Amneal Pharmaceuticals(AMRX) - 2025 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents Amneal Pharmaceuticals' unaudited consolidated financial statements for the three months ended March 31, 2025, including statements of operations, balance sheets, and cash flows Consolidated Statements of Operations The company reported net revenue of $695.4 million, a 5.5% increase, and a significant turnaround to $100.3 million operating income from a prior-year loss Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net revenue | $695,420 | $659,191 | | Gross profit | $255,891 | $238,060 | | Operating income (loss) | $100,347 | $(10,746) | | Net income (loss) attributable to Amneal | $12,195 | $(91,643) | | Diluted EPS | $0.04 | $(0.30) | - The significant improvement in operating income was largely driven by the absence of a $94.4 million charge related to legal matters that was recorded in the first quarter of 2024[15] Consolidated Balance Sheets Total assets decreased to $3.37 billion as of March 31, 2025, with cash and equivalents at $59.2 million, while total liabilities also saw a reduction Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $59,187 | $110,552 | | Total current assets | $1,510,450 | $1,587,806 | | Total assets | $3,365,249 | $3,501,445 | | Total current liabilities | $1,075,824 | $1,129,771 | | Long-term debt, net | $2,153,979 | $2,161,790 | | Total liabilities | $3,424,638 | $3,545,983 | | Total stockholders' deficiency | $(132,000) | $(109,512) | Consolidated Statements of Cash Flows Net cash provided by operating activities improved to $7.4 million for Q1 2025, compared to a $4.4 million use in the prior year, resulting in a $50.0 million net decrease in cash Consolidated Cash Flow Highlights (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $7,408 | $(4,410) | | Net cash used in investing activities | $(17,798) | $(19,760) | | Net cash used in financing activities | $(39,166) | $(23,155) | | Net decrease in cash, cash equivalents, and restricted cash | $(50,026) | $(47,490) | Notes to Consolidated Financial Statements This section provides detailed disclosures on accounting policies, revenue recognition, legal contingencies, and debt, including updates on the opioid litigation settlement - Three customers (A, B, and C) accounted for 24%, 15%, and 21% of total net revenue, respectively, for the three months ended March 31, 2025, indicating significant customer concentration[38] - In late April 2024, the company reached a nationwide settlement in principle for opioid cases, agreeing to pay $92.5 million in cash over ten years and provide $180.0 million in naloxone nasal spray, with a $94.4 million charge recorded in Q1 2024 related to this[75][85] - In January 2025, the company paid the entire remaining principal balance of $192.0 million on its Term Loan Due 2025 using borrowings from its revolving credit facility and cash on hand[61] - Subsequent to the quarter end, the company increased its Rondo Revolving Credit Facility borrowing capacity from $70 million to $125 million and acquired land in India for $11.4 million from related parties to build new manufacturing facilities[112][114] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's Q1 2025 financial performance, highlighting a 5.5% increase in consolidated net revenue and a significant turnaround in operating income Consolidated Results Summary (in thousands) | Metric | Q1 2025 | Q1 2024 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $695,420 | $659,191 | $36,229 | 5.5% | | Gross profit | $255,891 | $238,060 | $17,831 | 7.5% | | Operating income (loss) | $100,347 | $(10,746) | $111,093 | nm | | Net income (loss) | $24,618 | $(81,678) | $106,296 | nm | - Net revenue growth was driven by new product launches in the Affordable Medicines segment, growth in the government label channel for AvKARE, and increased sales of CREXONT® and UNITHROID® in the Specialty segment[130] - The company believes its cash from operations, available cash, and borrowing capacity are sufficient to fund operations, meet obligations, and support acquisitions over the next 12 months[154][155] Results of Operations Consolidated net revenue increased by 5.5% to $695.4 million, with operating income significantly improving due to the non-recurrence of a $94.4 million legal charge - Affordable Medicines revenue grew 6.0% to $414.7 million, driven by new products contributing $40.8 million in year-over-year growth[137] - Specialty revenue increased 2.9% to $108.3 million, led by sales of CREXONT® and UNITHROID®, though partially offset by a decline in RYTARY® sales and prior-year out-licensing revenue[145] - AvKARE revenue rose 6.0% to $172.4 million, fueled by growth in the government label channel from new product introductions[150] Liquidity and Capital Resources The company's liquidity is supported by cash from operations and debt financing, with $305.2 million available under its main revolving credit facility and estimated $120.0 million in 2025 capital expenditures - As of March 31, 2025, the company had access to $305.2 million of available capacity under the Amended New Revolving Credit Facility and $28.0 million under the Amended Rondo Revolving Credit Facility[154] - The company estimates approximately $120.0 million in capital expenditures for 2025, primarily for manufacturing equipment, IT, and facilities[156] - The improvement in operating cash flow was primarily driven by the non-recurrence of a $52.4 million payment for the Opana ER® antitrust litigation settlement made in Q1 2024, along with better receivables collections[166] Quantitative and Qualitative Disclosures About Market Risk There have been no material changes in the company's assessment of market risk compared to its 2024 Annual Report on Form 10-K - There has not been any material change in the company's assessment of market risk as set forth in its 2024 Annual Report on Form 10-K[173] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting - Based on an evaluation as of the end of the period, the Co-Chief Executive Officers and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[175] - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[176] PART II - OTHER INFORMATION Legal Proceedings Information regarding legal proceedings is incorporated by reference from Note 16, Commitments and Contingencies, of the financial statements - Information regarding legal proceedings is located in Note 16. Commitments and Contingencies[179] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - There have been no material changes to the risk factors previously disclosed in the 2024 Annual Report on Form 10-K[180] Exhibits This section lists exhibits filed with the Form 10-Q, including an employment agreement, Sarbanes-Oxley Act certifications, and iXBRL data files - Exhibits filed include an employment agreement for Jason Daly, Sarbanes-Oxley Act certifications, and iXBRL formatted financial statements[186]