Business Wire | Feb 26, 2021 06:00AM EST

Amneal Reports Fourth Quarter and Full Year 2020 Financial Results

Feb. 26, 2021

BRIDGEWATER, N.J.--(BUSINESS WIRE)--Feb. 26, 2021--Amneal Pharmaceuticals, Inc. (NYSE: AMRX) (the "Company") announced its results today for the fourth quarter and full year ended December 31, 2020.

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

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

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

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

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

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

2021 Financial Outlook

Amneal's full year 2021 estimates are based on management's current expectations, including with respect to prescription trends, pricing levels, inventory levels, the costs incurred and benefits realized of restructuring activities and the anticipated timing of future product launches and events. The Company cannot provide a reconciliation between non-GAAP projections and the most directly comparable GAAP measures without unreasonable efforts because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items required for the reconciliation. The items include, but are not limited to, acquisition-related expenses, restructuring expenses and benefits, asset impairments and other gains and losses. These items are uncertain, depend on various factors, and could have a material impact on U.S. GAAP reported results for 2021.

Full Year 2021 Financial Guidance

Net revenue $2.1 billion - $2.2 billion

Adjusted EBITDA ^(1) $500 million - $540 million

Adjusted diluted EPS ^(2) $0.70 - $0.85

Operating cash flow $220 million - $250 million

Capital expenditures $60 million - $70 million

Weighted average diluted shares outstanding ^ Approximately 303 million(3)

(1)Includes 100% of Adjusted EBITDA from the AvKARE acquisition.

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

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

Conference Call Information

Amneal will host a conference call and live webcast at 8:30 am Eastern Time on February 26, 2021 to discuss its results. The live webcast and presentation will be accessible through the Investor Relations section of the Company's website at https://investors.amneal.com. To access the call through a conference line, dial (844) 746-0741 (in the U.S.) or (412) 317-5273 (international callers). A replay of the conference call will be posted shortly after the call and will be available for seven days. To access the replay, dial (877) 344-7529 (in the U.S.) or (412) 317-0088 (international callers). The access code for the replay is 10152029.

About Amneal

Amneal Pharmaceuticals, Inc. (NYSE: AMRX), headquartered in Bridgewater, NJ, is a fully-integrated pharmaceutical company focused on the development, manufacturing and distribution of generic and specialty drug products. The Company has operations in North America, Asia, and Europe, working together to bring high-quality medicines to patients primarily within the United States.

Amneal has an extensive portfolio of approximately 250 generic product families and is expanding its portfolio to include complex dosage forms, including biosimilars, in a broad range of therapeutic areas. The Company also markets a portfolio of branded pharmaceutical products through its Specialty segment focused principally on central nervous system and endocrine disorders.

The Company also owns 65% of AvKARE. AvKARE provides pharmaceuticals, medical and surgical products and services primarily to governmental agencies, primarily focused on serving the Department of Defense and the Department of Veterans Affairs. AvKARE is also a packager and wholesale distributor of pharmaceuticals and vitamins to its retail and institutional customers who are located throughout the United States focused primarily on offering 340b-qualified entities products to provide consistency in care and pricing. For more information, visit www.amneal.com.

Cautionary Statement on Forward-Looking Statements

Certain statements contained herein, regarding matters that are not historical facts, may be forward-looking statements (as defined in the U.S. Private Securities Litigation Reform Act of 1995). Such forward-looking statements include statements regarding management's intentions, plans, beliefs, expectations or forecasts for the future, including among other things: discussions of future operations; expected operating results and financial performance; impact of planned acquisitions and dispositions; the Company's strategy for growth; product development; regulatory approvals; market position and expenditures. Words such as "plans," "expects," "will," "anticipates," "estimates" and similar words are intended to identify estimates and forward-looking statements.

The reader is cautioned not to rely on these forward-looking statements. These forward-looking statements are based on current expectations of future events. If the underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the expectations and projections of the Company.

Such risks and uncertainties include, but are not limited to: the impact of the COVID-19 pandemic; the impact of global economic conditions; our ability to successfully develop, license, acquire and commercialize new products on a timely basis; our ability to obtain exclusive marketing rights for our products; the competition we face in the pharmaceutical industry from brand and generic drug product companies, and the impact of that competition on our ability to set prices; our ability to manage our growth through acquisitions and otherwise; our dependence on the sales of a limited number of products for a substantial portion of our total revenues; the risk of product liability and other claims against us by consumers and other third parties; risks related to changes in the regulatory environment, including U.S. federal and state laws related to healthcare fraud abuse and health information privacy and security and changes in such laws; changes to FDA product approval requirements; risks related to federal regulation of arrangements between manufacturers of branded and generic products; the impact of healthcare reform and changes in coverage and reimbursement levels by governmental authorities and other third-party payers; the continuing trend of consolidation of certain customer groups; our reliance on certain licenses to proprietary technologies from time to time; our dependence on third-party suppliers and distributors for raw materials for our products and certain finished goods; our dependence on third-party agreements for a portion of our product offerings; our ability to identify and make acquisitions of or investments in complementary businesses and products on advantageous terms; legal, regulatory and legislative efforts by our brand competitors to deter competition from our generic alternatives; the significant amount of resources we expend on research and development; our substantial amount of indebtedness and our ability to generate sufficient cash to service our indebtedness in the future, and the impact of interest rate fluctuations on such indebtedness; and the high concentration of ownership of our Class A Common Stock and the fact that we are controlled by the Amneal Group. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the Company's filings with the Securities and Exchange Commission, including under Item 1A, "Risk Factors" in the Company's most recent Annual Report on Form 10-K and in its subsequent reports on Forms 10-Q and 8-K. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. Forward-looking statements included herein speak only as of the date hereof and we undertake no obligation to revise or update such statements to reflect the occurrence of events or circumstances after the date hereof.

Non-GAAP Financial Measures

This release includes certain non-GAAP financial measures, including adjusted EBITDA, adjusted net income, adjusted net income per diluted share, adjusted gross profit, adjusted gross margin, adjusted operating income and adjusted cost of goods sold, which are intended as supplemental measures of the Company's performance that are not required by or presented in accordance with U.S. General Accepted Accounting Principles ("GAAP"). The calculation of non-GAAP adjusted diluted earnings per share assumes the conversion of all outstanding shares of Class B Common Stock to shares of Class A Common Stock.

Management uses these non-GAAP measures internally to evaluate and manage the Company's operations and to better understand its business because they facilitate a comparative assessment of the Company's operating performance relative to its performance based on results calculated under GAAP. These non-GAAP measures also isolate the effects of some items that vary from period to period without any correlation to core operating performance and eliminate certain charges that management believes do not reflect the Company's operations and underlying operational performance. The compensation committee of the Company's board of directors also uses certain of these measures to evaluate management's performance and set its compensation. The Company believes that these non-GAAP measures also provide useful information to investors regarding certain financial and business trends relating to the Company's financial condition and operating results facilitates an evaluation of the financial performance of the Company and its operations on a consistent basis. Providing this information therefore allows investors to make independent assessments of the Company's financial performance, results of operation and trends while viewing the information through the eyes of management.

These non-GAAP measures are subject to limitations. The non-GAAP measures presented in this release may not be comparable to similarly titled measures used by other companies because other companies may not calculate one or more in the same manner. Additionally, the non-GAAP performance measures exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements; do not reflect changes in, or cash requirements for, working capital needs; and do not reflect interest expense, or the requirements necessary to service interest or principal payments on debt. Further, our historical adjusted results are not intended to project our adjusted results of operations or financial position for any future period. To compensate for these limitations, management presents and considers these non-GAAP measures in conjunction with the Company's GAAP results; no non-GAAP measure should be considered in isolation from or as alternatives to net income, diluted earnings per share, gross profit, gross margin, operating income, cost of goods sold or any other measure determined in accordance with GAAP. Readers should review the reconciliations included below, and should not rely on any single financial measure to evaluate the Company's business.

A reconciliation of each historical non-GAAP measure to the most directly comparable GAAP measure is set forth below.

^ Includes 100% of Adjusted EBITDA from the AvKARE acquisition.(1) Accounts for 35% non-controlling interest in AvKARE. EPS guidance^ reflects the current tax laws in effect as of February 26, 2021. Any(2) potential increase in statutory tax rates will have an adverse impact on EPS.

^ Assumes the weighted average diluted shares outstanding of Class A and(3) Class B Common Shares under the if-converted method.

Conference Call Information

Amneal will host a conference call and live webcast at 8:30 am Eastern Time on February 26, 2021 to discuss its results. The live webcast and presentation will be accessible through the Investor Relations section of the Company's website at https://investors.amneal.com. To access the call through a conference line, dial (844) 746-0741 (in the U.S.) or (412) 317-5273 (international callers). A replay of the conference call will be posted shortly after the call and will be available for seven days. To access the replay, dial (877) 344-7529 (in the U.S.) or (412) 317-0088 (international callers). The access code for the replay is 10152029.

About Amneal

Amneal Pharmaceuticals, Inc. (NYSE: AMRX), headquartered in Bridgewater, NJ, is a fully-integrated pharmaceutical company focused on the development, manufacturing and distribution of generic and specialty drug products. The Company has operations in North America, Asia, and Europe, working together to bring high-quality medicines to patients primarily within the United States.

Amneal has an extensive portfolio of approximately 250 generic product families and is expanding its portfolio to include complex dosage forms, including biosimilars, in a broad range of therapeutic areas. The Company also markets a portfolio of branded pharmaceutical products through its Specialty segment focused principally on central nervous system and endocrine disorders.

The Company also owns 65% of AvKARE. AvKARE provides pharmaceuticals, medical and surgical products and services primarily to governmental agencies, primarily focused on serving the Department of Defense and the Department of Veterans Affairs. AvKARE is also a packager and wholesale distributor of pharmaceuticals and vitamins to its retail and institutional customers who are located throughout the United States focused primarily on offering 340b-qualified entities products to provide consistency in care and pricing. For more information, visit www.amneal.com.

Cautionary Statement on Forward-Looking Statements

Certain statements contained herein, regarding matters that are not historical facts, may be forward-looking statements (as defined in the U.S. Private Securities Litigation Reform Act of 1995). Such forward-looking statements include statements regarding management's intentions, plans, beliefs, expectations or forecasts for the future, including among other things: discussions of future operations; expected operating results and financial performance; impact of planned acquisitions and dispositions; the Company's strategy for growth; product development; regulatory approvals; market position and expenditures. Words such as "plans," "expects," "will," "anticipates," "estimates" and similar words are intended to identify estimates and forward-looking statements.

The reader is cautioned not to rely on these forward-looking statements. These forward-looking statements are based on current expectations of future events. If the underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the expectations and projections of the Company.

Such risks and uncertainties include, but are not limited to: the impact of the COVID-19 pandemic; the impact of global economic conditions; our ability to successfully develop, license, acquire and commercialize new products on a timely basis; our ability to obtain exclusive marketing rights for our products; the competition we face in the pharmaceutical industry from brand and generic drug product companies, and the impact of that competition on our ability to set prices; our ability to manage our growth through acquisitions and otherwise; our dependence on the sales of a limited number of products for a substantial portion of our total revenues; the risk of product liability and other claims against us by consumers and other third parties; risks related to changes in the regulatory environment, including U.S. federal and state laws related to healthcare fraud abuse and health information privacy and security and changes in such laws; changes to FDA product approval requirements; risks related to federal regulation of arrangements between manufacturers of branded and generic products; the impact of healthcare reform and changes in coverage and reimbursement levels by governmental authorities and other third-party payers; the continuing trend of consolidation of certain customer groups; our reliance on certain licenses to proprietary technologies from time to time; our dependence on third-party suppliers and distributors for raw materials for our products and certain finished goods; our dependence on third-party agreements for a portion of our product offerings; our ability to identify and make acquisitions of or investments in complementary businesses and products on advantageous terms; legal, regulatory and legislative efforts by our brand competitors to deter competition from our generic alternatives; the significant amount of resources we expend on research and development; our substantial amount of indebtedness and our ability to generate sufficient cash to service our indebtedness in the future, and the impact of interest rate fluctuations on such indebtedness; and the high concentration of ownership of our Class A Common Stock and the fact that we are controlled by the Amneal Group. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the Company's filings with the Securities and Exchange Commission, including under Item 1A, "Risk Factors" in the Company's most recent Annual Report on Form 10-K and in its subsequent reports on Forms 10-Q and 8-K. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. Forward-looking statements included herein speak only as of the date hereof and we undertake no obligation to revise or update such statements to reflect the occurrence of events or circumstances after the date hereof.

Non-GAAP Financial Measures

This release includes certain non-GAAP financial measures, including adjusted EBITDA, adjusted net income, adjusted net income per diluted share, adjusted gross profit, adjusted gross margin, adjusted operating income and adjusted cost of goods sold, which are intended as supplemental measures of the Company's performance that are not required by or presented in accordance with U.S. General Accepted Accounting Principles ("GAAP"). The calculation of non-GAAP adjusted diluted earnings per share assumes the conversion of all outstanding shares of Class B Common Stock to shares of Class A Common Stock.

Management uses these non-GAAP measures internally to evaluate and manage the Company's operations and to better understand its business because they facilitate a comparative assessment of the Company's operating performance relative to its performance based on results calculated under GAAP. These non-GAAP measures also isolate the effects of some items that vary from period to period without any correlation to core operating performance and eliminate certain charges that management believes do not reflect the Company's operations and underlying operational performance. The compensation committee of the Company's board of directors also uses certain of these measures to evaluate management's performance and set its compensation. The Company believes that these non-GAAP measures also provide useful information to investors regarding certain financial and business trends relating to the Company's financial condition and operating results facilitates an evaluation of the financial performance of the Company and its operations on a consistent basis. Providing this information therefore allows investors to make independent assessments of the Company's financial performance, results of operation and trends while viewing the information through the eyes of management.

These non-GAAP measures are subject to limitations. The non-GAAP measures presented in this release may not be comparable to similarly titled measures used by other companies because other companies may not calculate one or more in the same manner. Additionally, the non-GAAP performance measures exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements; do not reflect changes in, or cash requirements for, working capital needs; and do not reflect interest expense, or the requirements necessary to service interest or principal payments on debt. Further, our historical adjusted results are not intended to project our adjusted results of operations or financial position for any future period. To compensate for these limitations, management presents and considers these non-GAAP measures in conjunction with the Company's GAAP results; no non-GAAP measure should be considered in isolation from or as alternatives to net income, diluted earnings per share, gross profit, gross margin, operating income, cost of goods sold or any other measure determined in accordance with GAAP. Readers should review the reconciliations included below, and should not rely on any single financial measure to evaluate the Company's business.

A reconciliation of each historical non-GAAP measure to the most directly comparable GAAP measure is set forth below.

Amneal Pharmaceuticals, Inc.

Consolidated Statements of Operations

(Unaudited; In thousands, except per share amounts)

Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

Net revenue $ 510,034 $ 397,328 $ 1,992,523 $ 1,626,373

Cost of goods sold 342,962 273,373 1,329,551 1,147,214

Cost of goods sold - 13,721 34,579 126,162 impairment charges

Gross profit 167,072 110,234 $ 628,393 $ 352,997

Selling, general and 84,687 74,084 326,727 289,598 administrative

Research and 53,460 48,050 179,930 188,049 development

In-process researchand development 1,720 450 2,680 46,619 impairment charges

Acquisition,transaction-related 3,585 3,706 8,988 16,388 and integrationexpenses

Restructuring and (259) 4,412 2,398 34,345 other charges

(Gains) chargesrelated to legal - (2,308) 5,860 12,442 matters, net

Intellectualproperty legal 3,701 4,975 10,655 14,238 development expenses

Operating income 20,178 (23,135) 91,155 (248,682) (loss)

Other (expense) income:

Interest expense, (34,535) (38,829) (145,998) (168,205) net

Foreign exchange 8,392 4,722 16,350 (4,962) gain (loss)

Gain on sale ofinternational - 328 123 7,258 businesses

Gain from reductionof tax receivable - - - 192,884 agreement liability

Other income 488 (197) 2,590 1,465 (expense)

Total other(expense) income, (25,655) (33,976) (126,935) 28,440 net

Loss before income (5,477) (57,111) (35,780) (220,242) taxes

Provision for(benefit from) 1,485 7,792 (104,358) 383,331 income taxes

Net (loss) income (6,962) (64,903) 68,578 (603,573)

Less: Net lossattributable to 3,925 32,775 22,481 241,656 non-controllinginterests

Net (loss) incomeattributable toAmneal $ (3,037) $ (32,128) $ 91,059 $ (361,917) Pharmaceuticals,Inc.

Net (loss) incomeper shareattributable toAmneal Pharmaceuticals,Inc.'s commonstockholders:

Class A and Class $ (0.02) $ (0.23) $ 0.62 $ (2.74) B-1 basic

Class A and Class $ (0.02) $ (0.23) $ 0.61 $ (2.74) B-1 diluted

Weighted-averagecommon shares outstanding:

Class A and Class 147,640 141,853 147,443 132,106 B-1 basic

Class A and Class 147,640 141,853 148,913 132,106 B-1 diluted

Amneal Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(Unaudited; In thousands)

December 31,2020

December 31,2019

Assets

Current assets:

Cash and cash equivalents

$

341,378

$

151,197

Restricted cash

5,743

1,625

Trade accounts receivable, net

638,895

604,390

Inventories

490,649

381,067

Prepaid expenses and other current assets

73,467

70,164

Related party receivables

1,407

1,767

Total current assets

1,551,539

1,210,210

Property, plant and equipment, net

477,754

477,997

Goodwill

522,814

419,504

Intangible assets, net

1,304,626

1,382,753

Operating lease right-of-use assets

33,947

53,344

Operating lease right-of-use assets - related party

24,792

16,528

Financing lease right-of-use assets - related party

58,676

61,284

Other assets

31,885

44,270

Total assets

$

4,006,033

$

3,665,890

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable and accrued expenses

$

613,661

$

507,483

Current portion of long-term debt, net

44,228

21,479

Current portion of operating lease liabilities

6,474

11,874

Current portion of operating and financing lease liabilities - related party

3,978

3,601

Current portion of note payable - related party

1,000

-

Related party payables - short term

7,561

5,969

Total current liabilities

676,902

550,406

Long-term debt, net

2,735,264

2,609,046

Note payable - related party

36,440

-

Operating lease liabilities

30,182

43,135

Operating lease liabilities - related party

23,049

15,469

Financing lease liabilities - related party

60,193

61,463

Related party payable - long term

1,584

-

Other long-term liabilities

85,683

39,583

Total long-term liabilities

2,972,395

2,768,696

Redeemable non-controlling interest

11,804

-

Total stockholders' equity

344,932

346,788

Total liabilities and stockholders' equity

$

4,006,033

$

3,665,890

Amneal Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(Unaudited; In thousands)

December 31, December 31, 2020 2019

Assets

Current assets:

Cash and cash equivalents $ 341,378 $ 151,197

Restricted cash 5,743 1,625

Trade accounts receivable, net 638,895 604,390

Inventories 490,649 381,067

Prepaid expenses and other current assets 73,467 70,164

Related party receivables 1,407 1,767

Total current assets 1,551,539 1,210,210

Property, plant and equipment, net 477,754 477,997

Goodwill 522,814 419,504

Intangible assets, net 1,304,626 1,382,753

Operating lease right-of-use assets 33,947 53,344

Operating lease right-of-use assets - related 24,792 16,528 party

Financing lease right-of-use assets - related 58,676 61,284 party

Other assets 31,885 44,270

Total assets $ 4,006,033 $ 3,665,890

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable and accrued expenses $ 613,661 $ 507,483

Current portion of long-term debt, net 44,228 21,479

Current portion of operating lease liabilities 6,474 11,874

Current portion of operating and financing lease 3,978 3,601 liabilities - related party

Current portion of note payable - related party 1,000 -

Related party payables - short term 7,561 5,969

Total current liabilities 676,902 550,406

Long-term debt, net 2,735,264 2,609,046

Note payable - related party 36,440 -

Operating lease liabilities 30,182 43,135

Operating lease liabilities - related party 23,049 15,469

Financing lease liabilities - related party 60,193 61,463

Related party payable - long term 1,584 -

Other long-term liabilities 85,683 39,583

Total long-term liabilities 2,972,395 2,768,696

Redeemable non-controlling interest 11,804 -

Total stockholders' equity 344,932 346,788

Total liabilities and stockholders' equity $ 4,006,033 $ 3,665,890

Amneal Pharmaceuticals, Inc.

Consolidated Statements of Cash Flows

(Unaudited; In thousands)

Year EndedDecember 31,

2020

2019

Cash flows from operating activities:

Net income (loss)

$

68,578

$

(603,573)

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

Gain from reduction of tax receivable agreement liability

-

(192,884)

Depreciation and amortization

235,387

207,235

Amortization of Levothyroxine Transition Agreement asset

-

36,393

Unrealized foreign currency (gain) loss

(16,728)

7,342

Amortization of debt issuance costs

8,678

6,478

Gain on sale of international businesses, net

(123)

(7,258)

Intangible asset impairment charges

37,259

172,781

Non-cash restructuring and asset-related charges

(536)

12,459

Deferred tax provision

-

371,716

Stock-based compensation

20,750

21,679

Inventory provision

75,236

82,245

Other operating charges and credits, net

11,818

7,309

Changes in assets and liabilities:

Trade accounts receivable, net

16,787

(132,726)

Inventories

(113,782)

(20,393)

Prepaid expenses, other current assets and other assets

33,312

38,870

Related party receivables

412

(939)

Accounts payable, accrued expenses and other liabilities

307

(10,257)

Related party payables

1,646

5,228

Net cash provided by operating activities

379,001

1,705

Cash flows from investing activities:

Purchases of property, plant and equipment

(56,445)

(47,181)

Acquisition of product rights and licenses

-

(50,250)

Deposits for future acquisition of property, plant, and equipment

(5,391)

-

Acquisition of intangible assets

(4,350)

-

Acquisitions, net of cash acquired

(251,360)

-

Proceeds from surrender of corporate owned life insurance

-

43,017

Proceeds from sale of international businesses, net of cash sold

-

34,834

Net cash used in investing activities

(317,546)

(19,580)

Cash flows from financing activities:

Payments of deferred financing costs and debt extinguishment costs

(4,102)

-

Proceeds from issuance of debt

180,000

-

Payments of principal on debt, financing leases and other

(35,933)

(27,000)

Proceeds from exercise of stock options

321

1,400

Employee payroll tax withholding on restricted stock unit vesting

(863)

(926)

Distribution of earnings to and acquisition of non-controlling interest

(3,300)

(3,543)

Tax distribution to non-controlling interest

(3,237)

(13,494)

Payments of principal on financing lease - related party

(1,079)

(2,270)

Net cash provided by (used in) financing activities

131,807

(45,833)

Effect of foreign exchange rate on cash

1,037

(2,249)

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

194,299

(65,957)

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

152,822

218,779

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

$

347,121

$

152,822

Cash and cash equivalents - end of period

$

341,378

$

151,197

Restricted cash - end of period

$

5,743

$

1,625

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

$

347,121

$

152,822

Amneal Pharmaceuticals, Inc.

Consolidated Statements of Cash Flows

(Unaudited; In thousands)

Year Ended December 31,

2020 2019

Cash flows from operating activities:

Net income (loss) $ 68,578 $ (603,573)

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

Gain from reduction of tax receivable agreement - (192,884) liability

Depreciation and amortization 235,387 207,235

Amortization of Levothyroxine Transition Agreement - 36,393 asset

Unrealized foreign currency (gain) loss (16,728) 7,342

Amortization of debt issuance costs 8,678 6,478

Gain on sale of international businesses, net (123) (7,258)

Intangible asset impairment charges 37,259 172,781

Non-cash restructuring and asset-related charges (536) 12,459

Deferred tax provision - 371,716

Stock-based compensation 20,750 21,679

Inventory provision 75,236 82,245

Other operating charges and credits, net 11,818 7,309

Changes in assets and liabilities:

Trade accounts receivable, net 16,787 (132,726)

Inventories (113,782) (20,393)

Prepaid expenses, other current assets and other 33,312 38,870 assets

Related party receivables 412 (939)

Accounts payable, accrued expenses and other 307 (10,257) liabilities

Related party payables 1,646 5,228

Net cash provided by operating activities 379,001 1,705

Cash flows from investing activities:

Purchases of property, plant and equipment (56,445) (47,181)

Acquisition of product rights and licenses - (50,250)

Deposits for future acquisition of property, plant, (5,391) - and equipment

Acquisition of intangible assets (4,350) -

Acquisitions, net of cash acquired (251,360) -

Proceeds from surrender of corporate owned life - 43,017 insurance

Proceeds from sale of international businesses, net - 34,834 of cash sold

Net cash used in investing activities (317,546) (19,580)

Cash flows from financing activities:

Payments of deferred financing costs and debt (4,102) - extinguishment costs

Proceeds from issuance of debt 180,000 -

Payments of principal on debt, financing leases and (35,933) (27,000) other

Proceeds from exercise of stock options 321 1,400

Employee payroll tax withholding on restricted (863) (926) stock unit vesting

Distribution of earnings to and acquisition of (3,300) (3,543) non-controlling interest

Tax distribution to non-controlling interest (3,237) (13,494)

Payments of principal on financing lease - related (1,079) (2,270) party

Net cash provided by (used in) financing activities 131,807 (45,833)

Effect of foreign exchange rate on cash 1,037 (2,249)

Net increase (decrease) in cash, cash equivalents, 194,299 (65,957) and restricted cash

Cash, cash equivalents, and restricted cash - 152,822 218,779 beginning of period

Cash, cash equivalents, and restricted cash - end $ 347,121 $ 152,822 of period

Cash and cash equivalents - end of period $ 341,378 $ 151,197

Restricted cash - end of period $ 5,743 $ 1,625

Cash, cash equivalents, and restricted cash - end $ 347,121 $ 152,822 of period

Amneal Pharmaceuticals, Inc.

Generics Operating Results

(Unaudited; In thousands)

Generics

Three Months Ended December 31,

Year EndedDecember 31,

2020

2019

2020

2019

Net revenue - Generics

$

342,145

$

300,281

$

1,343,210

$

1,308,843

Cost of goods sold

227,581

224,708

894,422

984,782

Cost of goods sold impairment charges

-

13,721

34,579

119,145

Gross profit

114,564

61,852

414,209

204,916

Selling, general and administrative

13,556

16,100

56,134

68,883

Research and development

41,486

42,281

150,068

172,196

In-process research and development impairment charges

1,720

450

2,680

46,619

Acquisition, transaction-related and integration expenses

3

547

328

4,633

Restructuring and other (credit) charges

(456)

2,900

(614)

20,101

(Gains) charges related to legal matters, net

-

(2,308)

5,610

12,442

Intellectual property legal development expenses

3,700

4,975

10,647

13,193

Operating income (loss)

$

54,555

$

(3,093)

$

189,356

$

(133,151)

Gross margin

33.5

%

20.6

%

30.8

%

15.7

%

Adjusted gross profit (Non-GAAP) (1)

$

129,425

$

99,770

$

514,018

$

464,270

Adjusted gross margin (Non-GAAP) (2)

37.8

%

33.2

%

38.3

%

35.5

%

Adjusted operating income (Non-GAAP)

$

78,834

$

48,740

$

325,605

$

250,000

Amneal Pharmaceuticals, Inc.

Generics Operating Results

(Unaudited; In thousands)

Generics Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

Net revenue - $ 342,145 $ 300,281 $ 1,343,210 $ 1,308,843 Generics

Cost of goods sold 227,581 224,708 894,422 984,782

Cost of goods sold - 13,721 34,579 119,145 impairment charges

Gross profit 114,564 61,852 414,209 204,916

Selling, general and 13,556 16,100 56,134 68,883 administrative

Research and 41,486 42,281 150,068 172,196 development

In-process researchand development 1,720 450 2,680 46,619 impairment charges

Acquisition,transaction-related 3 547 328 4,633 and integrationexpenses

Restructuring andother (credit) (456) 2,900 (614) 20,101 charges

(Gains) chargesrelated to legal - (2,308) 5,610 12,442 matters, net

Intellectual propertylegal development 3,700 4,975 10,647 13,193 expenses

Operating income $ 54,555 $ (3,093) $ 189,356 $ (133,151) (loss)



Gross margin 33.5 % 20.6 % 30.8 % 15.7 %

Adjusted gross profit $ 129,425 $ 99,770 $ 514,018 $ 464,270 (Non-GAAP) ^(1)

Adjusted gross margin 37.8 % 33.2 % 38.3 % 35.5 %(Non-GAAP) ^(2)

Adjusted operating $ 78,834 $ 48,740 $ 325,605 $ 250,000 income (Non-GAAP)

(1)

Adjusted gross profit is calculated as net revenue less adjusted cost of goods sold.

(2)

Adjusted gross margin is calculated as adjusted gross profit divided by net revenue.

Generics net revenue was $342 million for three months ended December 31, 2020, an increase of $42 million or 14% when compared with the same period in 2019. The year-over-year increase was primarily due to our 2019 and 2020 new product launches of $44 million, including EluRyng and Sucralfate Oral Solution, and growth in Generic volume from new commercial initiatives, partially offset by competition relating to Levothyroxine Sodium Tabs and Diclofenac Gel 1%.

Generics gross margin was 33.5% compared to 20.6% for the prior year period. The increase primarily related to new product launches, which contributed $31 million of gross margin growth, the impact of new volume won during 2020 and operational efficiencies and product mix, which more than offset pricing pressures relating to Levothyroxine Sodium Tabs and Diclofenac Gel 1%. In addition, gross margin improvement resulted from a $14 million decline in intangible asset impairment charges and a $5 million reduction in ongoing intangible asset amortization compared to the prior year. Generics adjusted gross margin was 37.8% compared to 33.2% in the prior-year period as the strength in new product contribution and operational efficiencies offset pricing pressure on Levothyroxine Sodium Tabs and Diclofenac Gel 1%.

Generics operating income was $55 million compared to an operating loss of $3 million in the prior year period. The improvement primarily reflected increased gross profit of $53 million as well as efficient operating expense management. Generics adjusted operating income for the fourth quarter of 2020 was $79 million compared to $49 million for the prior year due to improved gross margin.

^(1) Adjusted gross profit is calculated as net revenue less adjusted cost of goods sold.

^(2) Adjusted gross margin is calculated as adjusted gross profit divided by net revenue.

Generics net revenue was $342 million for three months ended December 31, 2020, an increase of $42 million or 14% when compared with the same period in 2019. The year-over-year increase was primarily due to our 2019 and 2020 new product launches of $44 million, including EluRyng and Sucralfate Oral Solution, and growth in Generic volume from new commercial initiatives, partially offset by competition relating to Levothyroxine Sodium Tabs and Diclofenac Gel 1%.

Generics gross margin was 33.5% compared to 20.6% for the prior year period. The increase primarily related to new product launches, which contributed $31 million of gross margin growth, the impact of new volume won during 2020 and operational efficiencies and product mix, which more than offset pricing pressures relating to Levothyroxine Sodium Tabs and Diclofenac Gel 1%. In addition, gross margin improvement resulted from a $14 million decline in intangible asset impairment charges and a $5 million reduction in ongoing intangible asset amortization compared to the prior year. Generics adjusted gross margin was 37.8% compared to 33.2% in the prior-year period as the strength in new product contribution and operational efficiencies offset pricing pressure on Levothyroxine Sodium Tabs and Diclofenac Gel 1%.

Generics operating income was $55 million compared to an operating loss of $3 million in the prior year period. The improvement primarily reflected increased gross profit of $53 million as well as efficient operating expense management. Generics adjusted operating income for the fourth quarter of 2020 was $79 million compared to $49 million for the prior year due to improved gross margin.

Amneal Pharmaceuticals, Inc.

Specialty Operating Results

(Unaudited; In thousands)

Specialty Three Months Ended Years Ended December 31, December 31,

2020 2019 2020 2019

Net revenue - Specialty:

Rytary(r) $ 45,412 $ 39,235 $ 159,293 $ 134,773

Unithroid(r) 13,773 12,309 53,578 41,089

Zomig(r) 13,062 15,458 48,392 54,980

All other specialty 13,219 30,045 94,304 86,688 products

Total net revenue - $ 85,466 $ 97,047 $ 355,567 $ 317,530 Specialty

Cost of goods sold 47,128 48,665 192,910 162,432

Cost of goods sold - - - 7,017 impairment charges

Gross profit 38,338 48,382 162,657 148,081

Selling, general and 18,924 21,960 75,917 79,665 administrative

Research and development 11,974 5,769 29,862 15,853

Acquisition,transaction-related and 2 2,641 85 8,346 integration expenses

Restructuring and other - - - 391 charges

Charges related to legal - - 250 - matters, net

Intellectual property legal 1 - 8 1,045 development expenses

Operating income $ 7,437 $ 18,012 $ 56,535 $ 42,781



Gross margin 44.9 % 49.9 % 45.7 % 46.6 %

Adjusted gross profit $ 63,465 $ 73,077 $ 263,801 $ 247,267 (Non-GAAP) ^(1)

Adjusted gross margin 74.3 % 75.3 % 74.2 % 77.9 %(Non-GAAP) ^(2)

Adjusted operating income $ 38,209 $ 45,880 $ 168,860 $ 154,825 (Non-GAAP)

(1)

Adjusted gross profit is calculated as net revenue less adjusted cost of goods sold.

(2)

Adjusted gross margin is calculated as adjusted gross profit divided by net revenue.

Specialty net revenue for the three months ended December 31, 2020 was $85 million, a decline of $12 million, or 12%, compared to $97 million for the prior year period. Growth in demand for Rytary(r) and Unithroid(r) was offset by declines in non-promoted products as well as unfavorable Emverm(r) sales due to the impact of COVID-19 on pinworm related prescriptions.

Specialty gross margin for fourth quarter of 2020 was 44.9% compared to 49.9% in the prior year period primarily due to the mix of revenues, including the impact of non-promoted products. Specialty adjusted gross margin for the fourth quarter of 2020 of 74% was generally in line with margin for the prior period.

Specialty operating income for the fourth quarter of 2020 was $7 million compared to $18 million in the prior year period. The decline in operating income primarily reflected the impact of unfavorable gross margin and increased research and development expense of $6 million including milestone expenses of $5 million for the expansion of the Specialty pipeline. Specialty adjusted operating income for the fourth quarter of 2020 was $38 million compared to $46 million for the prior period as adjusted gross margin declined.

^(1) Adjusted gross profit is calculated as net revenue less adjusted cost of goods sold.

^(2) Adjusted gross margin is calculated as adjusted gross profit divided by net revenue.

Specialty net revenue for the three months ended December 31, 2020 was $85 million, a decline of $12 million, or 12%, compared to $97 million for the prior year period. Growth in demand for Rytary(r) and Unithroid(r) was offset by declines in non-promoted products as well as unfavorable Emverm(r) sales due to the impact of COVID-19 on pinworm related prescriptions.

Specialty gross margin for fourth quarter of 2020 was 44.9% compared to 49.9% in the prior year period primarily due to the mix of revenues, including the impact of non-promoted products. Specialty adjusted gross margin for the fourth quarter of 2020 of 74% was generally in line with margin for the prior period.

Specialty operating income for the fourth quarter of 2020 was $7 million compared to $18 million in the prior year period. The decline in operating income primarily reflected the impact of unfavorable gross margin and increased research and development expense of $6 million including milestone expenses of $5 million for the expansion of the Specialty pipeline. Specialty adjusted operating income for the fourth quarter of 2020 was $38 million compared to $46 million for the prior period as adjusted gross margin declined.

Amneal Pharmaceuticals, Inc.

AvKARE Operating Results

(Unaudited; In thousands)

AvKARE ^(1) Three Months Ended Years Ended December 31, December 31,

2020 2019 2020 2019

Net revenue - AvKARE ^(2) $ 82,423 $ - $ 293,746 $ -

Cost of goods sold ^(2) 68,253 - 242,219 -

Gross profit ^(2) 14,170 - 51,527 -

Selling, general, and administrative 16,735 - 58,544 -

Acquisition, transaction-related and 641 - 641 - integration expenses

Operating loss $ (3,206) $ - $ (7,658) $ -



Gross margin 17.2 % - % 17.5 % - %

Adjusted gross profit (Non-GAAP) ^(3) $ 14,170 $ - $ 51,527 $ -

Adjusted gross margin (Non-GAAP) ^(3) 17.2 % - % 17.5 % - %

Adjusted operating income (Non-GAAP) $ 6,129 $ - $ 24,861 $ -

(1)The AvKARE segment includes the results of operations of AvKARE from January 31, 2020, the date of the acquisition, to December 31, 2020.

(2)AvKARE excludes net revenue, costs of goods sold and gross profit from sales of Amneal products through this distribution channel. These financial results are included in the Generics segment.

(3)There are no non-GAAP adjustments associated with gross profit and gross margin.

^ The AvKARE segment includes the results of operations of AvKARE from(1) January 31, 2020, the date of the acquisition, to December 31, 2020.

AvKARE excludes net revenue, costs of goods sold and gross profit from^ sales of Amneal products through this distribution channel. These(2) financial results are included in the Generics segment.

^ There are no non-GAAP adjustments associated with gross profit and gross(3) margin.

Amneal Pharmaceuticals, Inc.

Non-GAAP Reconciliations

(Unaudited; In thousands)

Reconciliations of Cost of Goods Sold to Adjusted Cost of Goods Sold

Generics

Three Months Ended December 31,

Year EndedDecember 31,

2020

2019

2020

2019

Cost of goods sold

$

227,581

$

224,708

$

894,422

$

984,782

Cost of goods sold impairment charges

-

13,721

34,579

119,145

Adjusted to deduct (add):

Amortization

10,047

15,483

41,946

51,783

Inventory related charges (4)

400

3,089

5,465

22,828

Acquisition and site closure expenses (2)

2,746

4,715

10,580

25,151

Asset impairment charges (3)

-

13,721

35,822

119,145

Stock-based compensation expense

954

910

4,166

3,030

Amortization of upfront payment (6)

-

-

-

36,393

Other

714

-

1,830

1,024

Adjusted cost of goods sold (Non-GAAP)

$

212,720

$

200,511

$

829,192

$

844,573

Amneal Pharmaceuticals, Inc.

Non-GAAP Reconciliations

(Unaudited; In thousands)



Reconciliations of Cost of Goods Sold to Adjusted Cost of Goods Sold

Generics Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

Cost of goods sold $ 227,581 $ 224,708 $ 894,422 $ 984,782

Cost of goods sold - 13,721 34,579 119,145 impairment charges

Adjusted to deduct (add):

Amortization 10,047 15,483 41,946 51,783

Inventory related charges 400 3,089 5,465 22,828 ^(4)

Acquisition and site 2,746 4,715 10,580 25,151 closure expenses ^(2)

Asset impairment charges - 13,721 35,822 119,145 ^(3)

Stock-based compensation 954 910 4,166 3,030 expense

Amortization of upfront - - - 36,393 payment^ (6)

Other 714 - 1,830 1,024

Adjusted cost of goods $ 212,720 $ 200,511 $ 829,192 $ 844,573 sold (Non-GAAP)

Specialty

Three Months Ended December 31,

Year EndedDecember 31,

2020

2019

2020

2019

Cost of goods sold

$

47,128

$

48,665

$

192,910

$

162,432

Cost of goods sold impairment charges

-

-

-

7,017

Adjusted to deduct:

Amortization

25,127

24,695

101,144

92,169

Asset impairment charges (3)

-

-

-

7,017

Adjusted cost of goods sold (Non-GAAP)

$

22,001

$

23,970

$

91,766

$

70,263

Specialty Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

Cost of goods sold $ 47,128 $ 48,665 $ 192,910 $ 162,432

Cost of goods sold impairment - - - 7,017 charges

Adjusted to deduct:

Amortization 25,127 24,695 101,144 92,169

Asset impairment charges ^(3) - - - 7,017

Adjusted cost of goods sold $ 22,001 $ 23,970 $ 91,766 $ 70,263 (Non-GAAP)

Amneal Pharmaceuticals, Inc.

Non-GAAP Reconciliations

(Unaudited; In thousands)

Reconciliations of Operating Income (Loss) to Adjusted Operating Income

Generics

Three Months Ended December 31,

Year EndedDecember 31,

2020

2019

2020

2019

Operating income (loss)

$

54,555

$

(3,093)

$

189,356

$

(133,151)

Adjusted to add (deduct):

Acquisition and site closure expenses (2)

3,195

6,028

14,832

41,639

Amortization

10,047

15,483

41,946

51,783

Inventory related charges (4)

400

5,938

6,083

25,677

Stock-based compensation expense

2,046

2,588

8,097

11,943

Asset impairment charges (3)

5,505

14,655

42,995

166,396

Restructuring and other charges (credit) (5)

(456)

2,900

(614)

20,101

(Gain) charges related to legal matters, net (7)

-

(2,409)

5,610

12,591

Amortization of upfront payment (6)

-

-

-

36,393

R&D milestone payment

2,626

6,650

15,771

16,579

Other

916

-

1,529

49

Adjusted operating income (Non-GAAP)

$

78,834

$

48,740

$

325,605

$

250,000

Amneal Pharmaceuticals, Inc.

Non-GAAP Reconciliations

(Unaudited; In thousands)



Reconciliations of Operating Income (Loss) to Adjusted Operating Income

Generics Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

Operating income (loss) $ 54,555 $ (3,093) $ 189,356 $ (133,151)

Adjusted to add (deduct):

Acquisition and site 3,195 6,028 14,832 41,639 closure expenses ^(2)

Amortization 10,047 15,483 41,946 51,783

Inventory related 400 5,938 6,083 25,677 charges ^(4)

Stock-based compensation 2,046 2,588 8,097 11,943 expense

Asset impairment charges 5,505 14,655 42,995 166,396 ^(3)

Restructuring and other (456) 2,900 (614) 20,101 charges (credit) ^(5)

(Gain) charges relatedto legal matters, net ^ - (2,409) 5,610 12,591 (7)

Amortization of upfront - - - 36,393 payment ^(6)

R&D milestone payment 2,626 6,650 15,771 16,579

Other 916 - 1,529 49

Adjusted operating $ 78,834 $ 48,740 $ 325,605 $ 250,000 income (Non-GAAP)

Specialty

Three Months Ended December 31,

Year Ended December 31,

2020

2019

2020

2019

Operating income

$

7,437

$

18,012

$

56,535

$

42,781

Adjusted to add (deduct):

Amortization

25,127

24,695

101,144

92,169

Acquisition and site closure expenses (2)

2

2,641

85

10,969

Stock-based compensation expense

645

532

2,678

1,498

Restructuring and other charges (5)

-

-

-

391

R&D milestone payment

5,000

-

7,000

-

Asset impairment charges (3)

-

-

-

7,017

Other

(2)

-

1,418

-

Adjusted operating income (Non-GAAP)

$

38,209

$

45,880

$

168,860

$

154,825

Specialty Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

Operating income $ 7,437 $ 18,012 $ 56,535 $ 42,781

Adjusted to add (deduct):

Amortization 25,127 24,695 101,144 92,169

Acquisition and site closure 2 2,641 85 10,969 expenses ^(2)

Stock-based compensation expense 645 532 2,678 1,498

Restructuring and other charges - - - 391 ^(5)

R&D milestone payment 5,000 - 7,000 -

Asset impairment charges ^(3) - - - 7,017

Other (2) - 1,418 -

Adjusted operating income $ 38,209 $ 45,880 $ 168,860 $ 154,825 (Non-GAAP)

AvKARE

Three Months Ended December 31,

Year Ended December 31,

2020

2019

2020

2019

Operating loss

$

(3,206)

$

-

$

(7,658)

$

-

Adjusted to add:

Amortization

8,694

-

31,878

-

Acquisition and site closure expenses (2)

641

-

641

-

Adjusted operating income (Non-GAAP)

$

6,129

$

-

$

24,861

$

-

AvKARE Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

Operating loss $ (3,206) $ - $ (7,658) $ -

Adjusted to add:

Amortization 8,694 - 31,878 -

Acquisition and site closure expenses 641 - 641 - ^(2)

Adjusted operating income (Non-GAAP) $ 6,129 $ - $ 24,861 $ -

Amneal Pharmaceuticals, Inc.

Non-GAAP Reconciliations

(Unaudited; In thousands, except per share amounts)

Reconciliation of Net (Loss) Income to Adjusted Net Income and Calculation of Adjusted Diluted EPS

Three Months Ended December 31,

Year Ended December 31,

2020

2019

2020

2019

Net (loss) income

$

(6,962)

$

(64,903)

$

68,578

$

(603,573)

Adjusted to add (deduct):

Non-cash interest

2,015

1,629

7,900

6,478

Gain from reduction of tax receivable agreement liability (1)

-

-

-

(192,884)

GAAP Income tax expense (benefit)

1,485

7,792

(104,358)

383,331

Amortization

40,833

40,178

163,842

143,952

Stock-based compensation expense

5,133

5,013

20,750

21,679

Acquisition and site closure expenses (2)

6,777

14,983

23,384

73,471

Restructuring and other charges (credit) (5)

(259)

4,412

2,398

34,345

Inventory related charges (4)

395

5,963

6,574

25,702

(Gains) charges related to legal matters, net (7)

-

(2,409)

5,610

12,591

Asset impairment charges (3)

5,505

14,655

43,629

175,210

Amortization of upfront payment (6)

-

-

-

36,393

Foreign exchange (gain) loss

(8,392)

(4,722)

(16,350)

4,962

Gain on sale of international businesses, net (8)

-

(328)

(123)

(7,258)

R&D milestone payments

7,626

6,650

22,771

16,579

Other

1,696

342

1,926

578

Income tax at 21%

(12,411)

(6,138)

(54,271)

(27,621)

Net loss attributable to NCI not associated with our Class B shares

(89)

(113)

(1,240)

(344)

Adjusted net income (Non-GAAP)

$

43,352

$

23,004

$

191,020

$

103,591

Adjusted diluted EPS (Non-GAAP) (9)

$

0.14

$

0.08

$

0.63

$

0.35

Amneal Pharmaceuticals, Inc.

Non-GAAP Reconciliations

(Unaudited; In thousands, except per share amounts)



Reconciliation of Net (Loss) Income to Adjusted Net Income and Calculation ofAdjusted Diluted EPS

Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

Net (loss) income $ (6,962) $ (64,903) $ 68,578 $ (603,573)

Adjusted to add (deduct):

Non-cash interest 2,015 1,629 7,900 6,478

Gain from reduction oftax receivable - - - (192,884) agreement liability ^(1)

GAAP Income tax 1,485 7,792 (104,358) 383,331 expense (benefit)

Amortization 40,833 40,178 163,842 143,952

Stock-based 5,133 5,013 20,750 21,679 compensation expense

Acquisition and site 6,777 14,983 23,384 73,471 closure expenses ^(2)

Restructuring andother charges (credit) (259) 4,412 2,398 34,345 ^(5)

Inventory related 395 5,963 6,574 25,702 charges ^(4)

(Gains) chargesrelated to legal - (2,409) 5,610 12,591 matters, net ^(7)

Asset impairment 5,505 14,655 43,629 175,210 charges ^(3)

Amortization of - - - 36,393 upfront payment ^(6)

Foreign exchange (8,392) (4,722) (16,350) 4,962 (gain) loss

Gain on sale ofinternational - (328) (123) (7,258) businesses, net ^(8)

R&D milestone payments 7,626 6,650 22,771 16,579

Other 1,696 342 1,926 578

Income tax at 21% (12,411) (6,138) (54,271) (27,621)

Net loss attributableto NCI not associated (89) (113) (1,240) (344) with our Class Bshares

Adjusted net income $ 43,352 $ 23,004 $ 191,020 $ 103,591 (Non-GAAP)

Adjusted diluted EPS $ 0.14 $ 0.08 $ 0.63 $ 0.35 (Non-GAAP) ^(9)

Amneal Pharmaceuticals, Inc.

Non-GAAP Reconciliations

(Unaudited, In thousands)

Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA

Three Months Ended December 31,

Year Ended December 31,

2020

2019

2020

2019

Net (loss) income

$

(6,962)

$

(64,903)

$

68,578

$

(603,573)

Adjusted to add (deduct):

Interest expense, net

34,535

38,829

145,998

168,205

Income tax expense (benefit)

1,485

7,792

(104,358)

383,331

Depreciation and amortization

59,873

54,303

235,387

207,235

EBITDA (Non-GAAP)

$

88,931

$

36,021

$

345,605

$

155,198

Adjusted to add (deduct):

Gain from reduction of tax receivable agreement liability (1)

-

-

-

(192,884)

Stock-based compensation expense

5,133

5,013

20,750

21,679

Acquisition and site closure expenses (2)

6,777

14,983

23,384

73,471

Restructuring and other charges (credit) (5)

(259)

4,412

2,398

34,345

Inventory related charges (4)

395

5,938

6,574

25,677

(Gains) charges related to legal matters, net (7)

-

(2,409)

5,610

12,591

Asset impairment charges (3)

5,505

14,655

43,629

175,210

Amortization of upfront payment (6)

-

-

-

36,393

Foreign exchange (gain) loss

(8,392)

(4,722)

(16,350)

4,962

Gain on sale of international businesses, net (8)

-

(328)

(123)

(7,258)

R&D milestone payments

7,626

6,650

22,771

16,579

Other

1,696

342

1,926

(446)

Adjusted EBITDA (Non-GAAP)

$

107,412

$

80,555

$

456,174

$

355,517

Amneal Pharmaceuticals, Inc.

Non-GAAP Reconciliations

(Unaudited, In thousands)



Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA

Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

Net (loss) income $ (6,962) $ (64,903) $ 68,578 $ (603,573)

Adjusted to add (deduct):

Interest expense, net 34,535 38,829 145,998 168,205

Income tax expense 1,485 7,792 (104,358) 383,331 (benefit)

Depreciation and 59,873 54,303 235,387 207,235 amortization

EBITDA (Non-GAAP) $ 88,931 $ 36,021 $ 345,605 $ 155,198

Adjusted to add (deduct):

Gain from reduction oftax receivable - - - (192,884) agreement liability ^(1)

Stock-based 5,133 5,013 20,750 21,679 compensation expense

Acquisition and site 6,777 14,983 23,384 73,471 closure expenses ^(2)

Restructuring andother charges (credit) (259) 4,412 2,398 34,345 ^(5)

Inventory related 395 5,938 6,574 25,677 charges ^(4)

(Gains) chargesrelated to legal - (2,409) 5,610 12,591 matters, net ^(7)

Asset impairment 5,505 14,655 43,629 175,210 charges ^(3)

Amortization of - - - 36,393 upfront payment ^(6)

Foreign exchange (8,392) (4,722) (16,350) 4,962 (gain) loss

Gain on sale ofinternational - (328) (123) (7,258) businesses, net ^(8)

R&D milestone payments 7,626 6,650 22,771 16,579

Other 1,696 342 1,926 (446)

Adjusted EBITDA $ 107,412 $ 80,555 $ 456,174 $ 355,517 (Non-GAAP)

Amneal Pharmaceuticals, Inc.

Non-GAAP Reconciliations

(Unaudited; In thousands)

(1)

Gain from reduction of tax receivable agreement liability represents the reversal of the accrued liability associated with the Company's deferred tax assets created at the Combination.

(2)

Acquisition and site closure expenses for the three months and year ended December 31, 2020 primarily included costs related to: (i) system integrations associated with the combination with Impax Laboratories, LLC ("Impax"), (ii) integration activities associated with the acquisition of AvKARE, (iii) expenses associated with the pending acquisition of a 98% interest in Kashiv Specialty Pharmaceuticals, LLC (a related party) and (iv) plant closure and redundant employee costs related to the planned cessation of manufacturing at our Hauppauge, NY facility. Acquisition and site closure expenses for the three months and year ended December 31, 2019 included costs related to: (i) plant closure and redundant employee costs related to the planned cessation of manufacturing at our Hauppauge, NY facility and (ii) third party costs associated with the combination with Impax and related integration including legal, investment banking, accounting and information technology.

(3)

Asset impairment charges for the three months ended December 31, 2020 were primarily associated with equipment and in-process research and development intangible assets acquired in the combination with Impax. Asset impairment charges for the year ended December 31, 2020 were primarily associated with equipment and in-process research and development and other intangible assets acquired in the combination with Impax. Asset impairment charges for the three months and year ended December 31, 2019 were primarily associated with in-process research and development and other intangible assets acquired in the combination with Impax.

(4)

For the three months and year ended December 31, 2020, inventory related charges represented inventory obsolescence and related expenses associated with recalls. For the three months and year ended December 31, 2019, inventory related charges primarily represented inventory obsolescence resulting from new initiatives and policies adopted with our restructuring efforts.

(5)

For the three months ended December 31, 2020, restructuring and other charges (credit) consisted of a change in estimate to reduce the amount accrued for the cost of benefits provided pursuant to our severance programs for employees impacted at our Hauppauge, NY facility. For the year ended December 31, 2020, restructuring and other charges (credit) primarily consisted of the cost of benefits provided pursuant to our severance programs for former senior executives and management employees, net of an asset-related credit associated with the contractual cancellation of an asset retirement obligation related to a lease in Hayward, CA. For the three months ended December 31, 2019, restructuring and other charges primarily consisted of the cost of benefits provided pursuant to our severance programs for employees at our Hauppauge, NY facility. For the year ended December 31, 2019, restructuring and other charges primarily consisted of the cost of benefits provided pursuant to our severance programs for employees at our Hauppauge, NY, Hayward, CA and other facilities as well as asset-related charges associated with the impairment of property, plant and equipment and the right of use asset associated with our Hauppauge, NY facility.

(6)

For the year ended December 31, 2019, amortization of upfront payment represents the amortization of the upfront payment made to Lannett Company in connection with our transition agreement for Levothyroxine.

(7)

For the year ended December 31, 2020, (gains) charges related to legal matters, net of $6 million were associated with commercial legal claims in our Generics segment. For the year ended December 31, 2019, (gains) charges related to legal matters, net were primarily related to an agreement in principle with Teva Pharmaceuticals, Inc. regarding a matter associated with Impax prior to the Combination.

(8)

For the year ended December 31, 2019, gain on the sale of international businesses, net represents the gain from the sale of our Creo Pharma Holding Limited subsidiary, which comprised substantially all of the Company's operations in the United Kingdom, partially offset by the loss from the sale of our Amneal Deutschland GmbH subsidiary, which comprised substantially all of the Company's operations in Germany.

(9)

For the three months and year ended December 31, 2020, adjusted diluted EPS (non-GAAP) utilizes weighted average diluted shares outstanding of 301,903 and 301,030, respectively, which consists of Class A shares and Class B shares under the if-converted method. For the three months and year ended December 31, 2019, adjusted diluted EPS (non-GAAP) utilizes weighted average diluted shares outstanding of 299,298 and 299,194, respectively, which consists of Class A and Class B shares under the if-converted method.

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CONTACT: Tasos Konidaris Executive Vice President, Chief Financial Officer invest@amneal.com