Amneal Pharmaceuticals(AMRX) - 2023 Q4 - Annual Results

Financial Highlights and Business Overview Fourth Quarter 2023 Performance In Q4 2023, Amneal's net revenue saw a marginal 1% increase to $617 million, propelled by a 38% growth in AvKARE and a 2% rise in Specialty, which was partially offset by a 9% decline in the Generics segment, leading to increased GAAP Net Loss and declines in Adjusted EBITDA and Adjusted Diluted EPS Q4 2023 vs Q4 2022 Financial Metrics | Metric | Q4 2023 | Q4 2022 | Change | | :--- | :--- | :--- | :--- | | Net Revenue | $617 million | $610 million | +1% | | GAAP Net Loss | $99 million | $4 million | +$95M | | Diluted Loss per Share | $0.40 | $0.03 | +$0.37 | | Adjusted EBITDA | $142 million | $154 million | -8% | | Adjusted Diluted EPS | $0.14 | $0.23 | -39% | - Revenue growth was driven by a 38% increase in AvKARE and a 2% increase in Specialty, but was offset by a 9% decline in Generics revenue due to the timing of orders[3] - The substantial increase in net loss was primarily attributed to non-cash intangible asset impairment charges and costs associated with the company's term loan refinancing[3] Full Year 2023 Performance For the full year 2023, Amneal achieved an 8% increase in net revenue, reaching $2.39 billion, with growth recorded across all three business segments, while GAAP Net Loss significantly improved and Adjusted EBITDA grew, despite a slight decrease in Adjusted Diluted EPS due to higher interest expenses Full Year 2023 vs Full Year 2022 Financial Metrics | Metric | FY 2023 | FY 2022 | Change | | :--- | :--- | :--- | :--- | | Net Revenue | $2.39 billion | $2.21 billion | +8% | | GAAP Net Loss | $84 million | $130 million | -$46M | | Diluted Loss per Share | $0.48 | $0.86 | -$0.38 | | Adjusted EBITDA | $558 million | $514 million | +9% | | Adjusted Diluted EPS | $0.64 | $0.68 | -6% | - Full-year revenue growth was broad-based, with AvKARE growing 31%, Generics 3%, and Specialty 4%[3] - The decrease in Adjusted Diluted EPS was a result of higher interest expense offsetting the growth in Adjusted EBITDA[3] CEO Commentary The Co-CEOs described 2023 as a very successful year marked by strong execution and growth, expressing confidence for 2024 due to significant momentum and key catalysts such as complex high-value products, biosimilars, and specialty drugs, positioning Amneal for sustainable, profitable growth - The company is entering 2024 with substantial momentum driven by key catalysts, including complex high-value products, biosimilars, and specialty drugs[2] - Amneal's mission to provide high-quality, affordable, essential medicines is aligned with industry dynamics, positioning the business for sustainable growth[2] 2024 Financial Guidance 2024 Financial Guidance Amneal has issued its financial guidance for 2024, projecting net revenue to be between $2.55 billion and $2.65 billion, Adjusted EBITDA in the range of $580 million to $620 million, Adjusted Diluted EPS between $0.53 and $0.63, and operating cash flow between $260 million and $300 million 2024 Financial Guidance vs. 2023 Actuals | Metric | Full Year 2024 Guidance | Full Year 2023 Actuals | | :--- | :--- | :--- | | Net revenue | $2.55 billion - $2.65 billion | $2.39 billion | | Adjusted EBITDA | $580 million - $620 million | $558 million | | Adjusted diluted EPS | $0.53 - $0.63 | $0.64 | | Operating cash flow | $260 million - $300 million | $346 million | | Capital expenditures | $60 million - $70 million | $43 million | - The 2024 guidance is based on management's current expectations regarding prescription trends, pricing levels, the timing of future product launches, and restructuring activities[4] Consolidated Financial Statements Consolidated Statements of Operations For the full year ended December 31, 2023, Amneal reported increased net revenue and gross profit, achieving an operating income compared to a prior-year loss, but still recorded a net loss primarily due to significant interest expense and a loss on refinancing Full Year Consolidated Statement of Operations Highlights (in thousands) | Line Item | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | Net revenue | $2,393,607 | $2,212,304 | | Gross profit | $820,565 | $784,708 | | Operating income (loss) | $204,374 | $(94,928) | | Interest expense, net | $(210,629) | $(158,377) | | Net loss | $(48,722) | $(254,789) | | Net loss attributable to Amneal | $(83,993) | $(129,986) | Condensed Consolidated Balance Sheets As of December 31, 2023, Amneal's total assets decreased to $3.47 billion, mainly due to lower intangible assets, while total liabilities also reduced to $3.41 billion driven by decreased long-term debt, and cash and cash equivalents significantly increased to $91.5 million Balance Sheet Highlights (in thousands) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $91,542 | $25,976 | | Total current assets | $1,377,863 | $1,411,818 | | Intangible assets, net | $890,423 | $1,096,093 | | Total assets | $3,472,569 | $3,799,341 | | Long-term debt, net | $2,386,004 | $2,591,981 | | Total liabilities | $3,411,265 | $3,590,413 | | Total stockholders' equity | $20,011 | $183,979 | Consolidated Statements of Cash Flows In 2023, Amneal generated $345.6 million in net cash from operating activities, a significant improvement from the prior year, with cash used in investing and financing activities, resulting in a net increase in cash and equivalents to $99.1 million by year-end Full Year Cash Flow Summary (in thousands) | Cash Flow Activity | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $345,577 | $65,100 | | Net cash used in investing activities | $(69,189) | $(174,309) | | Net cash used in financing activities | $(212,573) | $(106,620) | | Net increase (decrease) in cash | $63,880 | $(221,512) | | Cash, cash equivalents, and restricted cash - end of period | $99,107 | $35,227 | Reconciliation of GAAP to Non-GAAP Financial Measures Reconciliation of Net Loss to EBITDA and Adjusted EBITDA For the full year 2023, Amneal reconciled its GAAP Net Loss of $48.7 million to a non-GAAP Adjusted EBITDA of $558.2 million, primarily by adding back non-cash and non-recurring items such as depreciation, amortization, interest expense, asset impairment charges, and refinancing losses FY 2023 Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Item | Amount | | :--- | :--- | | Net loss | $(48,722) | | Interest expense, net | $210,629 | | Provision for income taxes | $8,452 | | Depreciation and amortization | $229,400 | | EBITDA (Non-GAAP) | $399,759 | | Key Adjustments (e.g., Stock comp, Legal, Impairments) | $158,455 | | Adjusted EBITDA (Non-GAAP) | $558,214 | Reconciliation of Net Loss to Adjusted Net Income and Adjusted Diluted EPS For the full year 2023, the company's GAAP Net Loss of $48.7 million was adjusted to a non-GAAP Adjusted Net Income of $197.6 million, resulting in an Adjusted Diluted EPS of $0.64, driven by significant positive adjustments for amortization, asset impairment charges, and loss on refinancing, partially offset by a non-GAAP provision for income taxes FY 2023 Reconciliation of Net Loss to Adjusted Net Income (in thousands) | Item | Amount | | :--- | :--- | | Net loss | $(48,722) | | Amortization | $157,219 | | Asset impairment charges | $70,015 | | Loss on refinancing | $40,805 | | Provision for income taxes (Non-GAAP) | $(60,014) | | Net income attributable to non-controlling interests | $(29,873) | | Other Adjustments | $68,125 | | Adjusted net income (Non-GAAP) | $197,555 | - The Adjusted Diluted EPS of $0.64 was calculated using a non-GAAP weighted average of 310,234 thousand diluted shares outstanding[23] Segment Performance Analysis Generics Segment The Generics segment's full-year 2023 net revenue increased modestly to $1.47 billion, with a slight decrease in non-GAAP gross margin but an improvement in non-GAAP operating income, though Q4 2023 revenue declined year-over-year Generics Segment Full Year Performance | Metric | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Net Revenue | $1,471.4M | $1,432.1M | | Non-GAAP Gross Margin | 41.7% | 42.3% | | Non-GAAP Operating Income | $379.1M | $343.3M | - In Q4 2023, the Generics segment experienced a year-over-year revenue decline, reporting $363.0 million compared to $399.2 million in Q4 2022[30] Specialty Segment The Specialty segment reported increased full-year 2023 net revenue of $390.5 million, maintaining a high non-GAAP gross margin and improving non-GAAP operating income, despite a slight decrease in Q4 2023 operating income due to higher costs relative to revenue Specialty Segment Full Year Performance | Metric | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Net Revenue | $390.5M | $374.1M | | Non-GAAP Gross Margin | 80.4% | 81.6% | | Non-GAAP Operating Income | $196.5M | $189.3M | - For Q4 2023, non-GAAP operating income was $53.2 million, down from $59.6 million in Q4 2022, primarily due to higher cost of goods sold and operating expenses relative to revenue[37] AvKARE Segment The AvKARE segment demonstrated robust growth in 2023, with full-year net revenue surging to $531.7 million and gross margin expanding, leading to a more than doubling of non-GAAP operating income, a trend that continued into Q4 2023 AvKARE Segment Full Year Performance | Metric | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Net Revenue | $531.7M | $406.1M | | Gross Margin | 16.3% | 14.0% | | Non-GAAP Operating Income | $46.9M | $22.6M | - The growth momentum continued in Q4 2023, with revenue increasing to $149.5 million from $108.0 million in Q4 2022[44]