x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019
|
☐
|
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)
|
|
Not applicable
|
||
(Former name, former address and former fiscal year, if changed since last report)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Class A Common Stock, par value $0.01 per share
|
AMRX
|
New York Stock Exchange
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
x
|
Smaller reporting company
|
☐
|
|
|
Emerging growth company
|
☐
|
|
|||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|||
|
|||
|
|||
|
|
|
|
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net revenue
|
$
|
404,642
|
|
|
$
|
413,787
|
|
|
$
|
850,762
|
|
|
$
|
688,976
|
|
Cost of goods sold
|
296,381
|
|
|
235,492
|
|
|
606,124
|
|
|
366,086
|
|
||||
Cost of goods sold impairment charges
|
3,012
|
|
|
—
|
|
|
56,309
|
|
|
—
|
|
||||
Gross profit
|
105,249
|
|
|
178,295
|
|
|
188,329
|
|
|
322,890
|
|
||||
Selling, general and administrative
|
67,281
|
|
|
56,003
|
|
|
151,717
|
|
|
81,124
|
|
||||
Research and development
|
48,016
|
|
|
50,335
|
|
|
101,874
|
|
|
94,544
|
|
||||
In-process research and development impairment charges
|
—
|
|
|
—
|
|
|
22,787
|
|
|
—
|
|
||||
Intellectual property legal development expenses
|
2,511
|
|
|
4,047
|
|
|
6,677
|
|
|
8,623
|
|
||||
Legal settlement gains
|
—
|
|
|
(3,000
|
)
|
|
—
|
|
|
(3,000
|
)
|
||||
Acquisition, transaction-related and integration expenses
|
3,519
|
|
|
207,507
|
|
|
9,551
|
|
|
214,642
|
|
||||
Restructuring and other charges
|
2,835
|
|
|
44,465
|
|
|
8,996
|
|
|
44,465
|
|
||||
Operating loss
|
(18,913
|
)
|
|
(181,062
|
)
|
|
(113,273
|
)
|
|
(117,508
|
)
|
||||
Other (expense) income:
|
|
|
|
|
|
|
|
|
|||||||
Interest expense, net
|
(43,886
|
)
|
|
(36,622
|
)
|
|
(87,167
|
)
|
|
(57,673
|
)
|
||||
Foreign exchange gain (loss), net
|
8,311
|
|
|
(25,946
|
)
|
|
2,847
|
|
|
(17,381
|
)
|
||||
Loss on extinguishment of debt
|
—
|
|
|
(19,667
|
)
|
|
—
|
|
|
(19,667
|
)
|
||||
(Loss) gain on sale of international businesses, net
|
(1,888
|
)
|
|
—
|
|
|
6,930
|
|
|
—
|
|
||||
Other income, net
|
149
|
|
|
791
|
|
|
1,256
|
|
|
1,739
|
|
||||
Total other expense, net
|
(37,314
|
)
|
|
(81,444
|
)
|
|
(76,134
|
)
|
|
(92,982
|
)
|
||||
Loss before income taxes
|
(56,227
|
)
|
|
(262,506
|
)
|
|
(189,407
|
)
|
|
(210,490
|
)
|
||||
Benefit from income taxes
|
(5,701
|
)
|
|
(12,416
|
)
|
|
(14,129
|
)
|
|
(12,052
|
)
|
||||
Net loss
|
(50,526
|
)
|
|
(250,090
|
)
|
|
(175,278
|
)
|
|
(198,438
|
)
|
||||
Less: Net loss attributable to Amneal Pharmaceuticals LLC pre-Combination
|
—
|
|
|
200,341
|
|
|
—
|
|
|
148,806
|
|
||||
Less: Net loss attributable to non-controlling interests
|
33,624
|
|
|
31,885
|
|
|
110,495
|
|
|
31,768
|
|
||||
Net loss attributable to Amneal Pharmaceuticals, Inc. before accretion of redeemable non-controlling interest
|
(16,902
|
)
|
|
(17,864
|
)
|
|
(64,783
|
)
|
|
(17,864
|
)
|
||||
Accretion of redeemable non-controlling interest
|
—
|
|
|
(1,240
|
)
|
|
—
|
|
|
(1,240
|
)
|
||||
Net loss attributable to Amneal Pharmaceuticals, Inc.
|
$
|
(16,902
|
)
|
|
$
|
(19,104
|
)
|
|
$
|
(64,783
|
)
|
|
$
|
(19,104
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net loss per share attributable to Amneal Pharmaceuticals, Inc.'s common stockholders:
|
|
|
|
|
|
|
|
||||||||
Class A and Class B-1 basic and diluted
|
$
|
(0.13
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(0.51
|
)
|
|
$
|
(0.15
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Class A and Class B-1 basic and diluted
|
128,016
|
|
|
127,112
|
|
|
127,852
|
|
|
127,112
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net loss
|
$
|
(50,526
|
)
|
|
$
|
(250,090
|
)
|
|
$
|
(175,278
|
)
|
|
$
|
(198,438
|
)
|
Less: Net loss attributable to Amneal Pharmaceuticals LLC pre-Combination
|
—
|
|
|
200,341
|
|
|
—
|
|
|
148,806
|
|
||||
Less: Net loss attributable to non-controlling interests
|
33,624
|
|
|
31,885
|
|
|
110,495
|
|
|
31,768
|
|
||||
Net loss attributable to Amneal Pharmaceuticals, Inc. before accretion of redeemable non-controlling interest
|
(16,902
|
)
|
|
(17,864
|
)
|
|
(64,783
|
)
|
|
(17,864
|
)
|
||||
Accretion of redeemable non-controlling interest
|
—
|
|
|
(1,240
|
)
|
|
—
|
|
|
(1,240
|
)
|
||||
Net loss attributable to Amneal Pharmaceuticals, Inc.
|
(16,902
|
)
|
|
(19,104
|
)
|
|
(64,783
|
)
|
|
(19,104
|
)
|
||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|||||
Foreign currency translation adjustments arising during the period
|
(6,219
|
)
|
|
8,932
|
|
|
(983
|
)
|
|
(1,025
|
)
|
||||
Less: Reclassification of foreign currency translation adjustment included in net loss
|
40
|
|
|
—
|
|
|
3,413
|
|
|
—
|
|
||||
Foreign currency translation adjustments, net
|
(6,179
|
)
|
|
8,932
|
|
|
2,430
|
|
|
(1,025
|
)
|
||||
Less: Other comprehensive income attributable to Amneal Pharmaceuticals LLC pre-Combination
|
—
|
|
|
(11,678
|
)
|
|
—
|
|
|
(1,721
|
)
|
||||
Less: Other comprehensive loss (income) attributable to non-controlling interests
|
3,533
|
|
|
1,576
|
|
|
(1,394
|
)
|
|
1,576
|
|
||||
Other comprehensive (loss) income attributable to Amneal Pharmaceuticals, Inc.
|
(2,646
|
)
|
|
(1,170
|
)
|
|
1,036
|
|
|
(1,170
|
)
|
||||
Comprehensive loss attributable to Amneal Pharmaceuticals, Inc.
|
$
|
(19,548
|
)
|
|
$
|
(20,274
|
)
|
|
$
|
(63,747
|
)
|
|
$
|
(20,274
|
)
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
54,893
|
|
|
$
|
213,394
|
|
Restricted cash
|
2,129
|
|
|
5,385
|
|
||
Trade accounts receivable, net
|
634,666
|
|
|
481,495
|
|
||
Inventories
|
414,627
|
|
|
457,219
|
|
||
Prepaid expenses and other current assets
|
77,062
|
|
|
128,321
|
|
||
Related party receivables
|
2,470
|
|
|
830
|
|
||
Total current assets
|
1,185,847
|
|
|
1,286,644
|
|
||
Property, plant and equipment, net
|
508,086
|
|
|
544,146
|
|
||
Goodwill
|
420,017
|
|
|
426,226
|
|
||
Intangible assets, net
|
1,553,330
|
|
|
1,654,969
|
|
||
Deferred tax asset, net
|
391,881
|
|
|
373,159
|
|
||
Operating lease right-of-use assets
|
59,900
|
|
|
—
|
|
||
Operating lease right-of-use assets - related party
|
17,031
|
|
|
—
|
|
||
Financing lease right-of-use assets - related party
|
62,588
|
|
|
—
|
|
||
Other assets
|
63,459
|
|
|
67,592
|
|
||
Total assets
|
$
|
4,262,139
|
|
|
$
|
4,352,736
|
|
Liabilities and Stockholders' Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
505,143
|
|
|
$
|
514,440
|
|
Current portion of long-term debt, net
|
21,445
|
|
|
21,449
|
|
||
Current portion of operating lease liabilities
|
13,313
|
|
|
—
|
|
||
Current portion of operating and financing lease liabilities - related party
|
3,293
|
|
|
—
|
|
||
Related party payables
|
2,965
|
|
|
17,695
|
|
||
Current portion of financing obligation - related party
|
—
|
|
|
266
|
|
||
Total current liabilities
|
546,159
|
|
|
553,850
|
|
||
Long-term debt, net
|
2,619,788
|
|
|
2,630,598
|
|
||
Deferred income taxes
|
—
|
|
|
1,178
|
|
||
Liabilities under tax receivable agreement
|
193,499
|
|
|
192,884
|
|
||
Operating lease liabilities
|
47,836
|
|
|
—
|
|
||
Operating lease liabilities - related party
|
14,862
|
|
|
—
|
|
||
Financing lease liabilities - related party
|
61,990
|
|
|
—
|
|
||
Financing obligation - related party
|
—
|
|
|
39,083
|
|
||
Other liabilities
|
28,653
|
|
|
38,780
|
|
||
Total long-term liabilities
|
2,966,628
|
|
|
2,902,523
|
|
||
Commitments and contingencies (Notes 5, 11 and 13)
|
|
|
|
|
|
||
Stockholders' Equity
|
|
|
|
||||
Preferred stock, $0.01 par value, 2,000 shares authorized; none issued at both June 30, 2019 and December 31, 2018
|
—
|
|
|
—
|
|
||
Class A common stock, $0.01 par value, 900,000 shares authorized at both June 30, 2019 and December 31, 2018; 128,151 and 115,047 shares issued at June 30, 2019 and December 31, 2018, respectively
|
1,281
|
|
|
1,151
|
|
||
Class B common stock, $0.01 par value, 300,000 shares authorized at both June 30, 2019 and December 31, 2018; 170,941 and 171,261 shares issued at June 30, 2019 and December 31, 2018 respectively
|
1,710
|
|
|
1,713
|
|
||
Class B-1 common stock, $0.01 par value, 18,000 shares authorized at both June 30, 2019 and December 31, 2018; none and 12,329 shares issued at June 30, 2019 and December 31, 2018, respectively
|
—
|
|
|
123
|
|
||
Additional paid-in capital
|
544,161
|
|
|
530,438
|
|
||
Stockholders' accumulated deficit
|
(80,746
|
)
|
|
(20,920
|
)
|
||
Accumulated other comprehensive loss
|
(6,750
|
)
|
|
(7,755
|
)
|
||
Total Amneal Pharmaceuticals, Inc. stockholders' equity
|
459,656
|
|
|
504,750
|
|
||
Non-controlling interests
|
289,696
|
|
|
391,613
|
|
||
Total stockholders' equity
|
749,352
|
|
|
896,363
|
|
||
Total liabilities and stockholders' equity
|
$
|
4,262,139
|
|
|
$
|
4,352,736
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(175,278
|
)
|
|
$
|
(198,438
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
99,574
|
|
|
46,897
|
|
||
Amortization of Levothyroxine Transition Agreement asset
|
36,393
|
|
|
—
|
|
||
Unrealized foreign currency (gain) loss
|
(3,695
|
)
|
|
17,032
|
|
||
Amortization of debt issuance costs
|
3,218
|
|
|
2,577
|
|
||
Loss on extinguishment of debt
|
—
|
|
|
19,667
|
|
||
Gain on sale of international businesses, net
|
(6,930
|
)
|
|
—
|
|
||
Gain on termination of lease
|
—
|
|
|
(3,524
|
)
|
||
Intangible asset impairment charges
|
79,096
|
|
|
—
|
|
||
Non-cash restructuring and asset-related charges
|
1,314
|
|
|
—
|
|
||
Deferred tax benefit
|
(18,209
|
)
|
|
(14,993
|
)
|
||
Stock-based compensation and PPU expense
|
10,571
|
|
|
160,401
|
|
||
Inventory provision
|
50,410
|
|
|
17,426
|
|
||
Other operating charges and credits, net
|
3,155
|
|
|
927
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Trade accounts receivable, net
|
(162,954
|
)
|
|
(60,051
|
)
|
||
Inventories
|
(19,658
|
)
|
|
(71,655
|
)
|
||
Prepaid expenses, other current assets and other assets
|
28,614
|
|
|
(5,107
|
)
|
||
Related party receivables
|
(1,624
|
)
|
|
11,017
|
|
||
Accounts payable, accrued expenses and other liabilities
|
(13,538
|
)
|
|
19,630
|
|
||
Related party payables
|
2,225
|
|
|
(13,356
|
)
|
||
Net cash used in operating activities
|
(87,316
|
)
|
|
(71,550
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property, plant and equipment
|
(29,629
|
)
|
|
(36,600
|
)
|
||
Acquisition of product rights and licenses
|
(50,000
|
)
|
|
(3,000
|
)
|
||
Acquisitions, net of cash acquired
|
—
|
|
|
(321,324
|
)
|
||
Proceeds from sale of international businesses, net of cash sold
|
34,834
|
|
|
—
|
|
||
Net cash used in investing activities
|
(44,795
|
)
|
|
(360,924
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Payments of deferred financing costs and debt extinguishment costs
|
—
|
|
|
(54,955
|
)
|
||
Proceeds from issuance of debt
|
—
|
|
|
1,325,383
|
|
||
Payments of principal on debt and capital leases
|
(13,500
|
)
|
|
(603,551
|
)
|
||
Payments on revolving credit line
|
—
|
|
|
(75,000
|
)
|
||
Proceeds from exercise of stock options
|
1,385
|
|
|
1,977
|
|
||
Employee payroll tax withholding on restricted stock unit vesting
|
(921
|
)
|
|
—
|
|
||
Equity contributions
|
—
|
|
|
27,742
|
|
||
Capital contribution from non-controlling interest
|
—
|
|
|
360
|
|
||
Acquisition of non-controlling interest
|
(3,543
|
)
|
|
—
|
|
||
Tax distribution to non-controlling interest
|
(13,494
|
)
|
|
—
|
|
||
Distributions to members
|
—
|
|
|
(182,998
|
)
|
||
Payments of principal on financing lease - related party
|
(866
|
)
|
|
—
|
|
||
Payments of financing obligation - related party
|
—
|
|
|
(121
|
)
|
||
Repayment of related party note
|
—
|
|
|
(14,842
|
)
|
||
Net cash (used in) provided by financing activities
|
(30,939
|
)
|
|
423,995
|
|
||
Effect of foreign exchange rate on cash
|
1,293
|
|
|
(853
|
)
|
||
Net decrease in cash, cash equivalents, and restricted cash
|
(161,757
|
)
|
|
(9,332
|
)
|
||
Cash, cash equivalents, and restricted cash - beginning of period
|
218,779
|
|
|
77,922
|
|
||
Cash, cash equivalents, and restricted cash - end of period
|
$
|
57,022
|
|
|
$
|
68,590
|
|
Cash and cash equivalents - end of period
|
$
|
54,893
|
|
|
$
|
61,521
|
|
Restricted cash - end of period
|
2,129
|
|
|
7,069
|
|
||
Cash, cash equivalents, and restricted cash - end of period
|
$
|
57,022
|
|
|
$
|
68,590
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
81,103
|
|
|
$
|
50,391
|
|
Cash received for income taxes
|
$
|
8,533
|
|
|
$
|
—
|
|
Supplemental disclosure of non-cash investing and financing activity:
|
|
|
|
||||
Distribution to members
|
$
|
—
|
|
|
$
|
8,562
|
|
Payable for acquisition of product rights and licenses
|
$
|
—
|
|
|
$
|
10,000
|
|
|
|
Class A Common Stock
|
Class B Common Stock
|
Class B-1 Common Stock
|
Additional Paid-in Capital
|
Stockholders' Accumulated Deficit
|
Accumulated Other Comprehensive (Loss) Income
|
Non-Controlling Interests
|
Total Equity
|
||||||||||||||||||||||
|
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
||||||||||||||||||||||||
Balance at April 1, 2019
|
|
115,564
|
|
$
|
1,156
|
|
170,941
|
|
$
|
1,710
|
|
12,329
|
|
$
|
123
|
|
$
|
537,159
|
|
$
|
(63,844
|
)
|
$
|
(4,099
|
)
|
$
|
327,576
|
|
$
|
799,781
|
|
Net loss
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(16,902
|
)
|
—
|
|
(33,624
|
)
|
(50,526
|
)
|
||||||||
Foreign currency translation adjustment
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(2,663
|
)
|
(3,556
|
)
|
(6,219
|
)
|
||||||||
Stock-based compensation
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6,224
|
|
—
|
|
—
|
|
—
|
|
6,224
|
|
||||||||
Exercise of stock options
|
|
8
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
174
|
|
—
|
|
—
|
|
201
|
|
375
|
|
||||||||
Restricted stock unit vesting, net of shares withheld to cover payroll taxes
|
|
250
|
|
2
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6
|
|
—
|
|
(5
|
)
|
(924
|
)
|
(921
|
)
|
||||||||
Conversion of Class B-1 Common Stock
|
|
12,329
|
|
123
|
|
—
|
|
—
|
|
(12,329
|
)
|
(123
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Reclassification of foreign currency translation adjustment included in net loss
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
17
|
|
23
|
|
40
|
|
||||||||
Other
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
598
|
|
—
|
|
—
|
|
—
|
|
598
|
|
||||||||
Balance at June 30, 2019
|
|
128,151
|
|
$
|
1,281
|
|
170,941
|
|
$
|
1,710
|
|
—
|
|
$
|
—
|
|
$
|
544,161
|
|
$
|
(80,746
|
)
|
$
|
(6,750
|
)
|
$
|
289,696
|
|
$
|
749,352
|
|
|
|
Class A Common Stock
|
Class B Common Stock
|
Class B-1 Common Stock
|
Additional Paid-in Capital
|
Stockholders' Accumulated Deficit
|
Accumulated Other Comprehensive (Loss) Income
|
Non-Controlling Interests
|
Total Equity
|
||||||||||||||||||||||
|
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
||||||||||||||||||||||||
Balance at January 1, 2019
|
|
115,047
|
|
$
|
1,151
|
|
171,261
|
|
$
|
1,713
|
|
12,329
|
|
$
|
123
|
|
$
|
530,438
|
|
$
|
(20,920
|
)
|
$
|
(7,755
|
)
|
$
|
391,613
|
|
$
|
896,363
|
|
Net loss
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(64,783
|
)
|
—
|
|
(110,495
|
)
|
(175,278
|
)
|
||||||||
Cumulative-effective adjustment from adoption of Topic 842
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
4,957
|
|
—
|
|
8,604
|
|
13,561
|
|
||||||||
Foreign currency translation adjustment
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(425
|
)
|
(558
|
)
|
(983
|
)
|
||||||||
Stock-based compensation
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
10,571
|
|
—
|
|
—
|
|
—
|
|
10,571
|
|
||||||||
Exercise of stock options
|
|
205
|
|
2
|
|
—
|
|
—
|
|
—
|
|
—
|
|
922
|
|
—
|
|
(7
|
)
|
468
|
|
1,385
|
|
||||||||
Restricted stock unit vesting, net of shares withheld to cover payroll taxes
|
|
250
|
|
2
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6
|
|
—
|
|
(5
|
)
|
(924
|
)
|
(921
|
)
|
||||||||
Redemption of Class B Common Stock
|
|
320
|
|
3
|
|
(320
|
)
|
(3
|
)
|
—
|
|
—
|
|
1,124
|
|
—
|
|
(19
|
)
|
(882
|
)
|
223
|
|
||||||||
Conversion of Class B-1 Common Stock
|
|
12,329
|
|
123
|
|
—
|
|
—
|
|
(12,329
|
)
|
(123
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Tax distribution
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(82
|
)
|
(82
|
)
|
||||||||
Reclassification of foreign currency translation adjustment included in net loss
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,461
|
|
1,952
|
|
3,413
|
|
||||||||
Other
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,100
|
|
—
|
|
—
|
|
—
|
|
1,100
|
|
||||||||
Balance at June 30, 2019
|
|
128,151
|
|
$
|
1,281
|
|
170,941
|
|
$
|
1,710
|
|
—
|
|
$
|
—
|
|
$
|
544,161
|
|
$
|
(80,746
|
)
|
$
|
(6,750
|
)
|
$
|
289,696
|
|
$
|
749,352
|
|
|
|
|
|
Class A Common Stock
|
Class B Common Stock
|
Class B-1 Common Stock
|
Additional Paid-in Capital
|
Stockholders' Accumulated Deficit
|
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
|
|
|||||||||||||||||||||||||||||||
Balance at April 1, 2018
|
|
$
|
2,716
|
|
$
|
(357,980
|
)
|
—
|
|
$
|
—
|
|
—
|
|
$
|
—
|
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(24,189
|
)
|
$
|
10,634
|
|
$
|
(368,819
|
)
|
|
$
|
—
|
|
Period Prior to the Combination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Net loss
|
|
—
|
|
(200,341
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(20
|
)
|
(200,361
|
)
|
|
—
|
|
|||||||||||
Cumulative-effective adjustment from adoption of ASU 2014-09 (Topic 606)
|
|
—
|
|
1,707
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,707
|
|
|
—
|
|
|||||||||||
Distributions to members
|
|
—
|
|
(152,998
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(152,998
|
)
|
|
—
|
|
|||||||||||
PPU expense
|
|
158,757
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
158,757
|
|
|
—
|
|
|||||||||||
Foreign currency translation adjustment
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
11,678
|
|
—
|
|
11,678
|
|
|
—
|
|
|||||||||||
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
|
|
|
|
|
|
Class A Common Stock
|
Class B Common Stock
|
Class B-1 Common Stock
|
Additional Paid-in Capital
|
Stockholders' Accumulated Deficit
|
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
|
|
|||||||||||||||||||||||||||||||
Balance at January 1, 2018
|
|
$
|
2,716
|
|
$
|
(382,785
|
)
|
—
|
|
$
|
—
|
|
—
|
|
$
|
—
|
|
—
|
|
$
|
—
|
|
$
|
8,562
|
|
$
|
—
|
|
$
|
(14,232
|
)
|
$
|
10,157
|
|
$
|
(375,582
|
)
|
|
$
|
—
|
|
Period Prior to the Combination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Net (loss) income
|
|
—
|
|
(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
|
|
|
|
Final Fair Values
As of June 30, 2019 |
||
Trade accounts receivable, net
|
|
$
|
210,820
|
|
Inventories
|
|
183,088
|
|
|
Prepaid expenses and other current assets
|
|
91,430
|
|
|
Property, plant and equipment
|
|
87,472
|
|
|
Goodwill
|
|
398,733
|
|
|
Intangible assets
|
|
1,574,929
|
|
|
Other
|
|
55,790
|
|
|
Total assets acquired
|
|
2,602,262
|
|
|
Accounts payable
|
|
47,912
|
|
|
Accrued expenses and other current liabilities
|
|
274,979
|
|
|
Long-term debt
|
|
599,400
|
|
|
Other long-term liabilities
|
|
33,793
|
|
|
Total liabilities assumed
|
|
956,084
|
|
|
Net assets acquired
|
|
$
|
1,646,178
|
|
|
|
Final Fair Values
|
|
Weighted-Average Useful Life (Years)
|
||
Marketed product rights
|
|
$
|
1,045,617
|
|
|
12.9
|
|
Three Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2018
|
||||
Net revenue
|
$
|
447,524
|
|
|
$
|
865,068
|
|
Net loss
|
$
|
(86,621
|
)
|
|
$
|
(161,050
|
)
|
Net loss attributable to Amneal Pharmaceuticals, Inc.
|
$
|
(19,759
|
)
|
|
$
|
(28,454
|
)
|
•
|
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.
|
Segment
|
|
Product Family
|
|
Three Months Ended June 30, 2019
|
||||
|
|
|
|
$
|
|
%
|
||
Generics
|
|
Levothyroxine Sodium
|
|
$
|
46,459
|
|
|
11%
|
Specialty
|
|
Rytary®
|
|
33,000
|
|
|
8%
|
|
Generics
|
|
Diclofenac Sodium Gel
|
|
25,010
|
|
|
6%
|
|
Generics
|
|
Epinephrine Auto-Injector (generic Adrenaclick®)
|
|
15,959
|
|
|
4%
|
|
Generics
|
|
Yuvafem-Estradiol
|
|
$
|
14,022
|
|
|
3%
|
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 Capsule
|
|
27,919
|
|
|
7%
|
|
Specialty
|
|
Rytary®
|
|
20,520
|
|
|
5%
|
|
Generics
|
|
Epinephrine Auto-Injector (generic Adrenaclick®)
|
|
$
|
19,166
|
|
|
5%
|
Segment
|
|
Product Family
|
|
Six Months Ended June 30, 2019
|
||||
|
|
|
|
$
|
|
%
|
||
Generics
|
|
Levothyroxine Sodium
|
|
$
|
95,453
|
|
|
11%
|
Specialty
|
|
Rytary®
|
|
61,828
|
|
|
7%
|
|
Generics
|
|
Diclofenac Sodium Gel
|
|
48,477
|
|
|
6%
|
|
Generics
|
|
Yuvafem-Estradiol
|
|
32,761
|
|
|
4%
|
|
Generics
|
|
Epinephrine Auto-Injector (generic Adrenaclick®)
|
|
$
|
31,154
|
|
|
4%
|
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 Capsule
|
|
44,941
|
|
|
7%
|
|
Generics
|
|
Oseltamivir
|
|
39,634
|
|
|
6%
|
|
Specialty
|
|
Rytary®
|
|
$
|
20,520
|
|
|
3%
|
|
|
Contract Charge-backs and Sales Volume Allowances
|
|
Cash Discount Allowances
|
|
Accrued Returns Allowance
|
|
Accrued Medicaid and Commercial Rebates
|
||||||||
Balance at December 31, 2018
|
|
$
|
829,596
|
|
|
$
|
36,157
|
|
|
$
|
154,503
|
|
|
$
|
74,202
|
|
Provision related to sales recorded in the period
|
|
2,294,169
|
|
|
68,883
|
|
|
41,682
|
|
|
82,981
|
|
||||
Credits/payments issued during the period
|
|
(2,333,025
|
)
|
|
(78,111
|
)
|
|
(55,500
|
)
|
|
(65,524
|
)
|
||||
Balance at June 30, 2019
|
|
$
|
790,740
|
|
|
$
|
26,929
|
|
|
$
|
140,685
|
|
|
$
|
91,659
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Employee restructuring separation charges
(1)
|
$
|
516
|
|
|
$
|
44,465
|
|
|
$
|
2,420
|
|
|
$
|
44,465
|
|
Asset-related charges
(2)
|
900
|
|
|
—
|
|
|
1,314
|
|
|
—
|
|
||||
Total employee and asset-related restructuring charges
|
1,416
|
|
|
44,465
|
|
|
3,734
|
|
|
44,465
|
|
||||
Other employee severance charges
|
1,419
|
|
|
—
|
|
|
5,262
|
|
|
—
|
|
||||
Total restructuring and other charges
|
$
|
2,835
|
|
|
$
|
44,465
|
|
|
$
|
8,996
|
|
|
$
|
44,465
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Generics
|
$
|
1,317
|
|
|
$
|
24,797
|
|
|
$
|
2,313
|
|
|
$
|
24,797
|
|
Specialty
|
—
|
|
|
2,421
|
|
|
178
|
|
|
2,421
|
|
||||
Corporate
|
99
|
|
|
17,247
|
|
|
1,243
|
|
|
17,247
|
|
||||
Total employee and asset-related restructuring charges
|
$
|
1,416
|
|
|
$
|
44,465
|
|
|
$
|
3,734
|
|
|
$
|
44,465
|
|
|
Employee Restructuring
|
||
Balance at December 31, 2018
|
$
|
22,112
|
|
Charges to income
|
2,420
|
|
|
Payments
|
(22,075
|
)
|
|
Balance at June 30, 2019
|
$
|
2,457
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended
June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net loss attributable to Amneal Pharmaceuticals, Inc.
|
$
|
(16,902
|
)
|
|
$
|
(19,104
|
)
|
|
$
|
(64,783
|
)
|
|
$
|
(19,104
|
)
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares of Class A Common Stock and Class B-1 Common Stock outstanding - basic and diluted
|
128,016
|
|
|
127,112
|
|
|
127,852
|
|
|
127,112
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net loss per share attributable to Amneal Pharmaceuticals, Inc.'s common stockholders:
|
|
|
|
|
|
|
|
||||||||
Class A and Class B-1 basic and diluted
|
$
|
(0.13
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(0.51
|
)
|
|
$
|
(0.15
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Stock options
(1)
|
8,407
|
|
|
6,028
|
|
|
8,407
|
|
|
6,028
|
|
Restricted stock units
(1)
|
2,894
|
|
|
1,320
|
|
|
2,894
|
|
|
1,320
|
|
Performance stock units
(1)
|
465
|
|
|
—
|
|
|
465
|
|
|
—
|
|
Shares of Class B Common Stock
(2)
|
170,941
|
|
|
171,261
|
|
|
170,941
|
|
|
171,261
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Gross accounts receivable
|
$
|
1,454,294
|
|
|
$
|
1,349,588
|
|
|
|
|
|
||||
Allowance for doubtful accounts
|
(1,959
|
)
|
|
(2,340
|
)
|
||
Contract charge-backs and sales volume allowances
|
(790,740
|
)
|
|
(829,596
|
)
|
||
Cash discount allowances
|
(26,929
|
)
|
|
(36,157
|
)
|
||
Subtotal
|
(819,628
|
)
|
|
(868,093
|
)
|
||
Trade accounts receivable, net
|
$
|
634,666
|
|
|
$
|
481,495
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Raw materials
|
$
|
180,188
|
|
|
$
|
181,654
|
|
Work in process
|
38,376
|
|
|
54,152
|
|
||
Finished goods
|
196,063
|
|
|
221,413
|
|
||
Total inventories
|
$
|
414,627
|
|
|
$
|
457,219
|
|
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2019
|
||||
Operating lease cost
(1)
|
$
|
4,950
|
|
|
$
|
10,890
|
|
|
|
|
|
||||
Finance lease cost:
|
|
|
|
||||
Amortization of right-of-use assets
|
652
|
|
|
1,304
|
|
||
Interest on lease liabilities
|
1,119
|
|
|
2,243
|
|
||
Total finance lease cost
|
1,771
|
|
|
3,547
|
|
||
|
|
|
|
||||
Total lease cost
|
$
|
6,721
|
|
|
$
|
14,437
|
|
Operating leases
|
June 30, 2019
|
||
Operating lease right-of-use assets
|
$
|
59,900
|
|
Operating lease right-of-use assets - related party
|
17,031
|
|
|
Total operating lease right-of-use assets
|
$
|
76,931
|
|
|
|
||
Operating lease liabilities
|
$
|
47,836
|
|
Operating lease liabilities - related party
|
14,862
|
|
|
Current portion of operating lease liabilities
|
13,313
|
|
|
Current portion of operating and financing lease liabilities - related party
|
2,258
|
|
|
Total operating lease liabilities
|
$
|
78,269
|
|
|
|
||
Financing leases
|
|
||
Financing lease right of use assets - related party
|
$
|
62,588
|
|
|
|
||
Financing lease liabilities - related party
|
$
|
61,990
|
|
Current portion of operating and financing lease liabilities - related party
|
1,035
|
|
|
Total financing lease liabilities
|
$
|
63,025
|
|
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2019
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
||||
Operating cash flows from finance leases
|
$
|
1,120
|
|
|
$
|
1,870
|
|
Operating cash flows from operating leases
|
5,107
|
|
|
10,004
|
|
||
Financing cash flows from finance leases
|
247
|
|
|
866
|
|
||
|
|
|
|
||||
Non-cash activity:
|
|
|
|
||||
Right-of-use assets obtained in exchange for new operating lease liabilities
|
$
|
—
|
|
|
$
|
360
|
|
|
June 30, 2019
|
Weighted average remaining lease term - operating leases
|
6 years
|
Weighted average remaining lease term - finance leases
|
23 years
|
|
|
Weighted average discount rate - operating leases
|
6.1%
|
Weighted average discount rate - finance leases
|
7.0%
|
|
Operating Leases
|
|
Financing Leases
|
||||
2019
(1)
|
$
|
9,990
|
|
|
$
|
2,736
|
|
2020
|
19,826
|
|
|
5,474
|
|
||
2021
|
16,187
|
|
|
5,474
|
|
||
2022
|
12,342
|
|
|
5,474
|
|
||
2023
|
10,054
|
|
|
5,474
|
|
||
Thereafter
|
26,947
|
|
|
106,740
|
|
||
Total lease payments
|
95,346
|
|
|
131,372
|
|
||
Less: Imputed interest
|
(17,077
|
)
|
|
(68,347
|
)
|
||
Total
|
$
|
78,269
|
|
|
$
|
63,025
|
|
|
Operating Leases
|
|
Financing Obligation
|
||||
2019
|
$
|
25,885
|
|
|
$
|
5,474
|
|
2020
|
12,071
|
|
|
5,474
|
|
||
2021
|
11,105
|
|
|
5,474
|
|
||
2022
|
10,329
|
|
|
5,474
|
|
||
2023
|
10,043
|
|
|
5,474
|
|
||
Thereafter
|
28,128
|
|
|
107,196
|
|
||
Total lease payments
|
97,561
|
|
|
134,566
|
|
||
Less: Imputed interest
|
—
|
|
|
(95,217
|
)
|
||
Total
|
$
|
97,561
|
|
|
$
|
39,349
|
|
|
|
|
|
Fair Value Measurement Based on
|
||||||||||||
June 30, 2019
|
|
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)
|
|
$
|
43,004
|
|
|
$
|
—
|
|
|
$
|
43,004
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Deferred Compensation Plan liabilities
(1)
|
|
$
|
24,133
|
|
|
$
|
—
|
|
|
$
|
24,133
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Deferred Compensation Plan asset
(1)
|
|
$
|
40,101
|
|
|
$
|
—
|
|
|
$
|
40,101
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Deferred Compensation Plan liabilities
(1)
|
|
$
|
27,978
|
|
|
$
|
—
|
|
|
$
|
27,978
|
|
|
$
|
—
|
|
•
|
Political subdivision / municipal entity plaintiffs from the states of Alabama, Arkansas, Arizona, California, Colorado, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Puerto Rico, South Carolina, Tennessee, Texas, Utah, Washington, West Virginia, and Wisconsin;
|
•
|
Third-party payor plaintiffs;
|
•
|
Indian tribe plaintiffs; and
|
•
|
Hospital / healthcare provider plaintiffs.
|
Three Months Ended June 30, 2019
|
|
Generics
|
|
Specialty
|
|
Corporate
and Other |
|
Total
Company |
||||||||
Net revenue
|
|
$
|
335,064
|
|
|
$
|
69,578
|
|
|
$
|
—
|
|
|
$
|
404,642
|
|
Cost of goods sold
|
|
263,423
|
|
|
32,958
|
|
|
—
|
|
|
296,381
|
|
||||
Cost of goods sold impairment charges
|
|
3,012
|
|
|
—
|
|
|
—
|
|
|
3,012
|
|
||||
Gross profit
|
|
68,629
|
|
|
36,620
|
|
|
—
|
|
|
105,249
|
|
||||
Selling, general and administrative
|
|
14,379
|
|
|
16,150
|
|
|
36,752
|
|
|
67,281
|
|
||||
Research and development
|
|
45,448
|
|
|
2,568
|
|
|
—
|
|
|
48,016
|
|
||||
Intellectual property legal development expenses
|
|
2,511
|
|
|
—
|
|
|
—
|
|
|
2,511
|
|
||||
Acquisition, transaction-related and integration expenses
|
|
987
|
|
|
1,366
|
|
|
1,166
|
|
|
3,519
|
|
||||
Restructuring and other charges
|
|
418
|
|
|
—
|
|
|
2,417
|
|
|
2,835
|
|
||||
Operating income (loss)
|
|
$
|
4,886
|
|
|
$
|
16,536
|
|
|
$
|
(40,335
|
)
|
|
$
|
(18,913
|
)
|
Six Months Ended June 30, 2019
|
|
Generics
|
|
Specialty
|
|
Corporate
and Other |
|
Total
Company |
||||||||
Net revenue
|
|
$
|
717,541
|
|
|
$
|
133,221
|
|
|
$
|
—
|
|
|
$
|
850,762
|
|
Cost of goods sold
|
|
542,301
|
|
|
63,823
|
|
|
—
|
|
|
606,124
|
|
||||
Cost of goods sold impairment charges
|
|
56,309
|
|
|
—
|
|
|
—
|
|
|
56,309
|
|
||||
Gross profit
|
|
118,931
|
|
|
69,398
|
|
|
—
|
|
|
188,329
|
|
||||
Selling, general and administrative
|
|
38,527
|
|
|
37,477
|
|
|
75,713
|
|
|
151,717
|
|
||||
Research and development
|
|
95,599
|
|
|
6,275
|
|
|
—
|
|
|
101,874
|
|
||||
In-process research and development impairment charges
|
|
22,787
|
|
|
—
|
|
|
—
|
|
|
22,787
|
|
||||
Intellectual property legal development expenses
|
|
5,632
|
|
|
1,045
|
|
|
—
|
|
|
6,677
|
|
||||
Acquisition, transaction-related and integration expenses
|
|
3,584
|
|
|
3,250
|
|
|
2,717
|
|
|
9,551
|
|
||||
Restructuring and other charges
|
|
2,499
|
|
|
178
|
|
|
6,319
|
|
|
8,996
|
|
||||
Operating (loss) income
|
|
$
|
(49,697
|
)
|
|
$
|
21,173
|
|
|
$
|
(84,749
|
)
|
|
$
|
(113,273
|
)
|
Three Months Ended June 30, 2018
|
|
Generics
|
|
Specialty
|
|
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
|
|
19,621
|
|
|
13,549
|
|
|
22,833
|
|
|
56,003
|
|
||||
Research and development
|
|
47,206
|
|
|
3,129
|
|
|
—
|
|
|
50,335
|
|
||||
Intellectual property legal development expenses
|
|
4,004
|
|
|
43
|
|
|
—
|
|
|
4,047
|
|
||||
Acquisition, transaction-related and integration expenses
|
|
114,622
|
|
|
—
|
|
|
92,885
|
|
|
207,507
|
|
||||
Restructuring and other charges
|
|
24,797
|
|
|
2,421
|
|
|
17,247
|
|
|
44,465
|
|
||||
Legal settlement gains
|
|
(3,000
|
)
|
|
—
|
|
|
—
|
|
|
(3,000
|
)
|
||||
Operating (loss) income
|
|
$
|
(57,014
|
)
|
|
$
|
8,917
|
|
|
$
|
(132,965
|
)
|
|
$
|
(181,062
|
)
|
Six Months Ended June 30, 2018
|
|
Generics
|
|
Specialty
|
|
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
|
|
30,824
|
|
|
13,549
|
|
|
36,751
|
|
|
81,124
|
|
||||
Research and development
|
|
91,415
|
|
|
3,129
|
|
|
—
|
|
|
94,544
|
|
||||
Intellectual property legal development expenses
|
|
8,580
|
|
|
43
|
|
|
—
|
|
|
8,623
|
|
||||
Acquisition, transaction-related and integration expenses
|
|
114,622
|
|
|
—
|
|
|
100,020
|
|
|
214,642
|
|
||||
Restructuring and other charges
|
|
24,797
|
|
|
2,421
|
|
|
17,247
|
|
|
44,465
|
|
||||
Legal settlement gains
|
|
(3,000
|
)
|
|
—
|
|
|
—
|
|
|
(3,000
|
)
|
||||
Operating income (loss)
|
|
$
|
27,593
|
|
|
$
|
8,917
|
|
|
$
|
(154,018
|
)
|
|
$
|
(117,508
|
)
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Balance, beginning of period
|
$
|
426,226
|
|
|
$
|
26,444
|
|
Impax acquisition adjustment
|
(1,255
|
)
|
|
—
|
|
||
Goodwill acquired during the period
|
—
|
|
|
401,488
|
|
||
Goodwill divested during the period
|
(5,175
|
)
|
|
—
|
|
||
Currency translation
|
221
|
|
|
(1,706
|
)
|
||
Balance, end of period
|
$
|
420,017
|
|
|
$
|
426,226
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||
|
Weighted-Average Amortization Period (in years)
|
|
Cost
|
|
Accumulated Amortization
|
|
Net
|
|
Cost
|
|
Accumulated Amortization
|
|
Net
|
||||||||||||
Amortizing intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product rights
|
11.0
|
|
$
|
1,265,150
|
|
|
$
|
(142,704
|
)
|
|
$
|
1,122,446
|
|
|
$
|
1,282,011
|
|
|
$
|
(88,081
|
)
|
|
$
|
1,193,930
|
|
Customer relationships
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,005
|
|
|
(1,955
|
)
|
|
5,050
|
|
||||||
Other intangible assets
|
10.5
|
|
3,000
|
|
|
(900
|
)
|
|
2,100
|
|
|
5,620
|
|
|
(1,561
|
)
|
|
4,059
|
|
||||||
Total
|
|
|
$
|
1,268,150
|
|
|
$
|
(143,604
|
)
|
|
$
|
1,124,546
|
|
|
$
|
1,294,636
|
|
|
$
|
(91,597
|
)
|
|
$
|
1,203,039
|
|
In-process research and development
|
|
|
428,784
|
|
|
—
|
|
|
428,784
|
|
|
451,930
|
|
|
—
|
|
|
451,930
|
|
||||||
Total intangible assets
|
|
|
$
|
1,696,934
|
|
|
$
|
(143,604
|
)
|
|
$
|
1,553,330
|
|
|
$
|
1,746,566
|
|
|
$
|
(91,597
|
)
|
|
$
|
1,654,969
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Amortization
|
$
|
34,796
|
|
|
$
|
16,694
|
|
|
$
|
65,759
|
|
|
$
|
18,454
|
|
|
Future Amortization
|
||
Remainder of 2019
|
$
|
76,018
|
|
2020
|
143,075
|
|
|
2021
|
142,600
|
|
|
2022
|
132,283
|
|
|
2023
|
129,564
|
|
|
2024
|
127,844
|
|
|
Thereafter
|
373,162
|
|
|
Total
|
$
|
1,124,546
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Acquisition, transaction-related and integration expenses
(1)
|
$
|
3,519
|
|
|
$
|
21,008
|
|
|
$
|
9,551
|
|
|
$
|
28,143
|
|
Profit participation units
(2)
|
—
|
|
|
158,757
|
|
|
—
|
|
|
158,757
|
|
||||
Transaction-related bonus
(3)
|
—
|
|
|
27,742
|
|
|
—
|
|
|
27,742
|
|
||||
Total
|
$
|
3,519
|
|
|
$
|
207,507
|
|
|
$
|
9,551
|
|
|
$
|
214,642
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended
June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net revenue
|
$
|
404,642
|
|
|
$
|
413,787
|
|
|
$
|
850,762
|
|
|
$
|
688,976
|
|
Cost of goods sold
|
296,381
|
|
|
235,492
|
|
|
606,124
|
|
|
366,086
|
|
||||
Cost of goods sold impairment charges
|
3,012
|
|
|
—
|
|
|
56,309
|
|
|
—
|
|
||||
Gross profit
|
105,249
|
|
|
178,295
|
|
|
188,329
|
|
|
322,890
|
|
||||
Selling, general and administrative
|
67,281
|
|
|
56,003
|
|
|
151,717
|
|
|
81,124
|
|
||||
Research and development
|
48,016
|
|
|
50,335
|
|
|
101,874
|
|
|
94,544
|
|
||||
In-process research and development impairment charges
|
—
|
|
|
—
|
|
|
22,787
|
|
|
—
|
|
||||
Intellectual property legal development expenses
|
2,511
|
|
|
4,047
|
|
|
6,677
|
|
|
8,623
|
|
||||
Acquisition, transaction-related and integration expenses
|
3,519
|
|
|
207,507
|
|
|
9,551
|
|
|
214,642
|
|
||||
Legal settlement gains
|
—
|
|
|
(3,000
|
)
|
|
—
|
|
|
(3,000
|
)
|
||||
Restructuring and other charges
|
2,835
|
|
|
44,465
|
|
|
8,996
|
|
|
44,465
|
|
||||
Operating loss
|
(18,913
|
)
|
|
(181,062
|
)
|
|
(113,273
|
)
|
|
(117,508
|
)
|
||||
Total other expense, net
|
(37,314
|
)
|
|
(81,444
|
)
|
|
(76,134
|
)
|
|
(92,982
|
)
|
||||
Loss before income taxes
|
(56,227
|
)
|
|
(262,506
|
)
|
|
(189,407
|
)
|
|
(210,490
|
)
|
||||
Benefit from income taxes
|
(5,701
|
)
|
|
(12,416
|
)
|
|
(14,129
|
)
|
|
(12,052
|
)
|
||||
Net loss
|
$
|
(50,526
|
)
|
|
$
|
(250,090
|
)
|
|
$
|
(175,278
|
)
|
|
$
|
(198,438
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended
June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net revenue
|
$
|
335,064
|
|
|
$
|
361,770
|
|
|
$
|
717,541
|
|
|
$
|
636,959
|
|
Cost of goods sold
|
263,423
|
|
|
211,534
|
|
|
542,301
|
|
|
342,128
|
|
||||
Cost of goods sold impairment charges
|
3,012
|
|
|
—
|
|
|
56,309
|
|
|
—
|
|
||||
Gross profit
|
68,629
|
|
|
150,236
|
|
|
118,931
|
|
|
294,831
|
|
||||
Selling, general and administrative
|
14,379
|
|
|
19,621
|
|
|
38,527
|
|
|
30,824
|
|
||||
Research and development
|
45,448
|
|
|
47,206
|
|
|
95,599
|
|
|
91,415
|
|
||||
In-process research and development impairment charges
|
—
|
|
|
—
|
|
|
22,787
|
|
|
—
|
|
||||
Intellectual property legal development expenses
|
2,511
|
|
|
4,004
|
|
|
5,632
|
|
|
8,580
|
|
||||
Legal settlement gains
|
—
|
|
|
(3,000
|
)
|
|
—
|
|
|
(3,000
|
)
|
||||
Other operating expenses
|
1,405
|
|
|
139,419
|
|
|
6,083
|
|
|
139,419
|
|
||||
Operating income (loss)
|
$
|
4,886
|
|
|
$
|
(57,014
|
)
|
|
$
|
(49,697
|
)
|
|
$
|
27,593
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net revenue
|
$
|
69,578
|
|
|
$
|
52,017
|
|
|
$
|
133,221
|
|
|
$
|
52,017
|
|
Cost of goods sold
|
32,958
|
|
|
23,958
|
|
|
63,823
|
|
|
23,958
|
|
||||
Gross profit
|
36,620
|
|
|
28,059
|
|
|
69,398
|
|
|
28,059
|
|
||||
Selling, general and administrative
|
16,150
|
|
|
13,549
|
|
|
37,477
|
|
|
13,549
|
|
||||
Research and development
|
2,568
|
|
|
3,129
|
|
|
6,275
|
|
|
3,129
|
|
||||
Intellectual property legal development expenses
|
—
|
|
|
43
|
|
|
1,045
|
|
|
43
|
|
||||
Other operating expenses
|
1,366
|
|
|
2,421
|
|
|
3,428
|
|
|
2,421
|
|
||||
Operating income
|
$
|
16,536
|
|
|
$
|
8,917
|
|
|
$
|
21,173
|
|
|
$
|
8,917
|
|
|
Six Months Ended
June 30,
|
||||||
|
2019
|
|
2018
|
||||
Cash (used in) provided by:
|
|
|
|
||||
Operating activities
|
$
|
(87,316
|
)
|
|
$
|
(71,550
|
)
|
Investing activities
|
(44,795
|
)
|
|
(360,924
|
)
|
||
Financing activities
|
(30,939
|
)
|
|
423,995
|
|
||
Effect of exchange rate changes on cash
|
1,293
|
|
|
(853
|
)
|
||
Net decrease in cash, cash equivalents, and restricted cash
|
$
|
(161,757
|
)
|
|
$
|
(9,332
|
)
|
Exhibit No.
|
|
Description of Document
|
|
|
|
|
Amneal Pharmaceuticals LLC 2019 Severance Plan (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed May 9, 2019).
†
|
|
|
|
|
|
Form of Tripartite Letter Agreement Credit Suisse*
|
|
|
|
|
|
Form of Tripartite Acknowledgment and Agreement Morgan Stanley*
|
|
|
|
|
|
Separation Agreement between Robert Stewart, Amneal Pharmaceuticals, Inc. and Amneal Pharmaceuticals LLC, dated as of August 2, 2019 *
†
|
|
|
|
|
|
Amendment No. 1, dated as of August 2, 2019, to Second Amended and Restated Stockholders Agreement, by and among Amneal Pharmaceuticals Holding Company, LLC, a Delaware limited liability company, AP Class D Member, LLC, a Delaware limited liability company, AP Class E Member, LLC, a Delaware limited liability company, AH PPU Management, LLC, a Delaware limited liability company, and Amneal Pharmaceuticals, Inc.
†
|
|
|
|
|
|
Certification of the Co - Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|
|
|
|
|
Certification of the Co - Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|
|
|
|
|
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|
|
|
|
|
Certification of the Co - Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* **
|
|
|
|
|
|
Certification of the Co - Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* **
|
|
|
|
|
|
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.* **
|
|
|
|
|
101
|
|
The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for each of the three and six months ended June 30, 2019 and 2018, (ii) Consolidated Statements of Comprehensive Loss for each of the three and six months ended June 30, 2019 and 2018, (iii) Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018, (iv) Consolidated Statements of Cash Flows for each of the six months ended June 30, 2019 and 2018, (v) Consolidated Statements of Stockholders' Equity/ Members' Deficit for each the three and six months ended June 30, 2019 and 2018 and (vi) Notes to Consolidated Financial Statements. *
|
Date: August 5, 2019
|
Amneal Pharmaceuticals, Inc.
|
|
|
|
(Registrant)
|
|
|
|
|
By:
|
/s/ Chirag Patel
|
|
|
Chirag Patel
|
|
|
President and Co-Chief Executive Officer
|
|
|
(Co-Principal Executive Officer)
|
|
|
|
|
By:
|
/s/ Chintu Patel
|
|
|
Chintu Patel
|
|
|
Co-Chief Executive Officer
|
|
|
(Co-Principal Executive Officer)
|
|
|
|
|
By:
|
/s/ Todd P. Branning
|
|
|
Todd P. Branning
|
|
|
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
|
1.
|
until the foreclosure on the Collateral in accordance with the terms of the Transactions of the Pledged Shares by the Lender, the Pledge shall not constitute a “Transfer” (as defined in the LLC Agreement) pursuant to the proviso under such definition, and the “Redemption” or “Direct Exchange” (each as defined in the LLC Agreement) by or on behalf of the Borrower upon any such foreclosure, as described below, is a “Permitted Transfer” under Section 10.02(iii) of the LLC Agreement (it being understood and acknowledged by the Lender that, if the Lender elects to exercise its remedies under the Loan Agreement and foreclose on the Pledged Shares, the Lender shall not be considered a “Member” under the LLC Agreement pending such redemption);
|
2.
|
while the Transactions are outstanding, the Lender, for and on behalf of the Borrower (but not the Borrower), shall be entitled to exercise the “Redemption Right” (as defined in the LLC Agreement) of the Borrower with respect to the Pledged Shares by sending a written notice to the Company (the “
Foreclosure Redemption Notice
”), which shall constitute a “Redemption Notice” (as defined in the LLC Agreement, specifying (i) the number of Units that the Lender (for and on behalf of the Borrower) intends to have the Company redeem on behalf of the Borrower (the “
Foreclosure Redeemed Units
”), (ii) whether the condition described under the second proviso under the fourth sentence of Section 11.01(a) of the LLC Agreement should apply and (iii) the settlement instructions for the Share Settlement or the Cash Settlement (each as defined in the LLC Agreement), in each case to be delivered or paid by the Company or Amneal to the Lender;
|
3.
|
upon delivery of such Foreclosure Redemption Notice, the Redemption (as defined in the LLC Agreement) shall be completed pursuant to Article XI of the LLC Agreement and, (i) to the extent the Company (or Amneal, in the case of a “Direct Exchange” pursuant to Section 11.03 of the LLC Agreement) elects a Share Settlement in connection with such Redemption (for the avoidance of doubt, the foreclosure sales by the Lender with respect to the Class A Shares received by it hereunder will be sold in reliance on Rule 144 under the Securities Act), unless (x) the Lender is an “affiliate” of Amneal, within the meaning of Rule 144 under the Securities Act of 1933, as amended (the “
Securities Act
”) or (y) the relevant Redemption Date is on or prior to May 7, 2019 and the conditions of Rule 144(c)(1) under the Securities Act are not satisfied with respect to Amneal at such time, the Company (or Amneal, in the case of a “Direct Exchange” pursuant to Section 11.03 of the LLC Agreement) shall deliver Class A Shares to the Lender, to be settled through the facilities of The Depository Trust Company without a restricted CUSIP, restrictive legend, “stop transfer order” or similar restrictions on transfer, absent a change in applicable securities law following the date hereof that prevents such settlement, and (ii) to the extent the Company (or Amneal, in the case of a “Direct Exchange” pursuant to Section 11.03 of the LLC Agreement) elects Cash Settlement in connection with such Redemption, the Company (or Amneal, in the case of a “Direct Exchange” pursuant to Section 11.03 of the LLC Agreement) shall pay such Cash Settlement to the Lender, in each case pursuant to settlement instructions provided
|
4.
|
If the Lender becomes aware of a change in applicable securities law that might prevent the settlement in Paragraph 3(i) above, the Lender may notify the other parties to this Letter Agreement, in which case the parties shall negotiate in good faith to amend this Letter Agreement to account for such change in applicable securities law;
|
5.
|
for the avoidance of doubt, the phrase “free and clear of all liens and encumbrances” under clause (i) of the fifth sentence of Section 11.01(a) of the LLC Agreement shall be deemed to exclude the liens and encumbrances created by the Pledge;
|
6.
|
solely for purposes of Article XI of the LLC Agreement, upon delivery of any Foreclosure Redemption Notice, the Lender, for and on behalf of the Borrower (but not the Borrower), shall be deemed to be the “Redeemed Member” (as defined in the LLC Agreement) with respect to the Foreclosure Redeemed Units, thereby entitled to take any action, give any instruction, consent, notice or otherwise pursuant to Article XI of the LLC Agreement as such “Redeemed Member” (as defined in the LLC Agreement), including without limitation, the right to send a “Retraction Notice” (as defined in the LLC Agreement) under Section 11.01(c) of the LLC Agreement;
|
7.
|
following the delivery of any Foreclosure Redemption Notice by the Lender, to the extent that the Borrower is entitled to take any action, give any instruction, consent, notice or otherwise under the LLC Agreement or the Stockholders Agreement with respect to the Pledged Shares, each of the Company and Amneal will accept and comply with all such action, consent, notice or instructions relating to the Pledged Shares that the Borrower would otherwise be entitled to take, give or otherwise provide under the LLC Agreement or the Stockholders Agreement solely from Lender without the consent of the Borrower or, except as required by applicable law, any other party and notwithstanding any contrary or conflicting instructions from the Borrower or, except as required by applicable law, any other party;
|
8.
|
until the foreclosure on the Class A Shares constituting Collateral by the Lender, the Pledge shall not constitute a “Transfer” (as defined in the Stockholders Agreement) pursuant to the second parenthetical of such definition, and the foreclosure sales by the Lender with respect to any part or whole of such Class A Shares is a “Transfer” (as defined in the Stockholders Agreement) permitted pursuant to Section 4.1(b)(ii)(D) of the Stockholders Agreement and not subject to Section 4.1(b)(iii) of the Stockholders Agreement (in each case as a “Transfer” (as defined in the Stockholders Agreement) permitted under Section 4.1(b)(i)(D) of the Stockholders Agreement) (for the avoidance of doubt, the Lockup Period has expired for the purposes of the final sentence of Section 4.1(b)(i));
|
9.
|
Section 5.6(c)(ii) of the Stockholders Agreement shall not apply to the foreclosure in accordance with this Letter Agreement and related sales by the Lender with respect to any part or whole of the Class A Shares constituting Collateral, if sold in reliance of Rule 144 of the Securities Act of 1933, as amended, and the Lender shall not be deemed to be an “Amneal Group Member” for purposes of Section 5.6(c)(ii) of the Stockholders
|
10.
|
any and all dividends or distributions on the Pledged Shares will be paid or delivered, including the consideration to be paid or delivered pursuant to Section 11.01(e) of the LLC Agreement, as the case may be, directly to Lender to the following account (the “
Collateral Account
”), unless otherwise agreed with Lender:
|
11.
|
each of the Company and Amneal agrees that (i) it will not comply, without the consent of the Lender, with any instruction originated by or on behalf of the Borrower to transfer or otherwise encumber the Pledged Shares while the Transactions are outstanding and (ii) it will not take any action intended to hinder or delay the Pledge and any exercise of any remedies with respect to the Transactions.
|
1.
|
the Class B Shares delivered to the Lender are in certificated form, duly authorized, validly issued, fully-paid and non-assessable, and are not subject to any pre-emptive or similar rights under the Delaware General Corporation Law or Amneal’s certificate of incorporation; and to Amneal’s knowledge as of the date hereof, such Class B Shares are not subject to any liens, pledges or other encumbrances (other than the Pledge); and
|
2.
|
the Class A Shares, upon issuance on exchange of the Pledged Shares in accordance with the LLC Agreement and as described above, will have been duly authorized, validly issued, fully-paid and non-assessable, and will not be subject to any pre-emptive or similar rights under the Delaware General Corporation Law or Amneal’s certificate of incorporation; and Amneal has no knowledge as of the date hereof of any liens, pledges, debts or other encumbrances (other than the Pledge) that would be applicable to such Class A Shares.
|
1.
|
as provided in Section 3.06(a) of the LLC Agreement, if the Company makes the election for the Units to be treated as “securities” within the meaning of Article 8 of the Uniform Commercial Code of any jurisdiction, the Company shall promptly deliver to the Lender the certificates representing the Units constituting the Pledged Shares.
|
1.
|
each party has the full legal capacity and authority to enter into this Letter Agreement;
|
2.
|
this Letter Agreement has been duly and validly executed and delivered by each party and constitutes its legal, valid and binding obligation, enforceable in accordance with its terms; and
|
3.
|
the parties hereto agree that the Lender shall not be deemed to be a “Member” under the LLC Agreement as a result of the Pledge.
|
THE COMPANY:
|
AMNEAL PHARMACEUTICALS, INC.
|
THE LLC:
|
AMNEAL PHARMACEUTICALS LLC
|
By:
|
Amneal Pharmaceuticals, Inc., Manager
|
LENDER:
|
MORGAN STANLEY PRIVATE BANK, NATIONAL ASSOCIATION
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2019 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;
|
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;
|
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;
|
(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;
|
(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
|
(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
|
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.
|
August 5, 2019
|
By:
|
/s/ Chirag Patel
|
|
|
Chirag Patel
|
|
|
President and Co-Chief Executive Officer
(Co-Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2019 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;
|
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;
|
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;
|
(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;
|
(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
|
(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
|
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.
|
August 5, 2019
|
By:
|
/s/ Chintu Patel
|
|
|
Chintu Patel
|
|
|
Co-Chief Executive Officer
(Co-Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2019 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;
|
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;
|
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;
|
(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;
|
(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
|
(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
|
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.
|
August 5, 2019
|
By:
|
/s/ Todd P. Branning
|
|
|
Todd P. Branning
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|
(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.
|
|
|
|
August 5, 2019
|
By:
|
/s/ Chirag Patel
|
|
|
Chirag Patel
|
|
|
President and Co-Chief Executive Officer
(Co-Principal Executive Officer)
|
(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.
|
|
|
|
August 5, 2019
|
By:
|
/s/ Chintu Patel
|
|
|
Chintu Patel
|
|
|
Co-Chief Executive Officer
|
|
|
(Co-Principal Executive Officer)
|
(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.
|
|
|
|
August 5, 2019
|
By:
|
/s/ Todd P. Branning
|
|
|
Todd P. Branning
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|