5,418
|
|
|
7,421
|
|
|
(1,072
|
)
|
|
6,349
|
|
||||||
Marketing authorizations
|
6.8
|
|
3,075
|
|
|
(118
|
)
|
|
2,957
|
|
|
76
|
|
|
(43
|
)
|
|
33
|
|
||||||
Licenses
|
11.5
|
|
3,000
|
|
|
(700
|
)
|
|
2,300
|
|
|
3,000
|
|
|
(600
|
)
|
|
2,400
|
|
||||||
Trade names
|
14.9
|
|
2,641
|
|
|
(671
|
)
|
|
1,970
|
|
|
2,699
|
|
|
(522
|
)
|
|
2,177
|
|
||||||
Total
|
|
|
$
|
1,255,381
|
|
|
$
|
(38,100
|
)
|
|
$
|
1,217,281
|
|
|
$
|
62,896
|
|
|
$
|
(19,447
|
)
|
|
$
|
43,449
|
|
In-process research and development
|
|
|
571,252
|
|
|
—
|
|
|
571,252
|
|
|
1,150
|
|
|
—
|
|
|
1,150
|
|
||||||
Total intangible assets
|
|
|
$
|
1,826,633
|
|
|
$
|
(38,100
|
)
|
|
$
|
1,788,533
|
|
|
$
|
64,046
|
|
|
$
|
(19,447
|
)
|
|
$
|
44,599
|
|
|
Three Months
Ended June 30, |
|
Six Months
Ended June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Amortization
|
$
|
16,694
|
|
|
$
|
886
|
|
|
$
|
18,454
|
|
|
$
|
1,773
|
|
|
|
Future Amortization
|
||
Remainder of 2018
|
|
$
|
52,829
|
|
2019
|
|
115,988
|
|
|
2020
|
|
128,101
|
|
|
2021
|
|
144,423
|
|
|
2022
|
|
147,528
|
|
|
2023
|
|
125,845
|
|
|
Thereafter
|
|
502,567
|
|
|
Total
|
|
$
|
1,217,281
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Deposits and advances
|
$
|
2,310
|
|
|
$
|
1,851
|
|
Prepaid insurance
|
8,993
|
|
|
3,154
|
|
||
Prepaid regulatory fees
|
1,621
|
|
|
5,926
|
|
||
Income tax receivable
|
68,334
|
|
|
—
|
|
||
Other current receivables
|
19,429
|
|
|
15,150
|
|
||
Other prepaid assets
|
38,909
|
|
|
16,315
|
|
||
Total prepaid expenses and other current assets
|
$
|
139,596
|
|
|
$
|
42,396
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Accounts payable
|
$
|
169,046
|
|
|
$
|
70,013
|
|
Accrued returns allowance
|
136,433
|
|
|
45,175
|
|
||
Accrued compensation
|
85,663
|
|
|
23,954
|
|
||
Accrued Medicaid and commercial rebates
|
70,198
|
|
|
12,911
|
|
||
Accrued royalties
|
20,628
|
|
|
2,970
|
|
||
Estimated Teva and Allergan chargebacks and rebates
1
|
13,277
|
|
|
—
|
|
||
Medicaid reimbursement accrual
|
15,000
|
|
|
15,000
|
|
||
Accrued professional fees
|
10,213
|
|
|
938
|
|
||
Accrued other
|
35,176
|
|
|
23,818
|
|
||
Total accounts payable and accrued expenses
|
$
|
555,634
|
|
|
$
|
194,779
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Senior Credit Facility – Term Loan due May 2025
|
$
|
2,699,376
|
|
|
$
|
—
|
|
Other
|
624
|
|
|
—
|
|
||
Senior Credit Facility – Term Loan
|
—
|
|
|
1,378,160
|
|
||
Senior Credit Facility – Revolver
|
—
|
|
|
75,000
|
|
||
Total debt
|
2,700,000
|
|
|
1,453,160
|
|
||
Less: debt issuance costs
|
(37,268
|
)
|
|
(8,715)
|
|
||
Total debt, net of debt issuance costs
|
2,662,732
|
|
|
1,444,445
|
|
||
Less: current portion of Senior Credit Facility – Revolver
|
—
|
|
|
75,000
|
|
||
Less: current portion of long-term debt
|
21,427
|
|
|
14,171
|
|
||
Total long-term debt, net
|
$
|
2,641,305
|
|
|
$
|
1,355,274
|
|
|
|
Payments Due
|
||
Remainder of 2018
|
|
$
|
2,600
|
|
2019
|
|
5,200
|
|
|
2020
|
|
5,200
|
|
|
2021
|
|
5,200
|
|
|
2022
|
|
5,200
|
|
|
2023
|
|
5,200
|
|
|
Thereafter
|
|
101,400
|
|
|
Total
|
|
$
|
130,000
|
|
|
|
|
|
Fair Value Measurement Based on
|
||||||||||||
|
|
Total
|
|
Quoted Prices in Active Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant Unobservable
Inputs
(Level 3)
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Deferred Compensation Plan asset
(1)
|
|
$
|
43,213
|
|
|
$
|
—
|
|
|
$
|
43,213
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Deferred Compensation Plan liabilities
(1)
|
|
$
|
34,213
|
|
|
$
|
—
|
|
|
$
|
34,213
|
|
|
$
|
—
|
|
|
|
Operating Leases
|
||
Remainder of 2018
|
|
$
|
11,910
|
|
2019
|
|
25,338
|
|
|
2020
|
|
11,840
|
|
|
2021
|
|
10,537
|
|
|
2022
|
|
9,613
|
|
|
2023
|
|
9,278
|
|
|
Thereafter
|
|
26,529
|
|
|
Total
|
|
$
|
105,045
|
|
Stock Options
|
Number of
Shares Under Option |
|
Weighted-
Average Exercise Price per Share |
|||
Outstanding at December 31, 2017
|
—
|
|
|
$
|
—
|
|
Conversion of Impax stock options outstanding on May 4, 2018
|
3,002,669
|
|
|
18.90
|
|
|
Options granted
|
3,391,199
|
|
|
16.48
|
|
|
Options exercised
|
(163,857
|
)
|
|
12.06
|
|
|
Options forfeited
|
(201,800
|
)
|
|
27.54
|
|
|
Outstanding at June 30, 2018
|
6,028,211
|
|
|
$
|
17.43
|
|
Options exercisable at June 30, 2018
|
2,637,012
|
|
|
$
|
18.66
|
|
Restricted Stock Units
|
Number of
Restricted Stock Units |
|
Weighted-
Average Grant Date Fair Value |
|||
Non-vested at December 31, 2017
|
—
|
|
|
$
|
—
|
|
Granted
|
1,320,448
|
|
|
17.06
|
|
|
Vested
|
—
|
|
|
—
|
|
|
Forfeited
|
—
|
|
|
—
|
|
|
Non-vested at June 30, 2018
|
1,320,448
|
|
|
$
|
17.06
|
|
|
June 30, 2018
|
Volatility
|
46.5%
|
Risk-free interest rate
|
2.9%
|
Dividend yield
|
—%
|
Weighted-average expected life (years)
|
6.25
|
Weighted average grant date fair value
|
$8.06
|
|
Three Months Ended June 30,
|
|
Six Months
Ended June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Cost of revenues
|
$
|
115
|
|
|
$
|
—
|
|
|
$
|
115
|
|
|
$
|
—
|
|
Selling, general and administrative
|
1,423
|
|
|
—
|
|
|
1,423
|
|
|
—
|
|
||||
Research and development
|
106
|
|
|
—
|
|
|
106
|
|
|
—
|
|
||||
Total
|
$
|
1,644
|
|
|
$
|
—
|
|
|
$
|
1,644
|
|
|
$
|
—
|
|
Three Months Ended June 30, 2018
|
Generics
|
|
Specialty Pharma
|
|
Corporate and Other
|
|
Total
Company |
||||||||
Net revenue
|
$
|
361,770
|
|
|
$
|
52,017
|
|
|
$
|
—
|
|
|
$
|
413,787
|
|
Cost of goods sold
|
211,534
|
|
|
23,958
|
|
|
—
|
|
|
235,492
|
|
||||
Gross profit
|
150,236
|
|
|
28,059
|
|
|
—
|
|
|
178,295
|
|
||||
Selling, general and administrative
|
16,621
|
|
|
13,549
|
|
|
22,833
|
|
|
53,003
|
|
||||
Research and development
|
47,206
|
|
|
3,129
|
|
|
—
|
|
|
50,335
|
|
||||
Intellectual property legal development expenses
|
4,004
|
|
|
43
|
|
|
—
|
|
|
4,047
|
|
||||
Acquisition and transaction-related expenses
|
114,622
|
|
|
—
|
|
|
92,885
|
|
|
207,507
|
|
||||
Restructuring expenses
|
24,797
|
|
|
2,421
|
|
|
17,247
|
|
|
44,465
|
|
||||
Operating (loss) income
|
$
|
(57,014
|
)
|
|
$
|
8,917
|
|
|
$
|
(132,965
|
)
|
|
$
|
(181,062
|
)
|
Six Months Ended June 30, 2018
|
Generics
|
|
Specialty Pharma
|
|
Corporate and Other
|
|
Total
Company |
||||||||
Net revenue
|
$
|
636,959
|
|
|
$
|
52,017
|
|
|
$
|
—
|
|
|
$
|
688,976
|
|
Cost of goods sold
|
342,128
|
|
|
23,958
|
|
|
—
|
|
|
366,086
|
|
||||
Gross profit
|
294,831
|
|
|
28,059
|
|
|
—
|
|
|
322,890
|
|
||||
Selling, general and administrative
|
27,824
|
|
|
13,549
|
|
|
36,751
|
|
|
78,124
|
|
||||
Research and development
|
91,415
|
|
|
3,129
|
|
|
—
|
|
|
94,544
|
|
||||
Intellectual property legal development expenses
|
8,580
|
|
|
43
|
|
|
—
|
|
|
8,623
|
|
||||
Acquisition and transaction-related expenses
|
114,622
|
|
|
—
|
|
|
100,020
|
|
|
214,642
|
|
||||
Restructuring expenses
|
24,797
|
|
|
2,421
|
|
|
17,247
|
|
|
44,465
|
|
||||
Operating income (loss)
|
$
|
27,593
|
|
|
$
|
8,917
|
|
|
$
|
(154,018
|
)
|
|
$
|
(117,508
|
)
|
Three Months Ended June 30, 2017
|
Generics
|
|
Specialty Pharma
|
|
Corporate
and Other |
|
Total
Company |
||||||||
Net revenue
|
$
|
259,871
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
259,871
|
|
Cost of goods sold
|
136,138
|
|
|
—
|
|
|
—
|
|
|
136,138
|
|
||||
Gross profit
|
123,733
|
|
|
—
|
|
|
—
|
|
|
123,733
|
|
||||
Selling, general and administrative
|
14,845
|
|
|
—
|
|
|
12,093
|
|
|
26,938
|
|
||||
Research and development
|
47,184
|
|
|
—
|
|
|
—
|
|
|
47,184
|
|
||||
Intellectual property legal development expenses
|
4,926
|
|
|
—
|
|
|
—
|
|
|
4,926
|
|
||||
Acquisition and transaction-related expenses
|
—
|
|
|
—
|
|
|
82
|
|
|
82
|
|
||||
Operating income (loss)
|
$
|
56,778
|
|
|
$
|
—
|
|
|
$
|
(12,175
|
)
|
|
$
|
44,603
|
|
Six Months Ended June 30, 2017
|
Generics
|
|
Specialty Pharma
|
|
Corporate
and Other |
|
Total
Company |
||||||||
Net revenue
|
$
|
485,552
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
485,552
|
|
Cost of goods sold
|
245,803
|
|
|
—
|
|
|
—
|
|
|
245,803
|
|
||||
Gross profit
|
239,749
|
|
|
—
|
|
|
—
|
|
|
239,749
|
|
||||
Selling, general and administrative
|
29,808
|
|
|
—
|
|
|
24,832
|
|
|
54,640
|
|
||||
Research and development
|
86,603
|
|
|
—
|
|
|
—
|
|
|
86,603
|
|
||||
Intellectual property legal development expenses
|
11,093
|
|
|
—
|
|
|
—
|
|
|
11,093
|
|
||||
Acquisition and transaction-related expenses
|
—
|
|
|
—
|
|
|
82
|
|
|
82
|
|
||||
Operating income (loss)
|
$
|
112,245
|
|
|
$
|
—
|
|
|
$
|
(24,914
|
)
|
|
$
|
87,331
|
|
Segment
|
|
Product Family
|
|
Three Months Ended June 30, 2018
|
||||
|
|
|
|
$
|
%
|
|||
Generics
|
|
Diclofenac Sodium Gel
|
|
$
|
31,820
|
|
8
|
%
|
Generics
|
|
Yuvafem-Estradiol
|
|
$
|
30,827
|
|
7
|
%
|
Generics
|
|
Aspirin;Dipyridamole ER Capsul
|
|
$
|
27,919
|
|
7
|
%
|
Specialty Pharma
|
|
Rytary® family
|
|
$
|
20,520
|
|
5
|
%
|
Generics
|
|
Epinephrine Auto-Injector family (generic Adrenaclick®)
|
|
$
|
19,166
|
|
5
|
%
|
Segment
|
|
Product Family
|
|
Three Months Ended June 30, 2017
|
||||
|
|
|
|
$
|
%
|
|||
Generics
|
|
Yuvafem-Estradiol
|
|
$
|
40,387
|
|
16
|
%
|
Generics
|
|
Diclofenac Sodium Gel
|
|
$
|
22,643
|
|
9
|
%
|
Generics
|
|
Ranitidine
|
|
$
|
8,678
|
|
3
|
%
|
Generics
|
|
Aspirin;Dipyridamole ER Capsul
|
|
$
|
8,742
|
|
3
|
%
|
Generics
|
|
Atovaquone
|
|
$
|
7,234
|
|
3
|
%
|
Segment
|
|
Product Family
|
|
Six Months Ended June 30, 2018
|
||||
|
|
|
|
$
|
%
|
|||
Generics
|
|
Diclofenac Sodium Gel
|
|
$
|
52,096
|
|
8
|
%
|
Generics
|
|
Yuvafem-Estradiol
|
|
$
|
50,094
|
|
7
|
%
|
Generics
|
|
Aspirin;Dipyridamole ER Capsul
|
|
$
|
44,941
|
|
7
|
%
|
Generics
|
|
Oseltamivir
|
|
$
|
39,634
|
|
6
|
%
|
Specialty Pharma
|
|
Rytary® family
|
|
$
|
20,520
|
|
3
|
%
|
Segment
|
|
Product Family
|
|
Six Months Ended June 30, 2017
|
||||
|
|
|
|
$
|
%
|
|||
Generics
|
|
Yuvafem-Estradiol
|
|
$
|
70,777
|
|
15
|
%
|
Generics
|
|
Diclofenac Sodium Gel
|
|
$
|
42,120
|
|
9
|
%
|
Generics
|
|
Ranitidine
|
|
$
|
16,498
|
|
3
|
%
|
Generics
|
|
Lidocaine
|
|
$
|
15,878
|
|
3
|
%
|
Generics
|
|
Aspirin;Dipyridamole ER Capsul
|
|
$
|
15,594
|
|
3
|
%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Net revenue
|
413,787
|
|
|
259,871
|
|
|
688,976
|
|
|
485,552
|
|
Gross profit
|
178,295
|
|
|
123,733
|
|
|
322,890
|
|
|
239,749
|
|
Operating (loss) income
|
(181,062
|
)
|
|
44,603
|
|
|
(117,508
|
)
|
|
87,331
|
|
(Loss) income before income taxes
|
(262,506
|
)
|
|
39,600
|
|
|
(210,490
|
)
|
|
82,864
|
|
(Benefit from) provision for income taxes
|
(12,416
|
)
|
|
1,852
|
|
|
(12,052
|
)
|
|
2,855
|
|
Net (loss) income
|
(250,090
|
)
|
|
37,748
|
|
|
(198,438
|
)
|
|
80,009
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net revenue
|
$
|
361,770
|
|
|
$
|
259,871
|
|
|
$
|
636,959
|
|
|
$
|
485,552
|
|
Cost of goods sold
|
211,534
|
|
|
136,138
|
|
|
342,128
|
|
|
245,803
|
|
||||
Gross profit
|
150,236
|
|
|
123,733
|
|
|
294,831
|
|
|
239,749
|
|
||||
Selling, general and administrative
|
16,621
|
|
|
14,845
|
|
|
27,824
|
|
|
29,808
|
|
||||
Research and development
|
47,206
|
|
|
47,184
|
|
|
91,415
|
|
|
86,603
|
|
||||
Intellectual property legal development expenses
|
4,004
|
|
|
4,926
|
|
|
8,580
|
|
|
11,093
|
|
||||
Acquisition and transaction-related expenses
|
114,622
|
|
|
—
|
|
|
114,622
|
|
|
—
|
|
||||
Restructuring expenses
|
24,797
|
|
|
—
|
|
|
24,797
|
|
|
—
|
|
||||
Operating income (loss)
|
$
|
(57,014
|
)
|
|
$
|
56,778
|
|
|
$
|
27,593
|
|
|
$
|
112,245
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net revenue
|
$
|
52,017
|
|
|
$
|
—
|
|
|
$
|
52,017
|
|
|
$
|
—
|
|
Cost of goods sold
|
23,958
|
|
|
—
|
|
|
23,958
|
|
|
—
|
|
||||
Gross profit
|
28,059
|
|
|
—
|
|
|
28,059
|
|
|
—
|
|
||||
Selling, general and administrative
|
13,549
|
|
|
—
|
|
|
13,549
|
|
|
—
|
|
||||
Research and development
|
3,129
|
|
|
—
|
|
|
3,129
|
|
|
—
|
|
||||
Intellectual property legal development expenses
|
43
|
|
|
—
|
|
|
43
|
|
|
—
|
|
||||
Acquisition and transaction-related expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Restructuring expenses
|
2,421
|
|
|
—
|
|
|
2,421
|
|
|
—
|
|
||||
Operating income (loss)
|
$
|
8,917
|
|
|
$
|
—
|
|
|
$
|
8,917
|
|
|
$
|
—
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net revenue
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Cost of goods sold
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Gross profit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
General and administrative
|
22,833
|
|
|
12,093
|
|
|
36,751
|
|
|
24,832
|
|
||||
Research and development
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Intellectual property legal development expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Acquisition and transaction-related expenses
|
92,885
|
|
|
82
|
|
|
100,020
|
|
|
82
|
|
||||
Restructuring expenses
|
17,247
|
|
|
—
|
|
|
17,247
|
|
|
—
|
|
||||
Operating (loss) income
|
$
|
(132,965
|
)
|
|
$
|
(12,175
|
)
|
|
$
|
(154,018
|
)
|
|
$
|
(24,914
|
)
|
Other expense, net
|
(81,444
|
)
|
|
(5,003
|
)
|
|
(92,982
|
)
|
|
(4,467
|
)
|
•
|
our ability to develop products in a timely and cost-efficient manner and in compliance with regulatory requirements, including delays associated with the FDA listing and approval process and our ability to obtain required regulatory approvals in a timely manner, or at all, and maintain such approvals if obtained;
|
•
|
the success of our clinical testing process to ensure that new products are safe and effective or bioequivalent to the reference listed drug;
|
•
|
the risk that any of our products presently under development, if and when fully developed and tested, will not perform as expected;
|
•
|
the risk that legal action may be brought against our generic drug products by our branded drug product competitors, including patent infringement claims among others;
|
•
|
the availability, on commercially reasonable terms, of raw materials, including active pharmaceutical ingredients ("APIs") and other key ingredients necessary to the development of our generic drug products; and
|
•
|
Our ability to scale-up manufacturing methods to successfully manufacture commercial quantities of generic drug product in compliance with regulatory requirements.
|
•
|
introduction of other generic drug manufacturers’ products in direct competition with our generic drug products;
|
•
|
introduction of authorized generic drug products in direct competition with our products, particularly during exclusivity periods;
|
•
|
the ability of generic drug product competitors to quickly enter the market after the expiration of patents or exclusivity periods, diminishing the amount and duration of significant profits;
|
•
|
consolidation among distribution outlets through mergers and acquisitions and the formation of buying groups;
|
•
|
the willingness of generic drug customers, including wholesale and retail customers, to switch among products of different pharmaceutical manufacturers;
|
•
|
pricing pressures by competitors and customers;
|
•
|
a company’s reputation as a manufacturer and distributor of quality products;
|
•
|
a company’s level of service (including maintaining sufficient inventory levels for timely deliveries);
|
•
|
product appearance and labeling; and
|
•
|
a company’s breadth of product offerings.
|
•
|
the availability of alternative products from our competitors;
|
•
|
the prices of our products relative to those of our competitors;
|
•
|
the timing of our market entry;
|
•
|
the ability to market our products effectively at the retail level;
|
•
|
the perception of patients and the healthcare community, including third-party payers, regarding the safety, efficacy and benefits of our drug products compared to those of competing products; and
|
•
|
the acceptance of our products by government and private formularies.
|
•
|
marketing an authorized generic version of a branded product at the same time that we introduce a generic equivalent of that product, directly or through agreement with a generic competitor;
|
•
|
filing “citizen’s petitions” with the FDA to thwart generic competition by causing delays of our product approvals;
|
•
|
using risk evaluation and mitigation strategies (“REMS”), related distribution restrictions or other means of limiting access to their branded products, to prevent us from obtaining product samples needed to conduct bioequivalence testing required for ANDA approval, thereby delaying or preventing us from obtaining FDA approval of a generic version of such branded products;
|
•
|
seeking to secure patent protection of certain “Elements to Assure Safe Use” of a REMS program, which are required medical interventions or other actions healthcare professionals need to execute prior to prescribing or dispensing the drug to the patient, in an attempt to thwart our ability to avoid infringement of the patents in question or secure approval;
|
•
|
seeking to establish regulatory and legal obstacles that would make it more difficult for us to demonstrate a generic product’s bioequivalence or “sameness” to the related branded product;
|
•
|
initiating legislative and administrative efforts in various states to limit the substitution of generic versions of branded pharmaceutical products for the corresponding branded products;
|
•
|
filing suits for patent infringement that automatically delay FDA approval of our generic products;
|
•
|
introducing “next-generation” products prior to the expiration of market exclusivity for their branded product, which often materially reduces the demand for the generic product for which we may be seeking FDA approval;
|
•
|
obtaining extensions of market exclusivity by conducting clinical trials of branded drugs in pediatric populations or by other methods as discussed below;
|
•
|
persuading the FDA to withdraw the approval of branded drugs for which the associated patents are about to expire, thus allowing the brand company to develop and launch new patented products serving as substitutes for the withdrawn products;
|
•
|
seeking to obtain new patents on drugs for which patent protection is about to expire;
|
•
|
filing patent applications that are more complex and costly to challenge;
|
•
|
seeking temporary restraining orders and injunctions against selling a generic equivalent of their branded product based on alleged misappropriation of trade secrets or breach of confidentiality obligations;
|
•
|
seeking temporary restraining orders and injunctions against us after we have received final FDA approval for a product for which we are attempting to launch at-risk prior to resolution of related patent litigation;
|
•
|
reducing the marketing of the branded product to healthcare providers, thereby reducing the branded drug’s commercial exposure and market size, which in turn adversely affects the market potential of the equivalent generic product; and
|
•
|
converting branded prescription drugs that are facing potential generic competition to over-the-counter products, thereby significantly impeding the growth of the generic prescription market for such drugs.
|
•
|
increase our vulnerability to adverse economic and industry conditions;
|
•
|
limit our ability to obtain additional financing for future working capital, capital expenditures, raw materials, strategic acquisitions and other general corporate requirements;
|
•
|
expose us to interest rate fluctuations because the interest on certain debt under the credit facilities is imposed at variable rates;
|
•
|
require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing the availability of cash flow for operations and other purposes;
|
•
|
make it more difficult for us to satisfy our obligations to our lenders, resulting in possible defaults on and acceleration of such indebtedness;
|
•
|
limit our ability to refinance indebtedness or increase the associated costs;
|
•
|
require us to sell assets to reduce debt or influence the decision about whether to do so;
|
•
|
limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate or prevent us from carrying out capital spending that is necessary or important to our growth strategy and efforts to improve operating margins or our business; and
|
•
|
place us at a competitive disadvantage compared to any competitors that have less debt or comparable debt at more favorable interest rates and that, as a result, may be better positioned to withstand economic downturn.
|
•
|
our debt holders could declare all outstanding principal and interest to be due and payable;
|
•
|
the lenders under our credit agreements could terminate their commitments to lend us money; and
|
•
|
we could be forced into bankruptcy or liquidation.
|
•
|
delays in patient enrollment, and variability in the number and types of patients available for clinical trials;
|
•
|
regulators or institutional review boards may not allow us to commence or continue a clinical trial;
|
•
|
our inability, or the inability of our partners, to manufacture or obtain from third parties materials sufficient to complete our clinical trials;
|
•
|
delays or failure in reaching agreement on acceptable clinical trial contracts or clinical trial protocols with prospective clinical trial sites;
|
•
|
risks associated with trial design, which may result in a failure of the trial to show statistically significant results even if the product candidate is effective;
|
•
|
difficulty in maintaining contact with patients after treatment commences, resulting in incomplete data;
|
•
|
poor effectiveness of product candidates during clinical trials;
|
•
|
safety issues, including adverse events associated with product candidates;
|
•
|
the failure of patients to complete clinical trials due to adverse side effects, dissatisfaction with the product candidate, or other reasons;
|
•
|
governmental or regulatory delays or changes in regulatory requirements, policy and guidelines; and
|
•
|
varying interpretation of data by the FDA or foreign regulatory authorities.
|
•
|
the number of new product introductions by us;
|
•
|
losses related to inventory write-offs;
|
•
|
marketing exclusivity, if any, which may be obtained on certain new products;
|
•
|
the level of competition in the marketplace for certain products;
|
•
|
our ability to create demand in the marketplace for our products;
|
•
|
availability of raw materials and finished products from suppliers;
|
•
|
our ability to manufacture products at our manufacturing facilities;
|
•
|
the scope and outcome of governmental regulatory actions;
|
•
|
our dependence on a small number of products for a significant portion of net revenue or income;
|
•
|
legal actions against our generic products brought by brand competitors, and legal challenges to our intellectual property rights by generic competitors;
|
•
|
price erosion and customer consolidation; and
|
•
|
significant payments (such as milestones) payable by us under collaboration, licensing, and development agreements to our partners before the related product has received FDA approval.
|
•
|
incur additional indebtedness;
|
•
|
pay dividends or make other distributions or repurchase or redeem capital stock;
|
•
|
prepay, redeem or repurchase certain debt;
|
•
|
make loans and investments;
|
•
|
sell assets;
|
•
|
incur liens;
|
•
|
enter into transactions with affiliates;
|
•
|
alter the businesses conducted by us;
|
•
|
enter into agreements restricting subsidiaries’ ability to pay dividends; and
|
•
|
consolidate, merge or sell all or substantially all of our assets.
|
•
|
unable to raise additional debt or equity financing to operate during general economic or business downturns; or
|
•
|
our ability to obtain regulatory approvals for product candidates, and delays or failures to obtain such approvals;
|
•
|
the failure of any of our product candidates, if approved for marketing and commercialization, to achieve commercial success;
|
•
|
issues in manufacturing our approved products or product candidates;
|
•
|
the entry into, or termination of, key agreements, including key licensing or collaboration agreements;
|
•
|
the initiation of material developments in, or conclusion of, litigation to enforce or defend any of our intellectual property rights or defend against the intellectual property rights of others;
|
•
|
announcements by commercial partners or competitors of new commercial products, clinical progress (or the lack thereof), significant contracts, commercial relationships, or capital commitments;
|
•
|
adverse publicity relating to our markets, including with respect to other products and potential products in such markets;
|
•
|
the introduction of technological innovations or new therapies competing with our products or our potential products;
|
•
|
the loss of talented employees;
|
•
|
changes in estimates or recommendations by securities analysts, if any, who cover the Class A Common Stock;
|
•
|
general and industry-specific economic conditions potentially affecting our research and development expenditures;
|
•
|
changes in the structure of health care payment systems;
|
•
|
period-to-period fluctuations in our financial results;
|
•
|
failure to meet or exceed financial and development projections we may provide to the public;
|
•
|
failure to meet or exceed the financial and development projections of the investment community;
|
•
|
the perception of the pharmaceutical industry by the public, legislators, regulators, and the investment community;
|
•
|
adverse regulatory decisions;
|
•
|
disputes or other developments relating to proprietary rights, including patents, litigation matters, and our ability to obtain patent protection for our technologies;
|
•
|
sales of the Class A Common Stock by us or our stockholders in the future;
|
•
|
trading volume of the Class A Common Stock; and
|
•
|
period-to-period fluctuations in our financial results
|
Exhibit No.
|
|
Description of Document
|
|
Business Combination Agreement, dated as of October 17, 2017, by and among Amneal Pharmaceuticals LLC, Impax Laboratories, Inc., Atlas Holdings, Inc. and K2 Merger Sub Corporation (incorporated by reference to Exhibit 2.1 to the Company’s Registration Statement on Form S-1 filed on May 7, 2018).
|
|
|
|
|
|
Amendment No. 1, dated as of November 21, 2017, to the Business Combination Agreement, dated as of as of October 17, 2017, by and among Amneal Pharmaceuticals LLC, Impax Laboratories, Inc., Atlas Holdings, Inc. and K2 Merger Sub Corporation (incorporated by reference to Exhibit 2.2 to the Company’s Registration Statement on Form S-1 filed on May 7, 2018).
|
|
|
|
|
|
Amendment No. 2, dated as of December 16, 2017, to the Business Combination Agreement, dated as of as of October 17, 2017, as amended by Amendment No. 1 dated as of November 21, 2017 by and among Amneal Pharmaceuticals LLC, Impax Laboratories, Inc., Atlas Holdings, Inc. and K2 Merger Sub Corporation (incorporated by reference to Exhibit 2.3 to the Company’s Registration Statement on Form S-1 filed on May 7, 2018).
|
|
|
|
|
|
Purchase and Sale Agreement, dated as of May 7, 2018, by and between Amneal Pharmaceuticals LLC, Gemini Laboratories, LLC, the parties signatory thereto and the Sellers’ Representative (incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed on May 7, 2018).
|
|
|
|
|
|
Amended and Restated Certificate of Incorporation of Amneal Pharmaceuticals, Inc. adopted as of May 4, 2018.*
|
|
|
|
|
|
|
|
|
Amended and Restated Bylaws of Amneal Pharmaceuticals, Inc. adopted as of May 4, 2018.*
|
|
|
|
|
|
Second Supplemental Indenture dated as of May 4, 2018 to the Indenture dated as of June 30, 2015 by and between Impax Laboratories, LLC and Wilmington Trust, N.A. (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on May 7, 2018).
|
|
|
|
|
|
Term Loan Credit Agreement, dated as of May 4, 2018, by and among Amneal Pharmaceuticals LLC, as the borrower, JP Morgan Chase Bank, N.A., as administrative agent and collateral agent, and the lenders and other parties party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 7, 2018).
|
|
|
|
|
|
Revolving Credit Agreement, dated as of May 4, 2018, by and among Amneal Pharmaceuticals LLC, as the borrower, the other loan parties from time to time, JP Morgan Chase Bank, N.A., as administrative agent and collateral agent and the lenders and other parties party thereto (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 7, 2018).
|
|
|
|
|
|
Term Loan Guarantee and Collateral Agreement, dated as of May 4, 2018, by and among the loan parties from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on May 7, 2018).
|
|
|
|
|
|
Revolving Loan Guarantee and Collateral Agreement, dated as of May 4, 2018, by and among the loan parties from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on May 7, 2018).
|
|
|
|
|
|
Third Amended and Restated Limited Liability Company Agreement of Amneal Pharmaceuticals LLC adopted as of May 4, 2018 (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on May 7, 2018).
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Tax Receivable Agreement, dated as of May 4, 2018, by and among Amneal Pharmaceuticals, Inc., Amneal Pharmaceuticals LLC and the Members of Amneal Pharmaceuticals LLC from time to time party thereto (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on May 7, 2018).
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Form of Indemnification and Advancement Agreement for the directors and officers of the Company (incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed on May 7, 2018). †
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Amneal Pharmaceuticals, Inc. 2018 Incentive Award Plan.* †
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Form of Amneal Pharmaceuticals, Inc. 2018 Incentive Award Plan Stock Option Grant Notice and Stock Option Agreement (incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K filed on May 7, 2018). †
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Form of Amneal Pharmaceuticals, Inc. 2018 Incentive Award Plan Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K filed on May 7, 2018). †
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Amneal Pharmaceuticals, Inc. Non-Employee Director Compensation Policy (incorporated by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K filed on May 7, 2018). †
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Employment Agreement, dated May 4, 2018, by and between Amneal Pharmaceuticals, Inc. and Paul M. Bisaro (incorporated by reference to Exhibit 10.12 to the Company’s Current Report on Form 8-K filed on May 12, 2018). †
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Unsecured Promissory Note, dated as of May 7, 2018, issued by Amneal Pharmaceuticals LLC to the Sellers (as defined therein) (incorporated by reference to Exhibit 10.13 to the Company’s Current Report on Form 8-K filed on May 12, 2018).
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Amneal Pharmaceuticals LLC Severance Plan and Summary Plan Description (incorporated by reference to Exhibit 10.14 to the Company’s Current Report on Form 8-K filed on May 12, 2018). †
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11.1
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Statement re computation of per share earnings (incorporated by reference to Note. 9 Earnings Per Share in the Notes to Interim Consolidated Financial Statements in this Quarterly Report on Form 10-Q).
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Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
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Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
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Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* **
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Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* **
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101
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The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017, (ii) Consolidated Statements of Operations for each of the three and six months ended June 30, 2018 and 2017, (iii) Consolidated Statements of Comprehensive Loss for each of the three and six months ended June 30, 2018 and 2017, (iv) Consolidated Statements of Cash Flows for each of the six months ended June 30, 2018 and 2017 and (v) Notes to Interim Consolidated Financial Statements.*
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Date: August 9, 2018
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Amneal Pharmaceuticals, Inc.
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(Registrant)
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By:
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/s/ Robert Stewart
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Robert Stewart
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President and Chief Executive Officer
(Principal Executive Officer)
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By:
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/s/ Bryan M. Reasons
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Bryan M. Reasons
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Chief Financial Officer and
Senior Vice President, Finance
(Principal Financial and Accounting Officer)
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a)
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Class A Common Stock and Class B Common Stock
. Each holder of Class A Common Stock and Class B Common Stock shall be entitled to one vote for each share of Class A Common Stock or Class B Common Stock held of record by such holder. Except as required by law or as otherwise expressly provided for in this Restated Certificate of Incorporation, the holders of Class A Common Stock and Class B Common Stock shall vote together as a single class on all matters upon which such holders are entitled to vote.
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b)
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Class B-1 Common Stock
. Except as required by law or as otherwise expressly provided for in ARTICLE SEVENTH, Section 1, shares of Class B-1 Common Stock shall have no voting rights and no holder thereof shall be entitled to vote on any matter.
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a)
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No shares of Class B Common Stock may be issued except to a holder of Common Units or its Affiliates (other than the Corporation or any subsidiary of the Corporation that is a holder of Common Units), such that after such issuance of Class B Common Stock such holder (together with its Affiliates) holds an identical number of Common Units and shares of Class B Common Stock unless otherwise provided in the LLC Agreement (as defined below).
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b)
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No shares of Class B Common Stock may be transferred by the holder thereof except (i) for no consideration to the Corporation, upon which transfer of such shares shall, to the full extent permitted by law, automatically be retired or (ii) in accordance with the terms of the Stockholders Agreement (as defined herein) and the Third Amended and Restated Limited Liability Company Agreement of Amneal Pharmaceuticals LLC, dated as of May 4, 2018, as the same may be further amended and/or restated from time to time (the “
LLC Agreement
”), copies of which will be provided to any stockholder of the Corporation upon written request therefor. Any stock certificates representing shares of Class B Common Stock shall include a legend referencing the transfer restrictions set forth herein. As used in this Restated Certificate of Incorporation, “
Common Units
” has the meaning assigned to such term in the LLC Agreement.
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a)
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Voluntary Conversion.
Subject to ARTICLE FIFTH, Section 7(g), each share of Class B-1 Common Stock may be automatically converted into one share of Class A Common Stock (as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like) if the holder of such share of Class B-1 Common Stock approves or consents to such conversion.
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b)
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Mandatory Conversion by the Corporation
. Following the earlier to occur of (i) the first anniversary of the effective date of this Restated Certificate of Incorporation and (ii) such time as TPG Improv Holdings, L.P., a Delaware limited partnership (“
TPG
”), or any of its Affiliates elects a Class B-1 Director or otherwise designates a director to serve on the Board, the Corporation shall have the right, upon notice to the holder thereof, to automatically convert all shares of Class B-1 Common Stock into an equal number of shares of Class A Common Stock (as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like).
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c)
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Mandatory Conversion upon Transfer
. If, at any time on or after the effective date of this Restated Certificate of Incorporation, any share of Class B-1 Common Stock shall not be owned, beneficially or of record, by TPG or any of its Affiliates or Amneal or any of its Affiliates, such share of Class B-1 Common Stock shall be automatically converted into one share of Class A Common Stock (as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like).
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d)
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Mechanics of Conversion
. Upon any conversion of shares of Class B-1 Common Stock into shares of Class A Common Stock pursuant to this Restated Certificate of Incorporation, the holder shall surrender any certificate or certificates representing the shares of Class B-1 Common Stock being converted, duly endorsed, at the office of the Corporation or of any transfer agent for such stock, and shall give written notice to the Corporation at its principal corporate office stating the name or names in which the certificate or certificates representing the shares of Class A Common Stock issued upon conversion of such holder’s shares of Class B-1 Common Stock are to be issued. The Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder, or to the nominee or nominees of such holder, a certificate or certificates representing the number of shares of Class A Common Stock to which such holder shall be entitled as aforesaid. Such conversion shall be deemed to have been made immediately upon the occurrence of any event described in ARTICLE FIFTH, Sections 7(a), 7(b) and 7(c), and the person or persons entitled to receive the shares of Class A Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Class A Common Stock as of such date.
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e)
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Reservation of Shares upon Conversion
. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Class A Common Stock, the number of shares of Class A Common Stock as shall from time to time be sufficient to effect a conversion of all outstanding shares of Class B-1 Common Stock (as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like). The Corporation covenants that all shares of Class A Common Stock issued upon any such conversion will, upon issuance, be validly issued, fully paid and non-assessable.
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f)
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Status of Converted Stock
. In the event any shares of Class B-1 Common Stock shall be converted into shares of Class A Common Stock pursuant to this ARTICLE FIFTH,
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g)
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Maximum Percentage for Voluntary Conversion
. The Corporation shall not effect a voluntary conversion of a holder’s shares of Class B-1 Common Stock into shares of Class A Common Stock pursuant to ARTICLE FIFTH, Section 7(a), and such holder shall not have the right to voluntarily convert their shares of Class B-1 Common Stock into shares of Class A Common Stock pursuant to such section, to the extent that after giving effect to such conversion, such person (together with such person’s Affiliates), would beneficially own in excess of 9.9% of the shares of Class A Common Stock outstanding immediately after giving effect to such conversion. For purposes of the foregoing sentence, the aggregate number of shares of Class A Common Stock beneficially owned by such person and its Affiliates shall include the number of shares of Class A Common Stock issuable upon conversion of the Class B-1 Common Stock with respect to which the determination of such sentence is being made, but shall exclude shares of Class A Common Stock that would be issuable upon (x) exercise of the remaining, unconverted shares of Class B-1 Common Stock beneficially owned by such person and its Affiliates and (y) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation beneficially owned by such person and its Affiliates (including, without limitation, any convertible notes or convertible preferred stock or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this ARTICLE FIFTH, Section 6(g), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”).
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a)
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the designation of such series, the number of shares to constitute such series and the stated value thereof, if any, if different from the par value thereof;
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b)
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whether the shares of such series shall have voting rights or powers, in addition to any voting rights required by law, and, if so, the terms of such voting rights or powers, which may be full or limited;
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c)
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the dividends, if any, payable on such series, whether any such dividends shall be cumulative, and, if so, from what dates, the conditions and dates upon which such dividends shall be payable, and the preference or relation which such dividends shall bear to the dividends payable on any shares of stock or any other class or any other series of this class;
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d)
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whether the shares of such series shall be subject to redemption by the Corporation and, if so, the times, prices and other conditions of such redemption;
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e)
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the amount or amounts payable upon shares of such series upon, and the rights of the holders of such series in, the voluntary or involuntary liquidation, dissolution or winding up, or upon any distribution of the assets, of the Corporation;
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f)
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whether the shares of such series shall be subject to the operation of a retirement or sinking fund and, if so, the extent to and manner in which any such retirement or sinking fund shall be applied to the purchase or redemption of the shares of such series for retirement or other corporate purposes and the terms and provisions relative to the operation thereof;
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g)
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whether the shares of such series shall be convertible into, or exchangeable for, shares of capital stock of any other class or any other series of this class or any other securities and, if so, the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same, and any other terms and condition or exchange;
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h)
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the limitations and restrictions, if any, to be effective while any shares of such series are outstanding upon the payment of dividends or the making of other distributions on, and upon the purchase, redemption or other acquisition by the Corporation of, the Common Stock or shares of capital stock of any other class or any other series of this class;
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i)
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the conditions or restrictions, if any, to be effective while any shares of such series are outstanding upon the creation of indebtedness of the Corporation upon the issue of any additional stock, including additional shares of such series or of any other series of this class or of any other class; and
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j)
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any other powers, designations, preferences and relative, participating, optional or other special rights, and any qualifications, limitations or restrictions thereof.
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a)
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The Corporation shall advance to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or officer, of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following request therefor, all expenses incurred by any director or officer in defending any such proceeding, provided, however, that if the DGCL requires, an advancement of expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter, an “undertaking”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a “final adjudication”) that such indemnitee is not entitled to be indemnified for such expenses under this Section 2 of this ARTICLE THIRTEENTH or otherwise.
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b)
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Notwithstanding the foregoing, unless otherwise determined pursuant to Section 2 of this ARTICLE THIRTEENTH, no advance shall be made by the Corporation to an executive officer of the Corporation (except by reason of the fact that such executive officer is or was a director of the Corporation in which event this paragraph shall not apply) in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made (i) by a majority vote of directors who were not parties to the proceeding, even if not a quorum, or (ii) by a committee of such directors designated by a majority vote of such directors, even though less than a quorum, or (iii) if there are no such directors, or such directors so direct, by independent legal counsel in a written opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the Corporation.
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a)
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For purposes of any determination under this ARTICLE THIRTEENTH, a director or executive officer shall be deemed to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, to have had no reasonable cause to believe that his conduct was unlawful, if his action is based on information, opinions, reports and statements, including financial statements and other financial data, in each case prepared or presented by:
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i.
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one or more officers or employees of the Corporation whom the director or executive officer believed to be reliable and competent in the matters presented;
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ii.
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counsel, independent accountants or other persons as to matters which the director or executive officer believed to be within such person’s professional competence; and
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iii.
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with respect to a Director, a committee of the Board upon which such director does not serve, as to matters within such Committee’s designated authority, which committee the director believes to merit confidence; so long as, in each case, the director or executive officer acts without knowledge that would cause such reliance to be unwarranted.
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b)
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The termination of any proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal proceeding, that he had reasonable cause to believe that his conduct was unlawful.
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c)
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The provisions of this ARTICLE THIRTEENTH shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth by the DGCL.
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a)
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The term “Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, member, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this ARTICLE THIRTEENTH with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued;
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b)
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The term “other enterprises” shall include employee benefit plans;
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c)
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The term “fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan;
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d)
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References to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants or beneficiaries; and
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e)
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A person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this ARTICLE THIRTEENTH.
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a)
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“
Affiliate
” shall mean (1) in respect of Amneal, any Person that, directly or indirectly, is controlled by Amneal, controls Amneal or is under common control with Amneal and shall include any principal, member, director, partner, stockholder, officer, employee or other representative of any of the foregoing (other than the Corporation and any entity that, directly or indirectly, is controlled by the Corporation); (2) in respect of the Corporation, any Person that, directly or indirectly, is controlled by the Corporation and (3) in respect of TPG, any Person that, directly or indirectly, is controlled by TPG or by any Person that controls TPG.
|
b)
|
“
Amneal
” shall mean Amneal Holdings LLC.
|
c)
|
“
Person
” shall mean an individual, a firm, a corporation, a partnership, a limited liability company, an association, a joint venture, a joint stock company, a trust, an unincorporated organization or similar company, or any other entity.
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1.
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I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2018 of Amneal Pharmaceuticals, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
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(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
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(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
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(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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||
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August 9, 2018
|
By:
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/s/ Robert Stewart
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Robert Stewart
|
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President and Chief Executive Officer
(Principal Executive Officer)
|
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|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2018 of Amneal Pharmaceuticals, Inc.;
|
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
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3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
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4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
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(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
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|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
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|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
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5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
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||
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|
|
August 9, 2018
|
By:
|
/s/ Bryan M. Reasons
|
|
|
Bryan M. Reasons
|
|
|
Chief Financial Officer and Senior Vice President,
Finance
|
|
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
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||
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|
August 9, 2018
|
By:
|
/s/ Robert Stewart
|
|
|
Robert Stewart
|
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
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|
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(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
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||
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|
August 9, 2018
|
By:
|
/s/ Bryan M. Reasons
|
|
|
Bryan M. Reasons
|
|
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Chief Financial Officer and Senior Vice President, Finance
|