Market Overview

Amneal Reports Third Quarter 2019 Financial Results

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‒ Q3 2019 Net Revenue of $378 million; GAAP Loss per share of ($2.03); Adjusted Diluted EPS (1) of $0.04 ‒

‒ Positive Cash Flow from Operations of $140 million ‒

‒ Executing on Near-Term Strategic Actions to Accelerate Business Performance ‒

‒ Announced Licensing Agreement to Develop and Commercialize Neurology Focused Orphan Drug to Treat Myasthenia Gravis ‒

‒ Co-Chief Executive Officers and Certain Amneal Group Legacy Owners Authorized to Purchase up to 10 Million Additional Shares ‒

‒ Updates Full Year 2019 Guidance ‒

Amneal Pharmaceuticals, Inc. (NYSE:AMRX) (the "Company") announced its results today for the third quarter ended September 30, 2019.

Net revenue in the third quarter of 2019 was $378 million, a decrease of 21% compared to $476 million in the third quarter of 2018, primarily due to lower Generics business revenue. Net loss attributable to Amneal Pharmaceuticals, Inc. was $265 million in the third quarter of 2019 compared to a net income of $7 million in the prior year period. Diluted EPS in the third quarter of 2019 was a loss of $2.03 compared to earnings of $0.05 in the prior year period.

Adjusted net income(1) in the third quarter of 2019 was $12 million, a decrease of 86% compared to the prior year period. Adjusted EBITDA(1) in the third quarter of 2019 was $71 million, a decrease of 56% compared to the prior year period, due to lower revenue and lower gross margins, partially offset by lower operating expenses as a result of cost savings initiatives. Adjusted diluted EPS in the third quarter of 2019 was $0.04, compared to $0.27 for the prior year period.

The Company generated positive cash flow from operations in the third quarter of 2019 of $140 million. Cash and cash equivalents, including restricted cash as of September 30, 2019 were $217 million, down slightly from year end, but increased $160 million from the second quarter ended June 30, 2019.

"While we are disappointed with our third quarter results, we continue to be optimistic about Amneal and view 2019 as a transition year," said Chirag and Chintu Patel, Co-Chief Executive Officers. "Since rejoining as Co-CEOs in early August, we have substantially completed a comprehensive review of the business and believe we have identified the root causes of Amneal's recent underperformance. This review has reinforced our belief that Amneal is a fundamentally strong company with a diverse generics portfolio across multiple dosage forms, a growing and increasingly complex pipeline and a specialty franchise with significant opportunities. We have already implemented initiatives to accelerate the reinvigoration of our Company and are confident we will return to growth in 2020 and beyond."

Development and Commercialization Partnership

In a separate press release today, the Company announced that it has entered into a licensing agreement with Kashiv BioSciences, LLC for the development and commercialization of Kashiv's orphan drug K127 (pyridostigmine) for the treatment of Myasthenia Gravis. Through this partnership, Amneal gains exclusive rights within the United States to the New Drug Application and commercialization of K127.

Equity Purchase Authorization

The Board of Directors Conflicts Committee has approved a waiver of an existing standstill provision in the Second Amended and Restated Stockholders Agreement, as amended (the "Stockholders Agreement"), between the Company and certain of its stockholders, which will allow the Company's Co-Chief Executive Officers, Chirag Patel and Chintu Patel, and certain other Amneal legacy owners (and/or affiliates thereof) that are subject to the Stockholders Agreement, to purchase up to 10 million shares of Class A common stock on the open market during permissible trading windows. The timing, price and volume of the share purchases, if any, will be determined by the buyers based on applicable securities laws and other relevant factors. The waiver is scheduled to expire on March 15, 2020.

(1) See "Non-GAAP Financial Measures" below.

Amneal Pharmaceuticals, Inc.

Generics Operating Results

(Unaudited; In thousands)

 

Generics

Three Months Ended September 30,

 

 

2019

 

2018

Net revenue - Generics

$

 

291,021

 

 

$

 

391,175

 

Cost of goods sold

 

217,773

 

 

 

230,051

 

Cost of goods sold impairment charges

 

49,115

 

 

 

7,815

 

Gross profit

 

24,133

 

 

 

153,309

 

Selling, general, and administrative

 

14,256

 

 

 

21,030

 

Research and development

 

34,316

 

 

 

38,347

 

In-process research and development impairment charges

 

23,382

 

 

 

650

 

Restructuring and other charges

 

14,702

 

 

 

(2,885

)

Charges (gains) related to legal matters, net

 

14,750

 

 

 

 

Intellectual property legal development expenses

 

2,586

 

 

 

3,929

 

Acquisition, integration and transaction related expenses

 

502

 

 

 

 

Operating (loss) income

$

 

(80,361

)

 

$

 

92,238

 

 

 

 

 

 

 

 

 

 

Gross margin

 

8.3

%

 

 

39.2

%

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