| DEBT
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Estimated Fair Value | |||
Purchase price per the APAs | $ | 575,800 | |
Upfront payment pursuant to Termination Agreement | 10,000 | ||
Total cash consideration | 585,800 | ||
Fair value of contingent consideration pursuant to Termination Agreement (1) | 30,100 | ||
Total consideration transferred | $ | 615,900 |
Estimated Fair Value | |||
Intangible assets | $ | 613,032 | |
Inventory - raw materials | 2,868 | ||
Total assets acquired | $ | 615,900 |
Estimated Fair Value | Weighted-Average Estimated Useful Life | ||||
Marketed product rights | $ | 461,152 | 19 years | ||
Acquired IPR&D product rights (1) | 151,880 | n/a | |||
Total intangible assets | $ | 613,032 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||
Total revenues | $ | 242,647 | $ | 262,381 | $ | 729,171 | $ | 702,224 | ||||||
Net (loss) income | (177,379 | ) | 43,600 | (167,505 | ) | 50,535 |
• | Adjustments to selling, general and administrative expense, including the following non-recurring transaction costs which have been included in the comparable nine months ended September 30, 2015 as if the transaction closed on January 1, 2015: |
(i) | For the three months ended September 30, 2016, the elimination of $1.7 million of non-recurring transaction costs directly related to the transaction; and |
(ii) | For the nine months ended September 30, 2016, the elimination of $2.9 million of non-recurring transaction costs directly related to the transaction. |
Accounts receivable (1) | $ | 56,851 | |
Inventory | 31,259 | ||
Income tax receivable and other prepaid expenses | 2,407 | ||
Property, plant and equipment | 27,540 | ||
Intangible assets | 632,600 | ||
Intangible assets held for sale | 4,000 | ||
Goodwill | 180,808 | ||
Deferred income taxes | 37,041 | ||
Other non-current assets | 3,844 | ||
Total assets acquired | 976,350 | ||
Current liabilities | 67,706 | ||
Deferred tax liabilities | 210,005 | ||
Other non-current liabilities | 7,291 | ||
Total liabilities assumed | 285,002 | ||
Cash paid, net of cash acquired (2) | $ | 691,348 |
(1) | The accounts receivable acquired in the Tower Acquisition had a fair value of $56.9 million, net of an allowance for doubtful accounts of $9.0 million, which represented the Company’s best estimate on March 9, 2015 (the closing date of the transaction) of the contractual cash flows not expected to be collected by the acquired companies. |
(2) | The initial net purchase price of $697.2 million was subject to post-closing working capital adjustments, which resulted in the return of $5.9 million to the Company during the third quarter of 2015. |
Estimated Fair Value | Weighted-Average Estimated Useful Life (years) | ||||
Marketed product rights | $ | 381,100 | 13 | ||
Royalty rights | 80,800 | 12 | |||
Acquired IPR&D product rights | 170,700 | n/a | |||
Total intangible assets | $ | 632,600 |
Nine Months Ended September 30, 2015 | ||||
Total revenues | $ | 610,814 | ||
Net income | $ | 40,007 |
• | Adjustments to amortization expense related to identifiable intangible assets acquired; |
• | Adjustments to depreciation expense related to property, plant and equipment acquired; |
• | Adjustments to interest expense to reflect the long-term debt held by Tower and Lineage paid out and eliminated at the closing and the Company's Senior Secured Credit Facilities with Barclays Bank PLC (described in "Note 13. Debt" below); |
• | Adjustments to cost of revenues related to the fair value adjustments in inventory sold, including elimination of $6.1 million for the nine months ended September 30, 2015; |
• | Adjustments to selling, general and administrative expense related to severance and retention costs of $3.4 million incurred as part of the transaction. These costs were eliminated in the pro forma results for the nine months ended September 30, 2015; |
• | Adjustments to selling, general and administrative expense related to transaction costs directly attributable to the transaction include the elimination of $12.2 million of charges in the pro forma results for the nine month period ended September 30, 2015; and |
• | Adjustments to reflect the elimination of $2.3 million in commitment fees related to the Company's $435.0 million term loan with Barclays Bank PLC (described in "Note 13. Debt" below) that were incurred during the nine months ended September 30, 2015. |
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• | the delivered item has value to the customer on a stand-alone basis; and |
• | if the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item is considered probable and substantially in the control of the vendor. |
• | the milestone is commensurate with either (1) the performance required to achieve the milestone or (2) the enhancement of the value of the delivered items resulting from the performance required to achieve the milestone; |
• | the milestone relates solely to past performance; and |
• | the milestone payment is reasonable relative to all of the deliverables and payment terms within the agreement. |
• | Chargebacks |
• | Rebates |
• | Distribution Service Fees |
• | Returns |
• | Shelf-Stock Adjustments |
• | Cash Discounts |
• | Medicaid and Other U.S. Government Pricing Programs |
• | Rx Partner and OTC Partner |
• | Research Partner |
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• | Level 1 - Inputs are quoted prices for identical instruments in active markets. |
• | Level 2 - Inputs are quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; or model-derived valuations whose inputs are observable or whose significant value drivers are observable. |
• | Level 3 - Inputs are unobservable and reflect the Company's own assumptions, based on the best information available, including the Company's own data. |
As of September 30, 2016 | |||||||||||||||||||
Fair Value Measurement Based on | |||||||||||||||||||
Carrying Amount | Fair Value | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||
Assets | |||||||||||||||||||
Deferred Compensation Plan assets(1) | $ | 32,050 | $ | 32,050 | $ | — | $ | 32,050 | $ | — | |||||||||
Liabilities | |||||||||||||||||||
Term Loan Facility due August 2021, current portion (2) | $ | 20,000 | $ | 20,000 | $ | — | $ | 20,000 | $ | — | |||||||||
Term Loan Facility due August 2021, long-term portion (2) | $ | 380,000 | $ | 380,000 | $ | — | $ | 380,000 | $ | — | |||||||||
2% Convertible senior notes due June 2022 (3) | $ | 600,000 | $ | 532,692 | $ | 532,692 | $ | — | $ | — | |||||||||
Deferred Compensation Plan liabilities (1) | $ | 27,860 | $ | 27,860 | $ | — | $ | 27,860 | $ | — | |||||||||
Contingent consideration (4) | $ | 30,100 | $ | 30,100 | $ | — | $ | — | $ | 30,100 |
As of December 31, 2015 | |||||||||||||||||||
Fair Value Measurement Based on | |||||||||||||||||||
Carrying Amount | Fair Value | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||
Assets | |||||||||||||||||||
Deferred Compensation Plan assets(1) | $ | 30,726 | $ | 30,726 | $ | — | $ | 30,726 | $ | — | |||||||||
Liabilities | |||||||||||||||||||
2% Convertible senior notes due June 2022 (3) | $ | 600,000 | $ | 602,250 | $ | 602,250 | $ | — | $ | — | |||||||||
Deferred Compensation Plan liabilities (1) | $ | 25,581 | $ | 25,581 | $ | — | $ | 25,581 | $ | — |
(1) | The Deferred Compensation Plan liabilities are non-current liabilities recorded at the value of the amount owed to the plan participants, with changes in value recognized as compensation expense in the Company’s consolidated statements of operations. The calculation of the Deferred Compensation Plan obligation is derived from observable market data by reference to hypothetical investments selected by the participants and is included in the line item captioned “Other non-current liabilities” on the Company’s consolidated balance sheets. The Company invests participant contributions in corporate-owned life insurance (“COLI”) policies, for which the cash surrender value is included in the line item captioned “Other non-current assets” on the Company’s consolidated balance sheets. |
(2) | The difference between the amount shown as the carrying value in the above tables and the amount shown on the Company’s consolidated balance sheets at September 30, 2016 and December 31, 2015 represents the unaccreted discount related to deferred debt issuance costs. |
(3) | The difference between the amount shown as the carrying value in the above tables and the amount shown on the Company’s consolidated balance sheets at September 30, 2016 and December 31, 2015 represents the unaccreted discounts related to deferred debt issuance costs and bifurcation of the conversion feature of the notes. |
(4) | The contingent consideration liability is a non-current liability representing future consideration potentially payable to Teva upon the achievement of specified commercialization events related to methylphenidate hydrochloride in accordance with the Termination Agreement related to the Teva Transaction as described in "Note 2. Business Acquisitions". A discounted cash flow valuation model was used to value the contingent consideration as of September 30, 2016. The valuation is based on significant unobservable inputs, including the probability and timing of successful product launch and the expected number of competitors at the time of launch and the launch anniversary date. The Company conducts a quarterly review of the underlying inputs and assumptions and significant changes in unobservable inputs could result in material changes to the contingent consideration liability. Changes in the value of the contingent consideration liability are included in "Other income (expense)" on the Company's consolidated statements of operations. A 5% increase or decrease in the probability of successful product launch would cause the fair value of the contingent consideration to both decrease and increase by $1.6 million, respectively. An increase or decrease in the number of competitors at the date of the product launch or the first anniversary would cause the fair value of the contingent consideration to decrease by $13.0 million and increase by $5.0 million, respectively. The maximum aggregate amount in contingent consideration payments the Company could be expected to make to Teva in accordance with the Termination Agreement related to methylphenidate hydrochloride is $40.0 million. |
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September 30, 2016 | December 31, 2015 | ||||||
Gross accounts receivable (1) | $ | 755,859 | $ | 738,730 | |||
Less: Rebate reserve | (295,489 | ) | (265,229 | ) | |||
Less: Chargeback reserve | (127,251 | ) | (102,630 | ) | |||
Less: Distribution services reserve | (16,529 | ) | (12,576 | ) | |||
Less: Discount reserve | (15,743 | ) | (18,657 | ) | |||
Less: Uncollectible accounts reserve (2) | (61,257 | ) | (15,187 | ) | |||
Accounts receivable, net | $ | 239,590 | $ | 324,451 |
Rebate reserve | Nine Months Ended September 30, 2016 | Year Ended December 31, 2015 | |||||
Beginning balance | $ | 265,229 | $ | 88,812 | |||
Acquired balances | — | 75,447 | |||||
Provision recorded during the period for Impax Generics rebates | 526,913 | 571,642 | |||||
Credits issued during the period for Impax Generics rebates | (496,653 | ) | (470,672 | ) | |||
Ending balance | $ | 295,489 | $ | 265,229 |
Chargeback reserve | Nine Months Ended September 30, 2016 | Year Ended December 31, 2015 | |||||
Beginning balance | $ | 102,630 | $ | 43,125 | |||
Acquired balances | — | 24,532 | |||||
Provision recorded during the period | 690,275 | 833,157 | |||||
Credits issued during the period | (665,654 | ) | (798,184 | ) | |||
Ending balance | $ | 127,251 | $ | 102,630 |
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September 30, 2016 | December 31, 2015 | ||||||
Raw materials | $ | 51,806 | $ | 52,366 | |||
Work in-process | 5,959 | 4,417 | |||||
Finished goods | 121,087 | 82,311 | |||||
Total inventory | 178,852 | 139,094 | |||||
Less: Non-current inventory | 11,298 | 13,512 | |||||
Total inventory-current | $ | 167,554 | $ | 125,582 |
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September 30, 2016 | December 31, 2015 | ||||||
Land | $ | 5,603 | $ | 5,773 | |||
Buildings and improvements | 173,637 | 165,322 | |||||
Equipment | 143,914 | 135,998 | |||||
Office furniture and equipment | 15,018 | 14,548 | |||||
Construction-in-progress | 41,641 | 25,659 | |||||
Property, plant and equipment, gross | 379,813 | 347,300 | |||||
Less: Accumulated depreciation | (152,225 | ) | (133,144 | ) | |||
Property, plant and equipment, net | $ | 227,588 | $ | 214,156 |
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September 30, 2016 | Gross Carrying Value | Accumulated Amortization | Intangible Assets, Net | ||||||||
Amortized intangible assets: | |||||||||||
Marketed product rights | $ | 760,981 | $ | (122,359 | ) | $ | 638,622 | ||||
Royalties | 339 | (339 | ) | — | |||||||
761,320 | (122,698 | ) | 638,622 | ||||||||
Non-amortized intangible assets: | |||||||||||
Acquired IPR&D product rights | 244,803 | — | 244,803 | ||||||||
Acquired future royalty rights | 7,800 | — | 7,800 | ||||||||
252,603 | — | 252,603 | |||||||||
Total intangible assets | $ | 1,013,923 | $ | (122,698 | ) | $ | 891,225 |
December 31, 2015 | Gross Carrying Value | Accumulated Amortization | Intangible Assets, Net | ||||||||
Amortized intangible assets: | |||||||||||
Marketed product rights | $ | 458,675 | $ | (82,906 | ) | $ | 375,769 | ||||
Royalties | 2,200 | (189 | ) | 2,011 | |||||||
460,875 | (83,095 | ) | 377,780 | ||||||||
Non-amortized intangible assets: | |||||||||||
Acquired IPR&D product rights | 145,640 | — | 145,640 | ||||||||
Acquired future royalty rights | 78,600 | — | 78,600 | ||||||||
224,240 | — | 224,240 | |||||||||
Total intangible assets | $ | 685,115 | $ | (83,095 | ) | $ | 602,020 |
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September 30, 2016 | December 31, 2015 | ||||||
Payroll-related expenses | $ | 29,761 | $ | 37,419 | |||
Product returns | 70,282 | 48,950 | |||||
Accrued shelf stock | 9,614 | 6,619 | |||||
Government rebates (1) | 79,775 | 91,717 | |||||
Legal and professional fees | 14,633 | 5,929 | |||||
Income taxes payable | — | 830 | |||||
Physician detailing sales force fees | — | 1,132 | |||||
Interest payable | 3,500 | 500 | |||||
Estimated Teva and Allergan chargebacks and rebates (2) | 17,627 | — | |||||
Other | 9,989 | 11,615 | |||||
Total accrued expenses | $ | 235,181 | $ | 204,711 |
Returns Reserve | Nine Months Ended September 30, 2016 | Year Ended December 31, 2015 | |||||
Beginning balance | $ | 48,950 | $ | 27,174 | |||
Acquired balances | — | 11,364 | |||||
Provision related to sales recorded in the period | 41,662 | 43,967 | |||||
Credits issued during the period | (20,330 | ) | (33,555 | ) | |||
Ending balance | $ | 70,282 | $ | 48,950 |
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(i) | If during any calendar quarter commencing after the quarter ending September 30, 2015 (and only during such calendar quarter) the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than 130% of the conversion price on each applicable trading day; or |
(ii) | If during the five business day period after any 10 consecutive trading day period (the “measurement period”) in which the trading price per $1,000 of principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last report sale price of the Company’s common stock and the conversion rate on each such trading day; or |
(iii) | Upon the occurrence of corporate events specified in the Indenture. |
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Shares issued | 74,174 | |
Stock options outstanding(1) | 2,470 | |
Conversion of Notes payable (2) | 9,471 | |
Warrants outstanding (see below) | 9,471 | |
Total shares of common stock issued and reserved for issuance | 95,586 |
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Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||
Basic (Loss) Earnings Per Common Share: | |||||||||||||||||||
Net (loss) income | $ | (179,337 | ) | $ | 35,755 | $ | (192,446 | ) | $ | 27,570 | |||||||||
Weighted-average common shares outstanding | 71,331 | 69,820 | 71,033 | 69,379 | |||||||||||||||
Basic (loss) earnings per share | $ | (2.51 | ) | $ | 0.51 | $ | (2.71 | ) | $ | 0.40 | |||||||||
Diluted (Loss) Earnings Per Common Share: | |||||||||||||||||||
Net (loss) income | $ | (179,337 | ) | $ | 35,755 | $ | (192,446 | ) | $ | 27,570 | |||||||||
Add-back of interest expense on outstanding convertible notes payable, net of tax | — | (1) | — | (2) | — | (1) | — | (2) | |||||||||||
Adjusted net (loss) income | $ | (179,337 | ) | $ | 35,755 | $ | (192,446 | ) | $ | 27,570 | |||||||||
Weighted-average common shares outstanding | 71,331 | 69,820 | 71,033 | 69,379 | |||||||||||||||
Weighted-average incremental shares related to assumed exercise of warrants and stock options, vesting of non-vested shares and ESPP share issuance | — | (3) | 2,958 | (4) | — | (3) | 3,170 | (4) | |||||||||||
Weighted-average incremental shares assuming conversion of outstanding notes payable | — | (1) | — | (2) | — | (1) | — | (2) | |||||||||||
Diluted weighted-average common shares outstanding | 71,331 | (3) | 72,778 | (5) | 71,033 | (3) | 72,549 | (5) | |||||||||||
Diluted net (loss) income per share | $ | (2.51 | ) | $ | 0.49 | $ | (2.71 | ) | $ | 0.38 |
(1) | For the three and nine month periods ended September 30, 2016, the Company incurred a net loss, which cannot be diluted, so basic and diluted loss per common share were the same. Accordingly, there were no numerator or denominator adjustments related to the Company's outstanding Notes. |
(2) | The add-back of interest expense incurred on the Company’s outstanding Notes, net of tax, to the numerator and the weighted-average incremental shares assuming conversion of the outstanding Notes to the denominator were excluded from the calculation of diluted EPS for the period ended September 30, 2015 because the Company was required to settle the conversion of the Notes in cash. See “Note 13. Debt” and “Note 14. Stockholders’ Equity” for additional information. |
(3) | For the three and nine month periods ended September 30, 2016, the Company incurred a net loss, which cannot be diluted, so basic and diluted loss per common share were the same. As of September 30, 2016, shares issuable but not included in the Company's calculation of diluted EPS, which could potentially dilute future earnings, included 9.47 million warrants outstanding, 9.47 million shares for conversion of outstanding Notes payable, 2.47 million stock options outstanding and 2.60 million non-vested restricted stock awards. |
(4) | The 9.47 million warrants outstanding have been excluded from the denominator of the diluted EPS calculation under the treasury stock method as of September 30, 2015 because the weighted-average exercise price of the warrants exceeded the average market price of the Company’s common stock for the periods presented and to do so would be anti-dilutive. |
(5) | As of September 30, 2015, shares issuable but not included in the Company's calculation of diluted EPS, which could potentially dilute future earnings, included 9.47 million warrants outstanding and 9.47 million shares for conversion of outstanding convertible notes payable. In addition, for the three and nine month periods ended September 30, 2015, the Company excluded 0.4 million and 0.3 million, respectively, of shares issuable upon the exercise of stock options and vesting of non-vested restricted stock awards from the computation of diluted net income per common share under the treasury stock method. |
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Stock Options | Number of Shares Under Option | Weighted- Average Exercise Price per Share | ||||
Outstanding at December 31, 2015 | 2,405,371 | $ | 21.39 | |||
Options granted | 552,180 | $ | 12.52 | |||
Options exercised | (464,950 | ) | $ | 19.37 | ||
Options forfeited | (22,266 | ) | $ | 38.10 | ||
Outstanding at September 30, 2016 | 2,470,335 | $ | 23.94 | |||
Options exercisable at September 30, 2016 | 1,453,277 | $ | 17.43 |
Restricted Stock Awards | Number of Restricted Stock Awards | Weighted- Average Grant Date Fair Value | ||||
Non-vested at December 31, 2015 | 2,146,498 | $ | 33.20 | |||
Granted | 1,181,068 | $ | 32.20 | |||
Vested | (528,396 | ) | $ | 31.14 | ||
Forfeited | (199,509 | ) | $ | 32.74 | ||
Non-vested at September 30, 2016 | 2,599,661 | $ | 33.20 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Manufacturing expenses | $ | 1,331 | $ | 1,436 | $ | 4,579 | $ | 3,674 | |||||||
Research and development | 1,312 | 1,755 | 4,259 | 4,486 | |||||||||||
Selling, general and administrative | 5,070 | 5,101 | 14,537 | 13,691 | |||||||||||
Total | $ | 7,713 | $ | 8,292 | $ | 23,375 | $ | 21,851 |
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Type of Cost | Amount Expected to be Incurred | ||
Employee retention and severance payments | $ | 13.7 | |
Technical transfer of products | 12.6 | ||
Asset impairment and accelerated depreciation charges | 18.0 | ||
Facilities lease terminations and asset retirement obligations | 1.0 | ||
Legal and professional fees | 0.3 | ||
Total estimated restructuring charges | $ | 45.6 |
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• | Designation of a development candidate. Following the designation of a development candidate, generally, IND-enabling animal studies for a new development candidate take 12 to 18 months to complete. |
• | Initiation of a Phase I clinical trial. Generally, Phase I clinical trials take one to two years to complete. |
• | Initiation or completion of a Phase II clinical trial. Generally, Phase II clinical trials take one to three years to complete. |
• | Initiation or completion of a Phase III clinical trial. Generally, Phase III clinical trials take two to four years to complete. |
• | Completion of a bioequivalence study. Generally, bioequivalence studies take three months to one year to complete. |
• | Filing or acceptance of regulatory applications for marketing approval such as a New Drug Application in the United States or Marketing Authorization Application in Europe. Generally, it takes six to 12 months to prepare and submit regulatory filings and two months for a regulatory filing to be accepted for substantive review. |
• | Marketing approval in a major market, such as the United States or Europe. Generally it takes one to three years after an application is submitted to obtain approval from the applicable regulatory agency. |
• | Marketing approval in a major market, such as the United States or Europe for a new indication of an already-approved product. Generally it takes one to three years after an application for a new indication is submitted to obtain approval from the applicable regulatory agency. |
• | First commercial sale in a particular market, such as in the United States or Europe. |
• | Product sales in excess of a pre-specified threshold, such as annual sales exceeding $100 million. The amount of time to achieve this type of milestone depends on several factors including but not limited to the dollar amount of the threshold, the pricing of the product and the pace at which customers begin using the product. |
(1) | Research & Development Services. Revenue received from the provision of research and development services including the $40.0 million upfront payment and the $12.0 million of milestone payments received prior to January 1, 2011, have been deferred and are being recognized on a straight-line basis over the expected period of performance of the research and development services. During the three month period ended March 31, 2013, the Company extended the revenue recognition period for the Joint Development Agreement from the previous recognition period ending in November 2013 to December 2014, due to changes in the estimated timing of completion of certain research and development activities. This change was made on a prospective basis, and resulted in a reduced periodic amount of revenue recognized in current and future periods. Revenue from the remaining $8.0 million of contingent milestone payments, including the $3.0 million received from Valeant in March 2011, will be recognized using the Milestone Method of accounting. Revenue recognized under the Joint Development Agreement is included in “Note 23. Supplementary Financial Information,” in the line item captioned “Other Revenues.” |
(2) | Royalty Fees Earned - Valeant’s Sale of Advanced Form SOLODYN® (Brand) Product. Under the Joint Development Agreement, the Company granted Valeant a license for the advanced form of the SOLODYN® product, with the Company receiving royalty fee income under such license for a period ending eight years after the first commercial sale of the advanced form SOLODYN® product. Commercial sales of the new SOLODYN® product, if any, are expected to commence upon FDA approval of Valeant’s NDA. The royalty fee income, if any, from the new SOLODYN® product, will be recognized by the Company as current period revenue when earned. |
(3) | Accounting for Sales of the Company’s Four Generic Dermatology Products. Upon FDA approval of the Company’s ANDA for each of the four generic products covered by the Joint Development Agreement, the Company will have the right (but not the obligation) to begin manufacture and sale of its four generic dermatology products. The Company sells its manufactured generic products to all Impax Generics division customers in the ordinary course of business through its Impax Generics Product sales channel. The Company accounts for the sale, if any, of the generic products covered by the Joint Development Agreement as current period revenue according to the Company’s revenue recognition policy applicable to its Impax Generics products. To the extent the Company sells any of the four generic dermatology products covered by the Joint Development Agreement, the Company pays Valeant a gross profit share, with such profit share payments accounted for as a current period cost of revenues in the consolidated statement of operations. |
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Three Months Ended September 30, 2016 | Impax Generics | Impax Specialty Pharma | Corporate and Other | Total Company | |||||||||||
Revenues, net | $ | 175,320 | $ | 52,589 | $ | — | $ | 227,909 | |||||||
Cost of revenues | $ | 115,020 | $ | 21,853 | $ | — | $ | 136,873 | |||||||
Cost of revenues impairment charges | $ | 256,462 | $ | — | $ | — | $ | 256,462 | |||||||
Selling, general and administrative | $ | 6,103 | $ | 16,358 | $ | 32,577 | $ | 55,038 | |||||||
Research and development | $ | 15,375 | $ | 4,740 | $ | — | $ | 20,115 | |||||||
In-process research and development impairment charges | $ | 15,543 | $ | 13,227 | $ | — | $ | 28,770 | |||||||
Patent litigation expense | $ | 147 | $ | 3,132 | $ | — | $ | 3,279 | |||||||
Loss before income taxes | $ | (233,330 | ) | $ | (6,721 | ) | $ | (43,817 | ) | $ | (283,868 | ) |
Three Months Ended September 30, 2015 | Impax Generics | Impax Specialty Pharma | Corporate and Other | Total Company | |||||||||||
Revenues, net | $ | 180,666 | $ | 40,433 | $ | — | $ | 221,099 | |||||||
Cost of revenues | $ | 112,716 | $ | 14,834 | $ | — | $ | 127,550 | |||||||
Selling, general and administrative | $ | 5,103 | $ | 11,418 | $ | 29,786 | $ | 46,307 | |||||||
Research and development | $ | 14,346 | $ | 4,285 | $ | — | $ | 18,631 | |||||||
Patent litigation expense | $ | 397 | $ | 655 | $ | — | $ | 1,052 | |||||||
Income before income taxes | $ | 48,104 | $ | 9,241 | $ | 3,987 | $ | 61,332 |
Nine Months Ended September 30, 2016 | Impax Generics | Impax Specialty Pharma | Corporate and Other | Total Company | |||||||||||
Revenues, net | $ | 467,094 | $ | 158,913 | $ | — | $ | 626,007 | |||||||
Cost of revenues | $ | 307,936 | $ | 49,916 | $ | — | $ | 357,852 | |||||||
Cost of revenues impairment charges | $ | 258,007 | $ | — | $ | — | $ | 258,007 | |||||||
Selling, general and administrative | $ | 12,442 | $ | 46,309 | $ | 85,493 | $ | 144,244 | |||||||
Research and development | $ | 46,113 | $ | 13,824 | $ | — | $ | 59,937 | |||||||
In-process research and development impairment charges | $ | 16,489 | $ | 13,227 | $ | — | $ | 29,716 | |||||||
Patent litigation expense | $ | 416 | $ | 6,111 | $ | — | $ | 6,527 | |||||||
(Loss) income before income taxes | $ | (174,309 | ) | $ | 29,526 | $ | (160,529 | ) | $ | (305,312 | ) |
Nine Months Ended September 30, 2015 | Impax Generics | Impax Specialty Pharma | Corporate and Other | Total Company | |||||||||||
Revenues, net | $ | 484,086 | $ | 94,291 | $ | — | $ | 578,377 | |||||||
Cost of revenues | $ | 299,596 | $ | 41,147 | $ | — | $ | 340,743 | |||||||
Selling, general and administrative | $ | 16,673 | $ | 39,186 | $ | 88,917 | $ | 144,776 | |||||||
Research and development | $ | 38,100 | $ | 12,488 | $ | — | $ | 50,588 | |||||||
Patent litigation expense | $ | 2,507 | $ | 999 | $ | — | $ | 3,506 | |||||||
Income (loss) before income taxes | $ | 127,210 | $ | 471 | $ | (81,602 | ) | $ | 46,079 |
|
(in thousands, except share and per share amounts) | Quarter Ended March 31, 2016 | Quarter Ended June 30, 2016 | Quarter Ended September 30, 2016 | |||||||||
Revenue: | ||||||||||||
Impax Generic Product sales, gross | $ | 611,281 | $ | 531,226 | $ | 651,372 | ||||||
Less: | ||||||||||||
Chargebacks | 217,354 | 197,864 | 254,681 | |||||||||
Rebates | 185,476 | 178,097 | 163,340 | |||||||||
Product Returns | 11,913 | 10,237 | 16,151 | |||||||||
Other credits | 29,354 | 25,075 | 48,607 | |||||||||
Impax Generic Product sales, net | 167,184 | 119,953 | 168,593 | |||||||||
Rx Partner | 2,835 | 1,669 | 6,672 | |||||||||
Other Revenues | 60 | 73 | 55 | |||||||||
Impax Generic Division revenues, net | 170,079 | 121,695 | 175,320 | |||||||||
Impax Specialty Pharma sales, gross | 82,073 | 81,254 | 77,841 | |||||||||
Less: | ||||||||||||
Chargebacks | 6,111 | 8,826 | 5,439 | |||||||||
Rebates | 2,853 | 2,430 | 3,556 | |||||||||
Product Returns | 1,508 | 1,279 | 574 | |||||||||
Other credits | 16,172 | 17,824 | 15,683 | |||||||||
Impax Specialty Pharma sales, net | 55,429 | 50,895 | 52,589 | |||||||||
Other Revenues | — | — | — | |||||||||
Impax Specialty Pharma revenues, net | 55,429 | 50,895 | 52,589 | |||||||||
Total revenues | 225,508 | 172,590 | 227,909 | |||||||||
Gross profit (loss) | 102,590 | 72,984 | (165,426 | ) | ||||||||
Net loss | $ | (10,408 | ) | $ | (2,701 | ) | $ | (179,337 | ) | |||
Net loss per common share: | ||||||||||||
Basic | $ | (0.15 | ) | $ | (0.04 | ) | $ | (2.51 | ) | |||
Diluted | $ | (0.15 | ) | $ | (0.04 | ) | $ | (2.51 | ) | |||
Weighted-average common shares outstanding: | ||||||||||||
Basic | 70,665,394 | 71,100,123 | 71,331,247 | |||||||||
Diluted | 70,665,394 | 71,100,123 | 71,331,247 |
(in thousands, except share and per share amounts) | Quarter Ended March 31, 2015 | Quarter Ended June 30, 2015 | Quarter Ended September 30, 2015 | |||||||||
Revenue: | ||||||||||||
Impax Generic Product sales, gross | $ | 355,321 | $ | 572,079 | $ | 565,261 | ||||||
Less: | ||||||||||||
Chargebacks | 126,607 | 228,977 | 212,588 | |||||||||
Rebates | 83,130 | 139,477 | 141,646 | |||||||||
Product Returns | 6,427 | 7,528 | 6,276 | |||||||||
Other credits | 13,198 | 24,824 | 26,295 | |||||||||
Impax Generic Product sales, net | 125,959 | 171,273 | 178,456 | |||||||||
Rx Partner | 2,239 | 2,579 | 1,957 | |||||||||
Other Revenues | 543 | 827 | 253 | |||||||||
Impax Generic Division revenues, net | 128,741 | 174,679 | 180,666 | |||||||||
Impax Specialty Pharma sales, gross | 29,219 | 65,269 | 69,286 | |||||||||
Less: | ||||||||||||
Chargebacks | 5,561 | 4,452 | 5,893 | |||||||||
Rebates | 2,132 | 2,970 | 1,078 | |||||||||
Product Returns | 2,620 | 6,763 | 2,824 | |||||||||
Other credits | 4,778 | 11,809 | 19,285 | |||||||||
Impax Specialty Pharma sales, net | 14,128 | 39,275 | 40,206 | |||||||||
Other Revenues | 227 | 228 | 227 | |||||||||
Impax Specialty Pharma revenues, net | 14,355 | 39,503 | 40,433 | |||||||||
Total revenues | 143,096 | 214,182 | 221,099 | |||||||||
Gross profit | 59,234 | 84,851 | 93,549 | |||||||||
Net (loss) income | $ | (6,333 | ) | $ | (1,852 | ) | $ | 35,755 | ||||
Net (loss) income per common share: | ||||||||||||
Basic | $ | (0.09 | ) | $ | (0.03 | ) | $ | 0.51 | ||||
Diluted | $ | (0.09 | ) | $ | (0.03 | ) | $ | 0.49 | ||||
Weighted-average common shares outstanding: | ||||||||||||
Basic | 68,967,875 | 69,338,789 | 69,820,348 | |||||||||
Diluted | 68,967,875 | 69,338,789 | 72,777,746 |
|
• | the delivered item has value to the customer on a stand-alone basis; and |
• | if the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item is considered probable and substantially in the control of the vendor. |
• | the milestone is commensurate with either (1) the performance required to achieve the milestone or (2) the enhancement of the value of the delivered items resulting from the performance required to achieve the milestone; |
• | the milestone relates solely to past performance; and |
• | the milestone payment is reasonable relative to all of the deliverables and payment terms within the agreement. |
• | Chargebacks |
• | Rebates |
• | Distribution Service Fees |
• | Returns |
• | Shelf-Stock Adjustments |
• | Cash Discounts |
• | Medicaid and Other U.S. Government Pricing Programs |
• | Rx Partner and OTC Partner |
• | Research Partner |
|
Estimated Fair Value | |||
Purchase price per the APAs | $ | 575,800 | |
Upfront payment pursuant to Termination Agreement | 10,000 | ||
Total cash consideration | 585,800 | ||
Fair value of contingent consideration pursuant to Termination Agreement (1) | 30,100 | ||
Total consideration transferred | $ | 615,900 |
Estimated Fair Value | |||
Intangible assets | $ | 613,032 | |
Inventory - raw materials | 2,868 | ||
Total assets acquired | $ | 615,900 |
Estimated Fair Value | Weighted-Average Estimated Useful Life | ||||
Marketed product rights | $ | 461,152 | 19 years | ||
Acquired IPR&D product rights (1) | 151,880 | n/a | |||
Total intangible assets | $ | 613,032 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||
Total revenues | $ | 242,647 | $ | 262,381 | $ | 729,171 | $ | 702,224 | ||||||
Net (loss) income | (177,379 | ) | 43,600 | (167,505 | ) | 50,535 |
Accounts receivable (1) | $ | 56,851 | |
Inventory | 31,259 | ||
Income tax receivable and other prepaid expenses | 2,407 | ||
Property, plant and equipment | 27,540 | ||
Intangible assets | 632,600 | ||
Intangible assets held for sale | 4,000 | ||
Goodwill | 180,808 | ||
Deferred income taxes | 37,041 | ||
Other non-current assets | 3,844 | ||
Total assets acquired | 976,350 | ||
Current liabilities | 67,706 | ||
Deferred tax liabilities | 210,005 | ||
Other non-current liabilities | 7,291 | ||
Total liabilities assumed | 285,002 | ||
Cash paid, net of cash acquired (2) | $ | 691,348 |
(1) | The accounts receivable acquired in the Tower Acquisition had a fair value of $56.9 million, net of an allowance for doubtful accounts of $9.0 million, which represented the Company’s best estimate on March 9, 2015 (the closing date of the transaction) of the contractual cash flows not expected to be collected by the acquired companies. |
(2) | The initial net purchase price of $697.2 million was subject to post-closing working capital adjustments, which resulted in the return of $5.9 million to the Company during the third quarter of 2015. |
Estimated Fair Value | Weighted-Average Estimated Useful Life (years) | ||||
Marketed product rights | $ | 381,100 | 13 | ||
Royalty rights | 80,800 | 12 | |||
Acquired IPR&D product rights | 170,700 | n/a | |||
Total intangible assets | $ | 632,600 |
Nine Months Ended September 30, 2015 | ||||
Total revenues | $ | 610,814 | ||
Net income | $ | 40,007 |
|
As of September 30, 2016 | |||||||||||||||||||
Fair Value Measurement Based on | |||||||||||||||||||
Carrying Amount | Fair Value | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||
Assets | |||||||||||||||||||
Deferred Compensation Plan assets(1) | $ | 32,050 | $ | 32,050 | $ | — | $ | 32,050 | $ | — | |||||||||
Liabilities | |||||||||||||||||||
Term Loan Facility due August 2021, current portion (2) | $ | 20,000 | $ | 20,000 | $ | — | $ | 20,000 | $ | — | |||||||||
Term Loan Facility due August 2021, long-term portion (2) | $ | 380,000 | $ | 380,000 | $ | — | $ | 380,000 | $ | — | |||||||||
2% Convertible senior notes due June 2022 (3) | $ | 600,000 | $ | 532,692 | $ | 532,692 | $ | — | $ | — | |||||||||
Deferred Compensation Plan liabilities (1) | $ | 27,860 | $ | 27,860 | $ | — | $ | 27,860 | $ | — | |||||||||
Contingent consideration (4) | $ | 30,100 | $ | 30,100 | $ | — | $ | — | $ | 30,100 |
As of December 31, 2015 | |||||||||||||||||||
Fair Value Measurement Based on | |||||||||||||||||||
Carrying Amount | Fair Value | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||
Assets | |||||||||||||||||||
Deferred Compensation Plan assets(1) | $ | 30,726 | $ | 30,726 | $ | — | $ | 30,726 | $ | — | |||||||||
Liabilities | |||||||||||||||||||
2% Convertible senior notes due June 2022 (3) | $ | 600,000 | $ | 602,250 | $ | 602,250 | $ | — | $ | — | |||||||||
Deferred Compensation Plan liabilities (1) | $ | 25,581 | $ | 25,581 | $ | — | $ | 25,581 | $ | — |
(1) | The Deferred Compensation Plan liabilities are non-current liabilities recorded at the value of the amount owed to the plan participants, with changes in value recognized as compensation expense in the Company’s consolidated statements of operations. The calculation of the Deferred Compensation Plan obligation is derived from observable market data by reference to hypothetical investments selected by the participants and is included in the line item captioned “Other non-current liabilities” on the Company’s consolidated balance sheets. The Company invests participant contributions in corporate-owned life insurance (“COLI”) policies, for which the cash surrender value is included in the line item captioned “Other non-current assets” on the Company’s consolidated balance sheets. |
(2) | The difference between the amount shown as the carrying value in the above tables and the amount shown on the Company’s consolidated balance sheets at September 30, 2016 and December 31, 2015 represents the unaccreted discount related to deferred debt issuance costs. |
(3) | The difference between the amount shown as the carrying value in the above tables and the amount shown on the Company’s consolidated balance sheets at September 30, 2016 and December 31, 2015 represents the unaccreted discounts related to deferred debt issuance costs and bifurcation of the conversion feature of the notes. |
(4) | The contingent consideration liability is a non-current liability representing future consideration potentially payable to Teva upon the achievement of specified commercialization events related to methylphenidate hydrochloride in accordance with the Termination Agreement related to the Teva Transaction as described in "Note 2. Business Acquisitions". A discounted cash flow valuation model was used to value the contingent consideration as of September 30, 2016. The valuation is based on significant unobservable inputs, including the probability and timing of successful product launch and the expected number of competitors at the time of launch and the launch anniversary date. The Company conducts a quarterly review of the underlying inputs and assumptions and significant changes in unobservable inputs could result in material changes to the contingent consideration liability. Changes in the value of the contingent consideration liability are included in "Other income (expense)" on the Company's consolidated statements of operations. A 5% increase or decrease in the probability of successful product launch would cause the fair value of the contingent consideration to both decrease and increase by $1.6 million, respectively. An increase or decrease in the number of competitors at the date of the product launch or the first anniversary would cause the fair value of the contingent consideration to decrease by $13.0 million and increase by $5.0 million, respectively. The maximum aggregate amount in contingent consideration payments the Company could be expected to make to Teva in accordance with the Termination Agreement related to methylphenidate hydrochloride is $40.0 million. |
|
September 30, 2016 | December 31, 2015 | ||||||
Gross accounts receivable (1) | $ | 755,859 | $ | 738,730 | |||
Less: Rebate reserve | (295,489 | ) | (265,229 | ) | |||
Less: Chargeback reserve | (127,251 | ) | (102,630 | ) | |||
Less: Distribution services reserve | (16,529 | ) | (12,576 | ) | |||
Less: Discount reserve | (15,743 | ) | (18,657 | ) | |||
Less: Uncollectible accounts reserve (2) | (61,257 | ) | (15,187 | ) | |||
Accounts receivable, net | $ | 239,590 | $ | 324,451 |
Rebate reserve | Nine Months Ended September 30, 2016 | Year Ended December 31, 2015 | |||||
Beginning balance | $ | 265,229 | $ | 88,812 | |||
Acquired balances | — | 75,447 | |||||
Provision recorded during the period for Impax Generics rebates | 526,913 | 571,642 | |||||
Credits issued during the period for Impax Generics rebates | (496,653 | ) | (470,672 | ) | |||
Ending balance | $ | 295,489 | $ | 265,229 |
Chargeback reserve | Nine Months Ended September 30, 2016 | Year Ended December 31, 2015 | |||||
Beginning balance | $ | 102,630 | $ | 43,125 | |||
Acquired balances | — | 24,532 | |||||
Provision recorded during the period | 690,275 | 833,157 | |||||
Credits issued during the period | (665,654 | ) | (798,184 | ) | |||
Ending balance | $ | 127,251 | $ | 102,630 |
|
September 30, 2016 | December 31, 2015 | ||||||
Raw materials | $ | 51,806 | $ | 52,366 | |||
Work in-process | 5,959 | 4,417 | |||||
Finished goods | 121,087 | 82,311 | |||||
Total inventory | 178,852 | 139,094 | |||||
Less: Non-current inventory | 11,298 | 13,512 | |||||
Total inventory-current | $ | 167,554 | $ | 125,582 |
|
September 30, 2016 | December 31, 2015 | ||||||
Land | $ | 5,603 | $ | 5,773 | |||
Buildings and improvements | 173,637 | 165,322 | |||||
Equipment | 143,914 | 135,998 | |||||
Office furniture and equipment | 15,018 | 14,548 | |||||
Construction-in-progress | 41,641 | 25,659 | |||||
Property, plant and equipment, gross | 379,813 | 347,300 | |||||
Less: Accumulated depreciation | (152,225 | ) | (133,144 | ) | |||
Property, plant and equipment, net | $ | 227,588 | $ | 214,156 |
|
September 30, 2016 | Gross Carrying Value | Accumulated Amortization | Intangible Assets, Net | ||||||||
Amortized intangible assets: | |||||||||||
Marketed product rights | $ | 760,981 | $ | (122,359 | ) | $ | 638,622 | ||||
Royalties | 339 | (339 | ) | — | |||||||
761,320 | (122,698 | ) | 638,622 | ||||||||
Non-amortized intangible assets: | |||||||||||
Acquired IPR&D product rights | 244,803 | — | 244,803 | ||||||||
Acquired future royalty rights | 7,800 | — | 7,800 | ||||||||
252,603 | — | 252,603 | |||||||||
Total intangible assets | $ | 1,013,923 | $ | (122,698 | ) | $ | 891,225 |
December 31, 2015 | Gross Carrying Value | Accumulated Amortization | Intangible Assets, Net | ||||||||
Amortized intangible assets: | |||||||||||
Marketed product rights | $ | 458,675 | $ | (82,906 | ) | $ | 375,769 | ||||
Royalties | 2,200 | (189 | ) | 2,011 | |||||||
460,875 | (83,095 | ) | 377,780 | ||||||||
Non-amortized intangible assets: | |||||||||||
Acquired IPR&D product rights | 145,640 | — | 145,640 | ||||||||
Acquired future royalty rights | 78,600 | — | 78,600 | ||||||||
224,240 | — | 224,240 | |||||||||
Total intangible assets | $ | 685,115 | $ | (83,095 | ) | $ | 602,020 |
|
September 30, 2016 | December 31, 2015 | ||||||
Payroll-related expenses | $ | 29,761 | $ | 37,419 | |||
Product returns | 70,282 | 48,950 | |||||
Accrued shelf stock | 9,614 | 6,619 | |||||
Government rebates (1) | 79,775 | 91,717 | |||||
Legal and professional fees | 14,633 | 5,929 | |||||
Income taxes payable | — | 830 | |||||
Physician detailing sales force fees | — | 1,132 | |||||
Interest payable | 3,500 | 500 | |||||
Estimated Teva and Allergan chargebacks and rebates (2) | 17,627 | — | |||||
Other | 9,989 | 11,615 | |||||
Total accrued expenses | $ | 235,181 | $ | 204,711 |
Returns Reserve | Nine Months Ended September 30, 2016 | Year Ended December 31, 2015 | |||||
Beginning balance | $ | 48,950 | $ | 27,174 | |||
Acquired balances | — | 11,364 | |||||
Provision related to sales recorded in the period | 41,662 | 43,967 | |||||
Credits issued during the period | (20,330 | ) | (33,555 | ) | |||
Ending balance | $ | 70,282 | $ | 48,950 |
|
Shares issued | 74,174 | |
Stock options outstanding(1) | 2,470 | |
Conversion of Notes payable (2) | 9,471 | |
Warrants outstanding (see below) | 9,471 | |
Total shares of common stock issued and reserved for issuance | 95,586 |
|
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||
Basic (Loss) Earnings Per Common Share: | |||||||||||||||||||
Net (loss) income | $ | (179,337 | ) | $ | 35,755 | $ | (192,446 | ) | $ | 27,570 | |||||||||
Weighted-average common shares outstanding | 71,331 | 69,820 | 71,033 | 69,379 | |||||||||||||||
Basic (loss) earnings per share | $ | (2.51 | ) | $ | 0.51 | $ | (2.71 | ) | $ | 0.40 | |||||||||
Diluted (Loss) Earnings Per Common Share: | |||||||||||||||||||
Net (loss) income | $ | (179,337 | ) | $ | 35,755 | $ | (192,446 | ) | $ | 27,570 | |||||||||
Add-back of interest expense on outstanding convertible notes payable, net of tax | — | (1) | — | (2) | — | (1) | — | (2) | |||||||||||
Adjusted net (loss) income | $ | (179,337 | ) | $ | 35,755 | $ | (192,446 | ) | $ | 27,570 | |||||||||
Weighted-average common shares outstanding | 71,331 | 69,820 | 71,033 | 69,379 | |||||||||||||||
Weighted-average incremental shares related to assumed exercise of warrants and stock options, vesting of non-vested shares and ESPP share issuance | — | (3) | 2,958 | (4) | — | (3) | 3,170 | (4) | |||||||||||
Weighted-average incremental shares assuming conversion of outstanding notes payable | — | (1) | — | (2) | — | (1) | — | (2) | |||||||||||
Diluted weighted-average common shares outstanding | 71,331 | (3) | 72,778 | (5) | 71,033 | (3) | 72,549 | (5) | |||||||||||
Diluted net (loss) income per share | $ | (2.51 | ) | $ | 0.49 | $ | (2.71 | ) | $ | 0.38 |
(1) | For the three and nine month periods ended September 30, 2016, the Company incurred a net loss, which cannot be diluted, so basic and diluted loss per common share were the same. Accordingly, there were no numerator or denominator adjustments related to the Company's outstanding Notes. |
(2) | The add-back of interest expense incurred on the Company’s outstanding Notes, net of tax, to the numerator and the weighted-average incremental shares assuming conversion of the outstanding Notes to the denominator were excluded from the calculation of diluted EPS for the period ended September 30, 2015 because the Company was required to settle the conversion of the Notes in cash. See “Note 13. Debt” and “Note 14. Stockholders’ Equity” for additional information. |
(3) | For the three and nine month periods ended September 30, 2016, the Company incurred a net loss, which cannot be diluted, so basic and diluted loss per common share were the same. As of September 30, 2016, shares issuable but not included in the Company's calculation of diluted EPS, which could potentially dilute future earnings, included 9.47 million warrants outstanding, 9.47 million shares for conversion of outstanding Notes payable, 2.47 million stock options outstanding and 2.60 million non-vested restricted stock awards. |
(4) | The 9.47 million warrants outstanding have been excluded from the denominator of the diluted EPS calculation under the treasury stock method as of September 30, 2015 because the weighted-average exercise price of the warrants exceeded the average market price of the Company’s common stock for the periods presented and to do so would be anti-dilutive. |
(5) | As of September 30, 2015, shares issuable but not included in the Company's calculation of diluted EPS, which could potentially dilute future earnings, included 9.47 million warrants outstanding and 9.47 million shares for conversion of outstanding convertible notes payable. In addition, for the three and nine month periods ended September 30, 2015, the Company excluded 0.4 million and 0.3 million, respectively, of shares issuable upon the exercise of stock options and vesting of non-vested restricted stock awards from the computation of diluted net income per common share under the treasury stock method. |
|
Stock Options | Number of Shares Under Option | Weighted- Average Exercise Price per Share | ||||
Outstanding at December 31, 2015 | 2,405,371 | $ | 21.39 | |||
Options granted | 552,180 | $ | 12.52 | |||
Options exercised | (464,950 | ) | $ | 19.37 | ||
Options forfeited | (22,266 | ) | $ | 38.10 | ||
Outstanding at September 30, 2016 | 2,470,335 | $ | 23.94 | |||
Options exercisable at September 30, 2016 | 1,453,277 | $ | 17.43 |
Restricted Stock Awards | Number of Restricted Stock Awards | Weighted- Average Grant Date Fair Value | ||||
Non-vested at December 31, 2015 | 2,146,498 | $ | 33.20 | |||
Granted | 1,181,068 | $ | 32.20 | |||
Vested | (528,396 | ) | $ | 31.14 | ||
Forfeited | (199,509 | ) | $ | 32.74 | ||
Non-vested at September 30, 2016 | 2,599,661 | $ | 33.20 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Manufacturing expenses | $ | 1,331 | $ | 1,436 | $ | 4,579 | $ | 3,674 | |||||||
Research and development | 1,312 | 1,755 | 4,259 | 4,486 | |||||||||||
Selling, general and administrative | 5,070 | 5,101 | 14,537 | 13,691 | |||||||||||
Total | $ | 7,713 | $ | 8,292 | $ | 23,375 | $ | 21,851 |
|
Type of Cost | Amount Expected to be Incurred | ||
Employee retention and severance payments | $ | 13.7 | |
Technical transfer of products | 12.6 | ||
Asset impairment and accelerated depreciation charges | 18.0 | ||
Facilities lease terminations and asset retirement obligations | 1.0 | ||
Legal and professional fees | 0.3 | ||
Total estimated restructuring charges | $ | 45.6 |
|
Three Months Ended September 30, 2016 | Impax Generics | Impax Specialty Pharma | Corporate and Other | Total Company | |||||||||||
Revenues, net | $ | 175,320 | $ | 52,589 | $ | — | $ | 227,909 | |||||||
Cost of revenues | $ | 115,020 | $ | 21,853 | $ | — | $ | 136,873 | |||||||
Cost of revenues impairment charges | $ | 256,462 | $ | — | $ | — | $ | 256,462 | |||||||
Selling, general and administrative | $ | 6,103 | $ | 16,358 | $ | 32,577 | $ | 55,038 | |||||||
Research and development | $ | 15,375 | $ | 4,740 | $ | — | $ | 20,115 | |||||||
In-process research and development impairment charges | $ | 15,543 | $ | 13,227 | $ | — | $ | 28,770 | |||||||
Patent litigation expense | $ | 147 | $ | 3,132 | $ | — | $ | 3,279 | |||||||
Loss before income taxes | $ | (233,330 | ) | $ | (6,721 | ) | $ | (43,817 | ) | $ | (283,868 | ) |
Three Months Ended September 30, 2015 | Impax Generics | Impax Specialty Pharma | Corporate and Other | Total Company | |||||||||||
Revenues, net | $ | 180,666 | $ | 40,433 | $ | — | $ | 221,099 | |||||||
Cost of revenues | $ | 112,716 | $ | 14,834 | $ | — | $ | 127,550 | |||||||
Selling, general and administrative | $ | 5,103 | $ | 11,418 | $ | 29,786 | $ | 46,307 | |||||||
Research and development | $ | 14,346 | $ | 4,285 | $ | — | $ | 18,631 | |||||||
Patent litigation expense | $ | 397 | $ | 655 | $ | — | $ | 1,052 | |||||||
Income before income taxes | $ | 48,104 | $ | 9,241 | $ | 3,987 | $ | 61,332 |
Nine Months Ended September 30, 2016 | Impax Generics | Impax Specialty Pharma | Corporate and Other | Total Company | |||||||||||
Revenues, net | $ | 467,094 | $ | 158,913 | $ | — | $ | 626,007 | |||||||
Cost of revenues | $ | 307,936 | $ | 49,916 | $ | — | $ | 357,852 | |||||||
Cost of revenues impairment charges | $ | 258,007 | $ | — | $ | — | $ | 258,007 | |||||||
Selling, general and administrative | $ | 12,442 | $ | 46,309 | $ | 85,493 | $ | 144,244 | |||||||
Research and development | $ | 46,113 | $ | 13,824 | $ | — | $ | 59,937 | |||||||
In-process research and development impairment charges | $ | 16,489 | $ | 13,227 | $ | — | $ | 29,716 | |||||||
Patent litigation expense | $ | 416 | $ | 6,111 | $ | — | $ | 6,527 | |||||||
(Loss) income before income taxes | $ | (174,309 | ) | $ | 29,526 | $ | (160,529 | ) | $ | (305,312 | ) |
Nine Months Ended September 30, 2015 | Impax Generics | Impax Specialty Pharma | Corporate and Other | Total Company | |||||||||||
Revenues, net | $ | 484,086 | $ | 94,291 | $ | — | $ | 578,377 | |||||||
Cost of revenues | $ | 299,596 | $ | 41,147 | $ | — | $ | 340,743 | |||||||
Selling, general and administrative | $ | 16,673 | $ | 39,186 | $ | 88,917 | $ | 144,776 | |||||||
Research and development | $ | 38,100 | $ | 12,488 | $ | — | $ | 50,588 | |||||||
Patent litigation expense | $ | 2,507 | $ | 999 | $ | — | $ | 3,506 | |||||||
Income (loss) before income taxes | $ | 127,210 | $ | 471 | $ | (81,602 | ) | $ | 46,079 |
|
(in thousands, except share and per share amounts) | Quarter Ended March 31, 2016 | Quarter Ended June 30, 2016 | Quarter Ended September 30, 2016 | |||||||||
Revenue: | ||||||||||||
Impax Generic Product sales, gross | $ | 611,281 | $ | 531,226 | $ | 651,372 | ||||||
Less: | ||||||||||||
Chargebacks | 217,354 | 197,864 | 254,681 | |||||||||
Rebates | 185,476 | 178,097 | 163,340 | |||||||||
Product Returns | 11,913 | 10,237 | 16,151 | |||||||||
Other credits | 29,354 | 25,075 | 48,607 | |||||||||
Impax Generic Product sales, net | 167,184 | 119,953 | 168,593 | |||||||||
Rx Partner | 2,835 | 1,669 | 6,672 | |||||||||
Other Revenues | 60 | 73 | 55 | |||||||||
Impax Generic Division revenues, net | 170,079 | 121,695 | 175,320 | |||||||||
Impax Specialty Pharma sales, gross | 82,073 | 81,254 | 77,841 | |||||||||
Less: | ||||||||||||
Chargebacks | 6,111 | 8,826 | 5,439 | |||||||||
Rebates | 2,853 | 2,430 | 3,556 | |||||||||
Product Returns | 1,508 | 1,279 | 574 | |||||||||
Other credits | 16,172 | 17,824 | 15,683 | |||||||||
Impax Specialty Pharma sales, net | 55,429 | 50,895 | 52,589 | |||||||||
Other Revenues | — | — | — | |||||||||
Impax Specialty Pharma revenues, net | 55,429 | 50,895 | 52,589 | |||||||||
Total revenues | 225,508 | 172,590 | 227,909 | |||||||||
Gross profit (loss) | 102,590 | 72,984 | (165,426 | ) | ||||||||
Net loss | $ | (10,408 | ) | $ | (2,701 | ) | $ | (179,337 | ) | |||
Net loss per common share: | ||||||||||||
Basic | $ | (0.15 | ) | $ | (0.04 | ) | $ | (2.51 | ) | |||
Diluted | $ | (0.15 | ) | $ | (0.04 | ) | $ | (2.51 | ) | |||
Weighted-average common shares outstanding: | ||||||||||||
Basic | 70,665,394 | 71,100,123 | 71,331,247 | |||||||||
Diluted | 70,665,394 | 71,100,123 | 71,331,247 |
(in thousands, except share and per share amounts) | Quarter Ended March 31, 2015 | Quarter Ended June 30, 2015 | Quarter Ended September 30, 2015 | |||||||||
Revenue: | ||||||||||||
Impax Generic Product sales, gross | $ | 355,321 | $ | 572,079 | $ | 565,261 | ||||||
Less: | ||||||||||||
Chargebacks | 126,607 | 228,977 | 212,588 | |||||||||
Rebates | 83,130 | 139,477 | 141,646 | |||||||||
Product Returns | 6,427 | 7,528 | 6,276 | |||||||||
Other credits | 13,198 | 24,824 | 26,295 | |||||||||
Impax Generic Product sales, net | 125,959 | 171,273 | 178,456 | |||||||||
Rx Partner | 2,239 | 2,579 | 1,957 | |||||||||
Other Revenues | 543 | 827 | 253 | |||||||||
Impax Generic Division revenues, net | 128,741 | 174,679 | 180,666 | |||||||||
Impax Specialty Pharma sales, gross | 29,219 | 65,269 | 69,286 | |||||||||
Less: | ||||||||||||
Chargebacks | 5,561 | 4,452 | 5,893 | |||||||||
Rebates | 2,132 | 2,970 | 1,078 | |||||||||
Product Returns | 2,620 | 6,763 | 2,824 | |||||||||
Other credits | 4,778 | 11,809 | 19,285 | |||||||||
Impax Specialty Pharma sales, net | 14,128 | 39,275 | 40,206 | |||||||||
Other Revenues | 227 | 228 | 227 | |||||||||
Impax Specialty Pharma revenues, net | 14,355 | 39,503 | 40,433 | |||||||||
Total revenues | 143,096 | 214,182 | 221,099 | |||||||||
Gross profit | 59,234 | 84,851 | 93,549 | |||||||||
Net (loss) income | $ | (6,333 | ) | $ | (1,852 | ) | $ | 35,755 | ||||
Net (loss) income per common share: | ||||||||||||
Basic | $ | (0.09 | ) | $ | (0.03 | ) | $ | 0.51 | ||||
Diluted | $ | (0.09 | ) | $ | (0.03 | ) | $ | 0.49 | ||||
Weighted-average common shares outstanding: | ||||||||||||
Basic | 68,967,875 | 69,338,789 | 69,820,348 | |||||||||
Diluted | 68,967,875 | 69,338,789 | 72,777,746 |
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