PR Newswire | May 5, 2021 04:16PM EDT

05/05 15:15 CDT

Lannett Announces Fiscal 2021 Third-Quarter Financial ResultsQ3 Business and Financial Highlights:- Net Sales Were $112 Million- Adjusted Gross Margin, Adjusted Profitability Better than Expected- Cash Significantly Increased to More Than $80 Million- Full-Year Adjusted Top- and Bottom-Line Guidance Reiterated- Added Another Large, Durable Asset to Pipeline, Biosimilar Insulin AspartPost Quarter End:- Completed Re-financing Transaction-- Retired Outstanding Term B Loan Balance of ~$540 Million-- Improves Cash Flow Significantly-- Extended Debt Maturity to 2026 at Fixed Interest Rates- Submitted ANDA for Generic ADVAIR DISKUS(r) PHILADELPHIA, May 5, 2021

PHILADELPHIA, May 5, 2021 /PRNewswire/ -- Lannett Company, Inc. (NYSE: LCI) today reported financial results for its fiscal 2021 third quarter ended March 31, 2021.

"In recent months, we have significantly advanced a number of strategic initiatives," said Tim Crew, chief executive officer of Lannett. "In April, we successfully completed a transaction to refinance our debt, using the proceeds to retire the outstanding Term Loan B balance of approximately $540 million that was set to mature in November of next year. As a result, we have extended the maturity of our debt to 2026 from 2022, which is after several high-value pipeline assets are expected to be commercialized. Moreover, we improved our free cash flow, by approximately $50 million in the first year alone, which we plan to use, in part, to support our growth initiatives.

"We were pleased with our fiscal 2021 third quarter financial results. While net sales were slightly lower than our expectations, adjusted gross margin, adjusted EBITDA and adjusted earnings per share were higher than we anticipated. Selling, general and administrative expenses were lower compared with the same quarter last year. Moreover, we ended the quarter with more than $80 million in cash, up from approximately $34 million at December 31, 2020.

"Looking ahead, we expect to launch a number of products in the coming months, and we continue to advance our durable, large market opportunity assets. Last month we announced the submission of an Abbreviated New Drug Application (ANDA) for generic ADVAIR DISKUS(r), an inhalation drug device combination product. Also, the pivotal clinical trial has been initiated for generic Flovent Diskus(r), another key respiratory product in our pipeline. And, last but not least, in the third quarter we added to our pipeline another potentially large and durable biosimilar asset, fast acting insulin aspart."

For the fiscal 2021 third quarter on a GAAP basis, net sales were $112.4 million compared with $144.4 million for the third quarter of fiscal 2020. Gross profit was $26.5 million, or 24% of net sales, compared with $41.7 million, or 29% of net sales. During last year's third quarter, the company recorded non-cash, asset impairment charges of $14.0 million, related to the write-down of the value of a product license agreement. Net loss was $7.1 million, or $0.18 per share, compared with $16.6 million, or $0.43 per share, for the third quarter of fiscal 2020.

For the fiscal 2021 third quarter reported on a Non-GAAP basis, net sales were $112.4 million compared with $144.4 million for the third quarter of fiscal 2020. Adjusted gross profit was $30.4 million, or 27% of net sales, compared with $52.3 million, or 36% of net sales, for the prior-year third quarter. Adjusted interest expense decreased to $9.8 million compared with $12.7 million for the second quarter of fiscal 2020. Adjusted net income was $1.0 million, or $0.02 per diluted share, compared with $11.7 million, or $0.27 per diluted share, for the fiscal 2020 third quarter. Adjusted EBITDA for the fiscal 2021 third quarter was $17.0 million.

Guidance for Fiscal 2021

Based on its current outlook and recent financing, the company revised guidance for fiscal year 2021, with the primary change related to interest expense, and is as follows:

GAAP Adjusted*

Net sales $480 million to $500 million, $480 million to $500 million, unchanged unchanged

Gross margin %Approximately 14% to 16%, Approximately 24% to 26%, unchanged unchanged

R&D expense $26 million to $28 million, $26 million to $28 million, unchanged unchanged

SG&A expense $62 million to $64 million, up $52 million to $54 million, from $58 million to $60 millionunchanged

Restructuring $4 million, unchanged $-- expense

Asset impairment $198 million, unchanged $-- charges

Interest and Approximately $71 million, up Approximately $44 million, up other from $53 million to $54 millionfrom $41 million to $42 million

Effective tax Approximately 27% to 28% N/A rate

Income tax expense/ N/A $1 million to ($1 million) (benefit)

Adjusted N/A $75 million to $85 million, EBITDA unchanged

Capital $10 million to $15 million, $10 million to $15 million, expenditures unchanged unchanged

*A reconciliation of Adjusted amounts to most directly comparable GAAP amounts can be found in the attached financial tables.

Conference Call Information and Forward-Looking Statements

Later today, the company will host a conference call at 4:30 p.m. ET to review its results of operations for its fiscal 2021 third quarter ended March 31, 2021. The conference call will be available to interested parties by dialing 888-895-5479 from the U.S. or Canada, or 847-619-6250 from international locations, passcode 50156994. The call will be broadcast via the Internet at www.lannett.com. Listeners are encouraged to visit the website at least 10 minutes prior to the start of the scheduled presentation to register, download and install any necessary audio software. A playback of the call will be archived and accessible on the same website for at least three months.

Discussion during the conference call may include forward-looking statements regarding such topics as, but not limited to, the company's financial status and performance, regulatory and operational developments, and any comments the company may make about its future plans or prospects in response to questions from participants on the conference call.

Use of Non-GAAP Financial Measures

This news release contains references to Non-GAAP financial measures, including Adjusted EBITDA, which are financial measures that are not prepared in conformity with United States generally accepted accounting principles (U.S. GAAP). Management uses these measures internally for evaluating its operating performance. The Company's management believes that the presentation of Non-GAAP financial measures provides useful supplementary information regarding operational performance, because it enhances an investor's overall understanding of the financial results for the Company's core business. Additionally, it provides a basis for the comparison of the financial results for the Company's core business between current, past and future periods. The Company also believes that including Adjusted EBITDA is appropriate to provide additional information to investors. Non-GAAP financial measures should be considered only as a supplement to, and not as a substitute for or as a superior measure to, financial measures prepared in accordance with U.S. GAAP.

Detailed reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are included with this release.

Non-GAAP financial measures exclude, among others, the effects of (1) amortization of purchased intangibles and other purchase accounting entries, (2) restructuring expenses, (3) non-cash interest expense, as well as (4) certain other items considered unusual or non-recurring in nature.

ADVAIR DISKUS(r) and Flovent(r) Diskus(r) are registered trademarks of GlaxoSmithKline.

About Lannett Company, Inc.:

Lannett Company, founded in 1942, develops, manufactures, packages, markets and distributes generic pharmaceutical products for a wide range of medical indications - see financial schedule below for net sales by medical indication. For more information, visit the company's website at www.lannett.com.

This news release contains certain statements of a forward-looking nature relating to future events or future business performance. Any such statements, including, but not limited to, successfully commercializing recently introduced products and launching and successfully commercializing additional products in fiscal 2021, achieving cost savings from the recently announced restructuring and cost savings plan, the potential material impact of COVID-19 on future financial results, and achieving the financial metrics stated in the company's revised guidance for fiscal 2021, whether expressed or implied, are subject to risks and uncertainties which can cause actual results to differ materially from those currently anticipated due to a number of factors which include, but are not limited to, the difficulty in predicting the timing or outcome of FDA or other regulatory approvals or actions, the ability to successfully commercialize products upon approval, including acquired products, and Lannett's estimated or anticipated future financial results, future inventory levels, future competition or pricing, future levels of operating expenses, product development efforts or performance, and other risk factors discussed in the company's Form 10-K and other documents filed with the Securities and Exchange Commission from time to time. These forward-looking statements represent the company's judgment as of the date of this news release. The company disclaims any intent or obligation to update these forward-looking statements.

FINANCIAL SCHEDULES FOLLOW

LANNETT COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

March 31, 2021 June 30, 2020

ASSETS

Current assets:

Cash and cash equivalents $ 81,290 $ 144,329

Accounts receivable, net 114,691 125,688

Inventories 113,074 142,867

Income taxes receivable 40,043 14,419

Assets held for sale 2,678 2,678

Other current assets 18,135 13,227

Total current assets 369,911 443,208

Property, plant and equipment, net 168,844 179,518

Intangible assets, net 160,138 374,735

Operating lease right-of-use asset 10,762 9,343

Deferred tax assets 138,019 117,890

Other assets 14,696 11,861

TOTAL ASSETS $ 862,370 $ 1,136,555

LIABILITIES

Current liabilities:

Accounts payable $ 32,605 $ 32,535

Accrued expenses 4,025 14,962

Accrued payroll and payroll-related expenses 9,758 16,304

Rebates payable 31,848 38,175

Royalties payable 14,541 20,863

Restructuring liability 42 27

Current operating lease liabilities 2,040 1,097

Short-term borrowings and current portion of long-term debt - 88,189

Other current liabilities 2,270 2,713

Total current liabilities 97,129 214,865

Long-term debt, net 610,698 592,940

Long-term operating lease liabilities 11,306 9,844

Other liabilities 19,187 16,010

TOTAL LIABILITIES 738,320 833,659

STOCKHOLDERS' EQUITY

Common stock ($0.001 par value, 100,000,000 sharesauthorized; 40,872,485 and 39,963,127 shares issued; 41 4039,539,798 and 38,798,787 shares outstanding at March 31,2021 and June 30, 2020, respectively)

Additional paid-in capital 328,911 321,164

Accumulated deficit (186,880) (1,291)

Accumulated other comprehensive loss (603) (627)

Treasury stock (1,332,687 and 1,164,340 shares at March 31, (17,419) (16,390)2021 and June 30, 2020, respectively)

Total stockholders' equity 124,050 302,896

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 862,370 $ 1,136,555

LANNETT COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except share and per share data)

Three months ended Nine months ended

March 31, March 31,

2021 2020 2021 2020

Net sales $ 112,370 $ 144,372 $ 372,769 $ 407,824

Cost of sales 82,063 94,380 298,738 258,699

Amortization of intangibles 3,851 8,316 21,097 23,497

Gross profit 26,456 41,676 52,934 125,628

Operating expenses:

Research and development expenses 5,973 7,441 18,156 23,287

Selling, general and administrative expenses 17,636 22,147 46,502 60,876

Restructuring expenses - 191 4,043 1,771

Asset impairment charges - 13,989 198,000 15,607

Total operating expenses 23,609 43,768 266,701 101,541

Operating income (loss) 2,847 (2,092) (213,767) 24,087

Other income (loss):

Loss on extinguishment of debt - - - (2,145)

Investment income 80 393 168 1,552

Interest expense (12,631) (16,177) (40,613) (52,163)

Other 18 (380) 23 (181)

Total other loss (12,533) (16,164) (40,422) (52,937)

Loss before income tax (9,686) (18,256) (254,189) (28,850)

Income tax benefit (2,544) (1,664) (68,600) (5,185)

Net loss $ (7,142) $ (16,592) $ (185,589) $ (23,665)

Loss per common share:

Basic $ (0.18) $ (0.43) $ (4.72) $ (0.61)

Diluted (1) $ (0.18) $ (0.43) $ (4.72) $ (0.61)

Weighted average common shares outstanding:

Basic 39,511,296 38,707,049 39,340,670 38,539,850

Diluted (1) 39,511,296 38,707,049 39,340,670 38,539,850

(1) Effective with the 4.5% Senior Convertible Note issued on September 27,2019, the diluted earnings per share was calculated based on the "if-converted"method.

LANNETT COMPANY, INC.

RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED)

(In thousands, except percentages, share and per share data)

Three months ended March 31, 2021

Amortization of Gross Income (loss) before Diluted earnings (loss) per Net sales Cost of sales intangibles Gross Profit Margin R&D expenses SG&A expenses Operating income Other loss income tax Income tax benefit Net income (loss) share (g) %

GAAP Reported $ 112,370 $ 82,063 $ 3,851 $ 26,456 24% $ 5,973 $ 17,636 $ 2,847 $ (12,533) $ (9,686) $ (2,544) $ (7,142) $ (0.18)

Adjustments:

Amortization of intangibles (a) - - (3,851) 3,851 - - 3,851 - 3,851 - 3,851

Cody API business (b) - (91) - 91 - (18) 109 - 109 - 109

Depreciation on capitalized software costs (c) - - - - - (1,051) 1,051 - 1,051 - 1,051

Non-cash interest (d) - - - - - - - 2,823 2,823 - 2,823

Other (e) - - - - - (2,191) 2,191 - 2,191 - 2,191

Tax adjustments (f) - - - - - - - - - 1,923 (1,923)

Non-GAAP Adjusted $ 112,370 $ 81,972 $ - $ 30,398 27% $ 5,973 $ 14,376 $ 10,049 $ (9,710) $ 339 $ (621) $ 960 $ 0.02

(a) To exclude amortization of purchased intangible assets primarily related to the acquisition of KUPI

(b) To exclude the operating results of the ceased Cody API business

(c) To exclude depreciation on previously capitalized software integration costs associated with the KUPI acquisition

(d) To exclude non-cash interest expense associated with debt issuance costs

(e) To primarily exclude the reimbursement of legal costs associated with a distribution agreement

(f) To exclude the tax effect of the pre-tax adjustments included above at applicable tax rates

The weighted average share number for the three months ended March 31, 2021 is(g) 39,511,296 for GAAP and 41,051,998 for the non-GAAP earnings (loss) per share calculations

LANNETT COMPANY, INC.

RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED)

(In thousands, except percentages, share and per share data)

Three months ended March 31, 2020

Amortization of Gross Restructuring Operating income Income (loss) Income tax expense Net income Diluted earnings (loss) per Net sales Cost of sales intangibles Gross Profit Margin R&D expense SG&A expense expenses Asset impairment charges (loss) Other loss before income tax (benefit) (loss) share (j) %

GAAP Reported $ 144,372 $ 94,380 $ 8,316 $ 41,676 29% $ 7,441 $ 22,147 $ 191 13,989 $ (2,092) $ (16,164) $ (18,256) $ (1,664) $ (16,592) $ (0.43)

Adjustments:

Amortization of intangibles (a) - - (8,316) 8,316 - - - - 8,316 - 8,316 - 8,316

Cody API business (b) - (983) - 983 (47) (58) - - 1,088 - 1,088 - 1,088

Depreciation on capitalized software costs (c) - - - - - (1,058) - - 1,058 - 1,058 - 1,058

Decommissioning of Philadelphia sites (d) - (192) - 192 - - - - 192 - 192 - 192

Branded prescription drug fee (e) - - - - - (2,957) - - 2,957 - 2,957 - 2,957

Restructuring expenses (f) - - - - - - (191) - 191 - 191 - 191

Asset impairment charge (g) - - - - - - - (13,989) 13,989 - 13,989 - 13,989

Non-cash interest (h) - - - - - - - - - 3,430 3,430 - 3,430

Other (i) - (1,168) - 1,168 (29) (354) - - 1,551 357 1,908 - 1,908

Tax adjustments (j) - - - - - - - - - - - 4,832 (4,832)

Non-GAAP Adjusted $ 144,372 $ 92,037 $ - $ 52,335 36% $ 7,365 $ 17,720 $ - $ - $ 27,250 $ (12,377) $ 14,873 $ 3,168 $ 11,705 $ 0.27

(a) To exclude amortization of purchased intangible assets primarily related to the acquisitions of KUPI and Silarx Pharmaceuticals, Inc.

(b) To exclude the operating results of the ceased Cody API business

(c) To exclude depreciation on previously capitalized software integration costs associated with the KUPI acquisition

To exclude the costs related to the decommissioning and shutdown of the(d) Philadelphia manufacturing and distribution sites, including costs to transfer products to other locations

(e) To exclude the federally mandated branded prescription drug fee related to Levothyroxine, a product the Company no longer sells

(f) To exclude expenses associated with the Cody API Restructuring Plan

(g) To exclude an impairment charge associated with an agreement to distribute Methylphenidate AB

(h) To exclude non-cash interest expense associated with debt issuance costs

(i) To exclude costs primarily related to the write-down of property, plant and equipment as well as COVID-19 special recognition payments

(j) To exclude the tax effect of the pre-tax adjustments included above at applicable tax rates

The weighted average share number for the three months ended March 31, 2020 is(k) 38,707,049 for GAAP and 46,132,471 for the non-GAAP earnings (loss) per share calculations. Effective with the 4.5% Senior Convertible Note issued on September 27, 2019, the diluted earnings per share was calculated based on the "if-converted" method.

LANNETT COMPANY, INC.

RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED)

(In thousands, except percentages, share and per share data)

Nine months ended March 31, 2021

Amortization of Gross Restructuring Asset impairment Operating income Income (loss) before Income tax expense Diluted earnings (loss) Net sales Cost of sales intangibles Gross Profit Margin R&D expenses SG&A expenses expenses charges (loss) Other loss income tax (benefit) Net income (loss) per share (k) %

GAAP Reported $ 372,769 $ 298,738 $ 21,097 $ 52,934 14% $ 18,156 $ 46,502 $ 4,043 $ 198,000 $ (213,767) $ (40,422) $ (254,189) $ (68,600) $ (185,589) $ (4.72)

Adjustments:

Amortization of intangibles (a) - - (21,097) 21,097 - - - - 21,097 - 21,097 - 21,097

Cody API business (b) - (249) - 249 (5) (473) - - 727 - 727 - 727

Depreciation on capitalized software costs (c) - - - - - (3,153) - - 3,153 - 3,153 - 3,153

Restructuring expenses (d) - - - - - - (4,043) - 4,043 - 4,043 - 4,043

Asset impairment charges (e) - - - - - - - (198,000) 198,000 - 198,000 - 198,000

Write-downs for excess and obsolete inventory (f) - (16,623) - 16,623 - - - - 16,623 - 16,623 - 16,623

Distribution agreement renewal costs (g) - (4,966) - 4,966 - - - - 4,966 - 4,966 - 4,966

Non-cash interest (h) - - - - - - - - - 9,073 9,073 - 9,073

Other (i) - - - - - (3,695) - - 3,695 - 3,695 - 3,695

Tax adjustments (j) - - - - - - - - - - - 69,376 (69,376)

Non-GAAP Adjusted $ 372,769 $ 276,900 $ - $ 95,869 26% $ 18,151 $ 39,181 $ - $ - $ 38,537 $ (31,349) $ 7,188 $ 776 $ 6,412 $ 0.16

(a) To exclude amortization of purchased intangible assets primarily related to the acquisition of KUPI

(b) To exclude the operating results of the ceased Cody API business

(c) To exclude depreciation on previously capitalized software integration costs associated with the KUPI acquisition

(d) To exclude expenses associated with the 2020 Restructuring Plan

(e) To exclude asset impairment charges primarily related to the KUPI product rights intangible assets

(f) To exclude write-downs for excess and obsolete inventory related to the discontinuance of certain product lines

(g) To exclude the consideration recorded to renew the Company's distribution agreement with Recro Gainesville LLC

(h) To exclude non-cash interest expense associated with debt issuance costs

(i) To primarily exclude the reimbursement of legal costs associated with a distribution agreement

(j) To exclude the tax effect of the pre-tax adjustments included above at applicable tax rates

The weighted average share number for the nine months ended March 31, 2021 is(k) 39,340,670 for GAAP and 40,933,946 for the non-GAAP earnings (loss) per share calculations

LANNETT COMPANY, INC.

RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION

(In thousands, except percentages, share and per share data)

Nine months ended March 31, 2020

Amortization of Gross Restructuring Asset impairment Income (loss) before Income tax expense Net income Diluted earnings (loss) per Net sales Cost of sales intangibles Gross Profit Margin R&D expense SG&A expense expenses charges Operating income Other loss income tax (benefit) (loss) share (l) %

GAAP Reported $ 407,824 $ 258,699 $ 23,497 $ 125,628 31% $ 23,287 $ 60,876 $ 1,771 $ 15,607 $ 24,087 $ (52,937) $ (28,850) $ (5,185) $ (23,665) $ (0.61)

Adjustments:

Amortization of intangibles (a) - - (23,497) 23,497 - - - - 23,497 - 23,497 - 23,497

Cody API business (b) - (2,911) - 2,911 (552) (433) - - 3,896 - 3,896 - 3,896

Depreciation on capitalized software costs (c) - - - - - (3,175) - - 3,175 - 3,175 - 3,175

Decommissioning of Philadelphia sites (d) - (1,484) - 1,484 - - - - 1,484 - 1,484 - 1,484

Branded prescription drug fee (e) - - - - - (2,957) - - 2,957 - 2,957 - 2,957

Restructuring expenses (f) - - - - - - (1,771) - 1,771 - 1,771 - 1,771

Asset impairment charges (g) - - - - - - - (15,607) 15,607 - 15,607 - 15,607

Non-cash interest (h) - - - - - - - - - 11,001 11,001 - 11,001

Loss on extinguishment of debt (i) - - - - - - - - - 2,145 2,145 - 2,145

Other (j) - (1,585) - 1,585 (29) (2,578) - - 4,192 21 4,213 - 4,213

Tax adjustments (k) - - - - - - - - - - - 13,942 (13,942)

Non-GAAP Adjusted $ 407,824 $ 252,719 $ - $ 155,105 38% $ 22,706 $ 51,733 $ - $ - $ 80,666 $ (39,770) $ 40,896 $ 8,757 $ 32,139 $ 0.76

(a) To exclude amortization of purchased intangible assets primarily related to the acquisitions of KUPI and Silarx Pharmaceuticals, Inc.

(b) To exclude the operating results of the ceased Cody API business

(c) To exclude depreciation on previously capitalized software integration costs associated with the KUPI acquisition

To exclude the costs related to the decommissioning and shutdown of the(d) Philadelphia manufacturing and distribution sites, including costs to transfer products to other locations

(e) To exclude the federally mandated branded prescription drug fee related to Levothyroxine, a product the Company no longer sells

(f) To exclude expenses associated with the Cody API Restructuring Plan

(g) To exclude impairment charges primarily associated with an agreement to distribute Methylphenidate AB

(h) To exclude non-cash interest expense associated with debt issuance costs

(i) To exclude the loss on extinguishment of debt primarily related to the partial repayment of the outstanding Term Loan A balance

(j) To primarily exclude accrued separation costs related to the Company's former Chief Financial Officer, COVID-19 special recognition payments, as well as legal settlements, partially offset by gains on sales of assets previously held for sale

(k) To exclude the tax effect of the pre-tax adjustments included above at applicable tax rates

The weighted average share number for the nine months ended March 31, 2020 is(l) 38,539,850 for GAAP and 44,248,722 for the non-GAAP earnings (loss) per share calculations. Effective with the 4.5% Senior Convertible Note issued on September 27, 2019, the diluted earnings per share was calculated based on the "if-converted" method.

LANNETT COMPANY, INC.

RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (UNAUDITED)

($ in thousands)

Three months ended

March 31, 2021

Net loss $ (7,142)

Interest expense 12,631

Depreciation and amortization 9,628

Income tax benefit (2,544)

EBITDA 12,573

Share-based compensation 1,863

Inventory write-down 399

Investment income (80)

Other non-operating loss (18)

Other(a) 2,300

Adjusted EBITDA (Non-GAAP) $ 17,037

(a) To primarily exclude the reimbursement of legal costs associated with a distribution agreement, as well as the operating results of the ceased Cody API business

LANNETT COMPANY, INC.

RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED)

($ in millions)

Fiscal Year 2021 Guidance

Non-GAAP

GAAP Adjustments Adjusted

Net sales $480 - $500 - $480 - $500

Gross margin percentage approx. 14% to 16% 10% (a) approx. 24% to 26%

R&D expense $26 - $28 - $26 - $28

SG&A expense $62 - $64 ($10) (b) $52 - $54

Restructuring expense $4 ($4) (c) -

Asset impairment charges $198 ($198) (d) -

Interest and other approx. $71 ($27) (e) approx. $44

Effective tax rate approx. 27% to 28% - N/A

Income tax expense (benefit) N/A - $1 - $(1) (f)

Adjusted EBITDA N/A N/A $75 - $85

Capital expenditures $10 - $15 - $10 - $15

(a) The adjustment primarily reflects amortization of purchased intangibleassets related to the acquisition of Kremers Urban Pharmaceuticals, Inc.("KUPI"), write-downs for excess and obsolete inventory related to thediscontinuance of certain product lines, and consideration recorded to renewthe Company's distribution agreement with Recro Gainesville LLC

(b) The adjustment primarily excludes depreciation on previously capitalizedsoftware integration costs associated with the KUPI acquisition and thereimbursement of legal costs associated with a distribution agreement

(c) To exclude expenses associated with the 2020 Restructuring Plan

(d) To exclude asset impairment charges primarily related to the KUPI productrights intangible assets

(e) The adjustment primarily reflects non-cash interest expense associated withdebt issuance costs and the anticipated loss on extinguishment of debt relatedto the refinancing of the Term Loan B in April 2021.

(f) The non-GAAP adjusted effective income tax rate was replaced with thedollar amount of income tax expense (benefit) to provide additional clarityaround the anticipated expense (benefit) for Fiscal 2021. The non-GAAP adjustedincome tax expense (benefit) reflects the impact of tax credits and deductionsrelated to expected annual pre-tax income (loss) as well as the impact of theCARES Act, which allows the Company to carryback the expected taxable loss intoa prior fiscal year, where the statutory tax rate was 35%.

LANNETT COMPANY, INC.

RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (UNAUDITED)

($ in millions)

Fiscal Year 2021 Guidance

Low High

Net loss $ (214.7) $ (205.2)

Interest expense 71.0 71.0

Depreciation and amortization 55.0 55.0

Income taxes (79.3) (79.8)

EBITDA (168.0) (159.0)

Share-based compensation 9.0 9.0

Inventory write-down 27.0 28.0

Asset impairment charges 198.0 198.0

Restructuring expenses 4.0 4.0

Distribution agreement renewal costs 5.0 5.0

Adjusted EBITDA (Non-GAAP) $ 75.0 $ 85.0

LANNETT COMPANY, INC.

NET SALES BY MEDICAL INDICATION

Three months ended Nine months ended

($ in thousands) March 31, March 31,

Medical Indication 2021 2020 2021 2020

Analgesic $ 3,836 $ 2,811 $ 10,528 $ 6,806

Anti-Psychosis 11,678 27,858 38,023 78,588

Cardiovascular 16,573 21,746 52,623 67,325

Central Nervous System 24,509 18,566 71,648 57,154

Endocrinology 6,822 - 19,551 -

Gastrointestinal 16,817 20,745 52,492 56,020

Infectious Disease 10,610 21,749 55,586 51,722

Migraine 5,169 12,886 20,942 32,907

Respiratory/Allergy/Cough/Cold 2,548 2,966 6,241 8,747

Urinary 1,566 1,149 4,385 2,817

Other 8,617 8,051 24,661 27,847

Contract Manufacturing revenue 3,625 5,845 16,089 17,891

Net Sales $ 112,370 $ 144,372 $ 372,769 $ 407,824

Contact: Robert Jaffe

Robert Jaffe Co., LLC

(424) 288-4098

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SOURCE Lannett Company, Inc.