PR Newswire | Aug 26, 2020 04:16PM EDT

08/26 15:15 CDT

Lannett Announces Fiscal 2020 Fourth-Quarter, Full-Year Financial ResultsFinancial and Business Highlights:-- Q4 Net Sales of $138 Million, Exceeded Expectations-- Q4 Adjusted EBITDA of $35 Million-- Commenced Marketing Six Products in FY20 Q4, Four thus far in FY2021, including Levothyroxine Tablets-- Implemented $15 Million of Cost Reduction Initiatives in July 2020 PHILADELPHIA, Aug. 26, 2020

PHILADELPHIA, Aug. 26, 2020 /PRNewswire/ -- Lannett Company, Inc. (NYSE: LCI) today reported financial results for its fiscal 2020 fourth quarter and full year ended June 30, 2020.

"For both the fiscal 2020 full year and fourth quarter, our net sales and profitability exceeded expectations, driven in large part by a strong performance of our base portfolio and 18 and six new product launches during the year and quarter, respectively," said Tim Crew, chief executive officer of Lannett. "Moreover, during the fourth quarter, we increased our cash position by more than $40 million to approximately $144 million at year end, due to initiatives implemented to improve working capital. We intend to use a portion of the cash to pay down, in full, our Term A Loans at their maturity in November of this year.

"Thus far in fiscal 2021, we have implemented and nearly completed a restructuring and cost reduction plan that we estimate will lower our expenses by approximately $15 million, annually, and launched four new products, including Levothyroxine Tablets. Over the course of the coming year, we intend to continue to launch a number of new products and expand our pipeline through in-house development efforts, as well as in-licensing agreements. We are especially excited and optimistic about recent clinical progress related to a number of drug candidates in our portfolio that have very large addressable markets; we believe these products also have durable value and the potential to be catalysts for significant growth.

"We have provided guidance for the upcoming year, which includes the expected contribution from a number of new product launches in the coming year and a full year of contribution from the 18 products we launched in fiscal 2020. Our outlook also reflects recent and anticipated competitive pressure on certain key products, as well as lower operating expenses as a result of our recently announced restructuring and cost reduction plan."

For the fiscal 2020 fourth quarter on a GAAP basis, net sales were $137.9 million compared with $133.8 million for the fourth quarter of fiscal 2019. Gross profit was $39.6 million, or 29% of net sales, compared with $49.3 million, or 37% of net sales. The company recorded asset impairment charges of $18.8 million compared with $5.9 million in the prior-year fourth quarter. Net loss was $9.7 million, or $0.25 per share, compared with $7.6 million, or $0.20 per share, for the fourth quarter of fiscal 2019.

For the fiscal 2020 fourth quarter reported on a Non-GAAP basis, net sales were $137.9 million compared with $133.8 million for the fourth quarter of fiscal 2019. Adjusted gross profit was $48.9 million, or 35% of net sales, compared with $59.8 million, or 45% of net sales, for the prior-year fourth quarter. Adjusted interest expense decreased to $11.3 million compared with $16.0 million for the fourth quarter of fiscal 2019. Adjusted net income was $13.4 million, or $0.31 per diluted share, compared with $14.7 million, or $0.37 per diluted share, for the fiscal 2019 fourth quarter. Adjusted EBITDA for the fiscal 2020 fourth quarter was $35.2 million.

For the fiscal 2020 full year, on a GAAP basis, net sales were $545.7 million compared with $655.4 million for the fiscal 2019 full year. Gross profit was $165.2 million, or 30% of total net sales, compared with $243.6 million, or 37% of total net sales. The company recorded asset impairment charges of $34.4 million compared with $375.4 million for fiscal 2019. Net loss was $33.4 million, or $0.86 per share, compared with $272.1 million, or $7.20 per diluted share, for fiscal 2019.

For the fiscal 2020 full year reported on a Non-GAAP basis, net sales were $545.7 million compared with $655.4 million for the fiscal 2019 full year. Adjusted gross profit was $204.0 million, or 37% of adjusted net sales, compared with $291.4 million, or 44% of adjusted net sales, for the prior year. Adjusted interest expense significantly declined to $52.5 million from $67.0 million for fiscal 2019. Adjusted net income was $45.6 million, or $1.07 per diluted share, compared with $91.8 million, or $2.35 per diluted share, for the fiscal 2019 full year.

Guidance for Fiscal 2021

Based on its current outlook, the company provided guidance for fiscal year 2021, as follows:

GAAP Adjusted**

Net sales $520 million to $545 $520 million to $545 million million

Gross margin % Approximately 23% to 25% Approximately 29% to 31%

R&D expense $29 million to $32 million $29 million to $32 million

SG&A expense $59 million to $62 million $55 million to $58 million

Restructuring expense$4 million to $5 million $ --

Interest and other $53 million to $54 million $41 million to $42 million

Effective tax rate Approximately 34% to 35% Approximately 21% to 22%

Adjusted EBITDA* N/A $100 million to $110 million

Capital expenditures $15 million to $20 million $15 million to $20 million

**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 2020 fourth quarter ended June 30, 2020. The conference call will be available to interested parties by dialing 800-447-0521 from the U.S. or Canada, or 847-413-3238 from international locations, passcode 49903262. 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, as defined in the company's existing Credit Agreement, is appropriate to provide additional information to investors to demonstrate the company's ability to comply with financial debt covenants. 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.

*Adjusted EBITDA excludes the same adjustments discussed above, as well as additional adjustments permitted under the company's existing Credit Agreement.

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, 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 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.

Contact: Robert Jaffe

Robert Jaffe Co., LLC

(424) 288-4098







FINANCIAL SCHEDULES FOLLOW

LANNETT COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

June 30, 2020 June 30, 2019

ASSETS

Current assets:

Cash and cash equivalents $ 144,329 $ 140,249

Accounts receivable, net 125,688 164,752

Inventories 142,867 143,971

Income taxes receivable 14,419 -

Assets held for sale 2,678 9,671

Other current assets 13,227 13,606

Total current assets 443,208 472,249

Property, plant and equipment, net 179,518 186,670

Intangible assets, net 374,735 411,229

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

Deferred tax assets 117,890 109,305

Other assets 11,861 7,960

TOTAL ASSETS $ 1,136,555 $ 1,187,413

LIABILITIES

Current liabilities:

Accounts payable $ 32,535 $ 13,493

Accrued expenses 14,962 5,805

Accrued payroll and payroll-related 16,304 19,924expenses

Rebates payable 38,175 46,175

Royalties payable 20,863 16,215

Restructuring liability 27 2,315

Income taxes payable - 2,198

Current operating lease liabilities 1,097 -

Short-term borrowings and current portion 88,189 66,845of long-term debt

Other current liabilities 2,713 3,652

Total current liabilities 214,865 176,622

Long-term debt, net 592,940 662,203

Long-term operating lease liabilities 9,844 -

Other liabilities 16,010 14,547

TOTAL LIABILITIES 833,659 853,372

STOCKHOLDERS' EQUITY

Common stock ($0.001 par value, 100,000,000shares authorized; 39,963,127 and38,969,518 shares issued; 38,798,787 and 40 3938,010,714 shares outstanding at June 30,2020 and June 30, 2019, respectively)

Additional paid-in capital 321,164 317,023

Retained earnings (1,291) 32,075

Accumulated other comprehensive loss (627) (615)

Treasury stock (1,164,340 and 958,804shares at June 30, 2020 and June 30, 2019, (16,390) (14,481)respectively)

Total stockholders' equity 302,896 334,041

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,136,555 $ 1,187,413

LANNETT COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except share and per share data)

Three months ended Twelve months ended

June 30, June 30,

2020 2019 2020 2019

Net sales $ 137,920 $ 133,841 $ 545,744 $ 655,407

Cost of sales 89,809 76,589 348,508 379,601

Amortization 8,519 7,910 32,016 32,196of intangibles

Gross profit 39,592 49,342 165,220 243,610

Operatingexpenses:

Research anddevelopment 6,691 9,436 29,978 38,807expenses

Selling,general and 18,591 22,214 79,467 87,648administrativeexpenses

Restructuring - 2,408 1,771 4,095expenses

Assetimpairment 18,841 5,882 34,448 375,381charges

Totaloperating 44,123 39,940 145,664 505,931expenses

Operating (4,531) 9,402 19,556 (262,321)income (loss)

Other income(loss):

Loss onextinguishment - (35) (2,145) (448)of debt

Investment 94 1,306 1,646 3,166income

Interest (14,682) (20,194) (66,845) (84,624)expense

Other (659) (609) (840) (2,018)

Total other (15,247) (19,532) (68,184) (83,924)loss

Loss before (19,778) (10,130) (48,628) (346,245)income tax

Income tax (10,077) (2,544) (15,262) (74,138)benefit

Net loss $ (9,701) $ (7,586) $ (33,366) $ (272,107)

Loss percommon share:

Basic $ (0.25) $ (0.20) $ (0.86) $ (7.20)

Diluted $ (0.25) $ (0.20) $ (0.86) $ (7.20)(1)

Weightedaverage commonsharesoutstanding:

Basic 38,752,080 37,932,509 38,592,618 37,779,812

Diluted 38,752,080 37,932,509 38,592,618 37,779,812(1)

(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 June 30, 2020

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

GAAP Reported $137,920 $ 89,809 $ 8,519 $ 39,592 29% $ 6,691 $ 18,591 $ 18,841 $ (4,531) $ (15,247) $ (19,778) $ (10,077) $ (9,701) $ (0.25)

Adjustments:

Amortization of - - (8,519) 8,519 - - - 8,519 - 8,519 - 8,519intangibles (a)

Cody API - 158 - (158) (66) (95) - 3 - 3 - 3business (b)

Depreciation oncapitalized - - - - - (1,058) - 1,058 - 1,058 - 1,058software costs(c)

Decommissioningof Philadelphia - (419) - 419 - - - 419 - 419 - 419sites (d)

Assetimpairment - - - - - - (18,841) 18,841 - 18,841 - 18,841charges (e)

Non-cash - - - - - - - - 3,335 3,335 - 3,335interest (f)

Other (g) - (508) - 508 (64) (1,817) - 2,389 - 2,389 - 2,389

Tax adjustments - - - - - - - - - - 11,436 (11,436)(h)

Non-GAAP $ 137,920 $ 89,040 $ - $ 48,880 35% $ 6,561 $ 15,621 $ $ 26,698 $ (11,912) $ 14,786 $ 1,359 $ 13,427 $ 0.31Adjusted -

(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

(d) To exclude the costs associated with the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites

To exclude asset impairment charges primarily related to the abandonment of(e) several pipeline products within the KUPI IPR&D and Silarx IPR&D asset portfolios

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

To exclude costs primarily related to separation costs related to the Company's(g) cost reduction plan, COVID-19 special recognition payments, as well as costs previously incurred as part of the Company's refinancing efforts

(h) 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 June 30, 2020 is(i) 38,752,080 for GAAP and 46,111,366 for 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 June 30, 2019

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

GAAP Reported $ 133,841 $ 76,589 $ 7,910 $ 49,342 37% $ 9,436 $ 22,214 $ 2,408 5,882 $ 9,402 $ (19,532) $ (10,130) $ (2,544) $ (7,586) $ (0.20)

Adjustments:

Amortization of - - (7,910) 7,910 - - - - 7,910 - 7,910 - 7,910intangibles (a)

Cody API business - (2,233) - 2,233 (760) (1,394) - 4,387 - 4,387 - 4,387(b)

Depreciation oncapitalized - - - - - (1,058) - - 1,058 - 1,058 - 1,058software costs (c)

Legal andfinancial advisory - - - - - (237) - - 237 - 237 - 237costs (d)

Decommissioning ofPhiladelphia sites - (89) - 89 (64) - - - 153 - 153 - 153(e)

Restructuring - - - - - - (2,408) - 2,408 - 2,408 - 2,408expenses (f)

Indemnificationasset write-off - - - - - (2,284) - - 2,284 - 2,284 - 2,284(g)

Asset impairment - - - - - - - (5,882) 5,882 - 5,882 - 5,882charges (h)

Non-cash interest - - - - - - - - - 4,201 4,201 - 4,201(i)

Loss onextinguishment of - - - - - - - - - 34 34 - 34debt (j)

Other (k) - (209) - 209 - (195) - - 404 (242) 162 - 162

Tax adjustments - - - - - - - - - - - 6,460 (6,460)(l)

Non-GAAP Adjusted $ 133,841 $ 74,058 $ $ 59,783 45% $ 8,612 $ 17,046 $ $ - $ 34,125 $ (15,539) $ 18,586 $ 3,916 $ 14,670 $ 0.37 - -

(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

(d) To exclude legal and financial advisory costs primarily related to exploring and evaluating debt and capital structure alternatives

(e) To exclude the costs associated with the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites

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

(g) To exclude the write-off of an indemnification asset related to the KUPI acquisition

To exclude asset impairment charges primarily associated with the Cody API(h) assets as well as obsolete equipment and computer software related to the consolidation of manufacturing functions

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

(j) To exclude the loss on extinguishment of debt related to repurchases of Term Loans

(k) To primarily exclude accrued separation costs related to the Company's Chief Financial Officer

(l) 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 June 30, 2019 is(m) 37,932,509 for GAAP and 39,345,258 for 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)

Twelve months ended June 30, 2020

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

GAAP Reported $ 545,744 $ 348,508 $ 32,016 $ 165,220 30% $ 29,978 $ 79,467 $ 1,771 $ 34,448 $ 19,556 $ (68,184) $ (48,628) $ (15,262) $ (33,366) $ (0.86)

Adjustments:

Amortization of - - (32,016) 32,016 - - - - 32,016 - 32,016 - 32,016intangibles (a)

Cody API - (2,752) - 2,752 (617) (528) - - 3,897 - 3,897 - 3,897business (b)

Depreciation oncapitalized - - - - - (4,233) - - 4,233 - 4,233 - 4,233software costs(c)

Decommissioningof Philadelphia - (1,903) - 1,903 - - - 1,903 - 1,903 - 1,903sites (d)

Brandedprescription - - - - - (2,957) - - 2,957 - 2,957 - 2,957drug fee (e)

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

Assetimpairment - - - - - - - (34,448) 34,448 - 34,448 - 34,448charges (g)

Non-cash - - - - - - - - - 14,336 14,336 - 14,336interest (h)

Loss onextinguishment - - - - - - - - - 2,145 2,145 - 2,145of debt (i)

Other (j) - (2,094) - 2,094 (94) (4,395) - - 6,583 21 6,604 - 6,604

Tax adjustments - - - - - - - - - - - 25,378 (25,378)(k)

Non-GAAP $ 545,744 $ 341,759 $ - $ 203,985 37% $ 29,267 $ 67,354 $ - $ - $ 107,364 $ (51,682) $ 55,682 $ 10,116 $ 45,566 $ 1.07Adjusted

(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

(d) To exclude the costs associated with the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites

(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

To exclude asset impairment charges primarily associated with an agreement to(g) distribute Methylphenidate AB and related to the abandonment of several pipeline products within the KUPI IPR&D and Silarx IPR&D asset portfolios

(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

To primarily exclude accrued separation costs related to the Company's former Chief Financial Officer and the Company's cost reduction plan, as well as(j) COVID-19 special recognition payments, legal settlements and costs previously incurred as part of the Company's refinancing efforts, 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 twelve months ended June 30, 2020 is(l) 38,592,618 for GAAP and 44,677,463 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)

Twelve months ended June 30, 2019

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

GAAP Reported $ 655,407 $ 379,601 $ 32,196 $ 243,610 37% $ 38,807 $ 87,648 $ 4,095 $ 375,381 $ (262,321) $ (83,924) $ (346,245) $ (74,138) $(272,107) $ (7.20)

Adjustments:

Depreciation offixed assets - (2,459) - 2,459 - - - - 2,459 - 2,459 - 2,459step-up (a)

Amortization of - - (32,196) 32,196 - - - - 32,196 - 32,196 - 32,196intangibles (b)

Cody API - (7,061) - 7,061 (2,397) (2,340) - - 11,798 - 11,798 - 11,798business (c)

Depreciation oncapitalized - - - - - (4,233) - - 4,233 - 4,233 - 4,233software costs(d)

Legal andfinancial - - - - - (3,626) - - 3,626 - 3,626 - 3,626advisory costs(e)

Decommissioningof Philadelphia - (4,114) - 4,114 (64) - - - 4,178 - 4,178 - 4,178sites (f)

Restructuring - - - - - - (4,095) - 4,095 - 4,095 - 4,095expenses (g)

Assetimpairment - - - - - - - (375,381) 375,381 - 375,381 - 375,381charges (h)

Indemnificationasset write-off - - - - - (3,094) - - 3,094 - 3,094 - 3,094(i)

Non-cash - - - - - - - - - 17,649 17,649 - 17,649interest (j)

Loss onextinguishment - - - - - - - - - 448 448 - 448of debt (k)

Other (l) - (1,960) - 1,960 (210) (3,173) - - 5,343 977 6,320 - 6,320

Tax adjustments - - - - - - - - - - - 101,526 (101,526)(m)

Non-GAAP $ 655,407 $ 364,007 $ - $ 291,400 44% $ 36,136 $ 71,182 $ - $ - $ 184,082 $ (64,850) $ 119,232 $ 27,388 $ 91,844 $ 2.35Adjusted

To exclude depreciation of a fair value step-up in property, plant and(a) equipment related to the acquisition of Kremers Urban Pharmaceuticals, Inc. ("KUPI")

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

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

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

To exclude legal and financial advisory costs primarily related to exploring(e) and evaluating debt and capital structure alternatives, including the December 2018 amendment to our Credit Agreement

(f) To exclude the costs associated with the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites

(g) To exclude expenses associated with the 2016 Restructuring Plan, the Cody Restructuring Plan as well as the Cody API Restructuring Plan

(h) To exclude asset impairment charges primarily related to goodwill and other long-lived assets

(i) To exclude the write-off of indemnification assets related to the KUPI acquisition

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

(k) To exclude the loss on extinguishment of debt related to repurchases of Term Loans

To primarily exclude separation costs related to the Company's cost reduction(l) plan, a special recognition incentive payment as well as a litigation settlement

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

The weighted average share number for the twelve months ended June 30, 2019 is(n) 37,779,812 for GAAP and 39,135,719 for the non-GAAP earnings (loss) per share calculations

LANNETT COMPANY, INC.

RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (UNAUDITED)

($ in thousands)

Three months ended

June 30, 2020

Net loss $ (9,701)

Interest expense 14,682

Depreciation and amortization 14,923

Income tax benefit (10,077)

EBITDA 9,827

Share-based compensation 1,880

Inventory write-down 1,855

Asset impairment charges 18,841

Investment income (94)

Other non-operating loss 659

Restructuring payments (142)

Decommissioning of Philadelphia sites (a) 419

Other(b) 1,966

Adjusted EBITDA (Non-GAAP) $ 35,211

(a) To exclude the costs associated with the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites

To exclude costs primarily related to separation costs related to the(b) Company's cost reduction plan, COVID-19 special recognition payments, costs previously incurred as part of the Company's refinancing efforts and 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 $520 - $545 - $520 - $545

Gross margin percentage approx. 23.0% to 25.0% 6% (a) approx. 29% to 31%

R&D expense $29 - $32 - $29 - $32

SG&A expense $59 - $62 ($4) (b) $55 - $58

Restructuring expense $4 - $5 ($4 - $5) (c) -

Interest and other $53 - $54 ($12) (d) $41 - $42

Effective tax rate approx. 34% to 35% (13%) (e) approx. 21% to 22%

Adjusted EBITDA N/A N/A $100 - $110

Capital expenditures $15 - $20 - $15 - $20

(a) The adjustment primarily reflects amortization of purchased intangibleassets related to the acquisition of Kremers Urban Pharmaceuticals, Inc.("KUPI")

(b) The adjustment excludes depreciation on previously capitalized softwareintegration costs associated with the KUPI acquisition

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

(d) The adjustment primarily reflects non-cash interest expense associated withdebt issuance costs

(e) The adjustment reflects the impact of the CARES Act, which allows theCompany to carryback the expected taxable loss into a prior fiscal year, wherethe 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 $ (16.5) $ (11.0)

Interest expense 53.0 54.0

Depreciation and 55.0 55.0amortization

Income taxes (8.5) (6.0)

EBITDA 83.0 92.0

Share-based compensation 9.0 9.0

Inventory write-down 8.0 9.0

Restructuring expenses 4.0 5.0

Restructuring payments (4.0) (5.0)

Adjusted EBITDA (Non-GAAP) $ 100.0 $ 110.0

LANNETT COMPANY, INC.

NET SALES BY MEDICAL INDICATION

Three months ended Twelve months ended

($ in thousands) June 30, June 30,

Medical 2020 2019 2020 2019Indication

Analgesic $ 1,874 $ 2,929 $ 8,680 $ 8,251

Anti-Psychosis 26,346 27,912 104,934 73,453

Cardiovascular 21,251 31,234 88,576 101,467

Central Nervous 20,102 21,454 77,256 59,019System

Endocrinology - (43) - 197,522

Gastrointestinal 17,457 16,005 73,477 63,043

Infectious 21,515 3,692 73,237 16,950Disease

Migraine 11,359 9,458 44,266 41,592

Respiratory/Allergy/Cough/ 2,829 2,958 11,576 12,479Cold

Urinary 1,408 1,522 4,225 6,755

Other 7,166 13,859 35,013 51,517

ContractManufacturing 6,613 2,861 24,504 23,359revenue

Net Sales $ 137,920 $ 133,841 $ 545,744 $ 655,407

View original content to download multimedia: http://www.prnewswire.com/news-releases/lannett-announces-fiscal-2020-fourth-quarter-full-year-financial-results-301118666.html

SOURCE Lannett Company, Inc.