AMNEAL PHARMACEUTICALS, INC., 10-Q filed on 11/7/2019
Quarterly Report
v3.19.3
Document And Entity Information - shares
9 Months Ended
Sep. 30, 2019
Oct. 31, 2019
Entity Information [Line Items]    
Entity Registrant Name Amneal Pharmaceuticals, Inc.  
Entity Central Index Key 0001723128  
Current Fiscal Year End Date --12-31  
Entity Filer Category Non-accelerated Filer  
Document Type 10-Q  
Document Period End Date Sep. 30, 2019  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q3  
Amendment Flag false  
Entity Emerging Growth Company false  
Entity Small Business false  
Entity Current Reporting Yes  
Entity Interactive Data Current Yes  
Entity Shell Company false  
Entity Tax Identification Number 32-0546926  
Entity File Number 001-38485  
Entity Address, Address Line One Amneal Pharmaceuticals, Inc.  
Entity Address, Address Line Two 400 Crossing Boulevard  
Entity Address, City or Town Bridgewater  
Entity Address, State or Province NJ  
Entity Address, Postal Zip Code 08807  
City Area Code 908  
Local Phone Number 947-3120  
Document Quarterly Report true  
Document Transition Report false  
Entity Incorporation, State or Country Code DE  
Title of 12(b) Security Class A Common Stock, par value $0.01 per share  
Security Exchange Name NYSE  
Trading Symbol AMRX  
Class A Common Stock    
Entity Information [Line Items]    
Entity Common Stock, Shares Outstanding (in shares)   134,095,850
Class B Common Stock    
Entity Information [Line Items]    
Entity Common Stock, Shares Outstanding (in shares)   165,004,323
v3.19.3
Consolidated Statements of Operations - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Income Statement [Abstract]        
Net revenue $ 378,283 $ 476,487 $ 1,229,045 $ 1,165,463
Cost of goods sold 267,717 268,567 873,841 634,653
Cost of goods sold impairment charges 56,132 7,815 112,441 7,815
Gross profit 54,434 200,105 242,763 522,995
Selling, general and administrative 63,797 75,486 215,514 156,610
Research and development 38,125 42,349 139,999 136,893
In-process research and development impairment charges 23,382 650 46,169 650
Charges (gains) related to legal matters, net 14,750 2,589 14,750 (411)
Intellectual property legal development expenses 2,586 4,401 9,263 13,024
Acquisition, transaction-related and integration expenses 3,131 2,231 12,682 216,873
Restructuring and other charges 20,937 (2,156) 29,933 42,309
Operating (loss) income (112,274) 74,555 (225,547) (42,953)
Other income (expense):        
Interest expense, net (42,209) (43,018) (129,376) (100,691)
Foreign exchange loss, net (12,531) (5,137) (9,684) (22,518)
Loss on extinguishment of debt 0 0 0 (19,667)
(Loss) gain on sale of international businesses, net 0 (2,812) 6,930 (2,812)
Gain from reduction of tax receivable agreement liability 192,844 0 192,844 0
Other income (expense), net 446 (1,014) 1,702 725
Total other income (expense), net 138,550 (51,981) 62,416 (144,963)
Income (loss) before income taxes 26,276 22,574 (163,131) (187,916)
Provision for (benefit from) income taxes 389,668 5,109 375,539 (6,943)
Net (loss) income (363,392) 17,465 (538,670) (180,973)
Less: Net loss attributable to Amneal Pharmaceuticals LLC pre- Combination 0 0 0 (148,806)
Less: Net loss (income) attributable to non-controlling interests (98,386) 10,577 (208,881) (21,191)
Net (loss) income attributable to Amneal Pharmaceuticals, Inc. before accretion of redeemable non-controlling interest (265,006) 6,888 (329,789) (10,976)
Accretion of redeemable non-controlling interest 0 64 0 (1,176)
Net (loss) income attributable to Amneal Pharmaceuticals, Inc. $ (265,006) $ 6,952 $ (329,789) $ (12,152)
Net (loss) income per share attributable to Amneal Pharmaceuticals, Inc.'s common stockholders:        
Class A and Class B-1 basic $ (2.03) $ 0.05 $ (2.56) $ (0.10)
Class A and Class B-1 diluted $ (2.03) $ 0.05 $ (2.56) $ (0.10)
Weighted-average common shares outstanding:        
Class A and Class B-1 basic 130,729 127,247 128,822 127,196
Class A and Class B-1 diluted 130,729 128,222 128,822 127,196
v3.19.3
Consolidated Statements of Comprehensive (Loss) Income - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Statement Of Other Comprehensive Income [Abstract]        
Net (loss) income $ (363,392) $ 17,465 $ (538,670) $ (180,973)
Less: Net loss attributable to Amneal Pharmaceuticals LLC pre- Combination 0 0 0 148,806
Less: Net loss (income) attributable to non-controlling interests 98,386 (10,577) 208,881 21,191
Net (loss) income attributable to Amneal Pharmaceuticals, Inc. before accretion of redeemable non-controlling interest (265,006) 6,888 (329,789) (10,976)
Accretion of redeemable non-controlling interest 0 64 0 (1,176)
Net (loss) income attributable to Amneal Pharmaceuticals, Inc. (265,006) 6,952 (329,789) (12,152)
Other comprehensive income (loss):        
Foreign currency translation adjustments arising during the period 4,997 (7,939) 4,014 (8,964)
Less: Reclassification of foreign currency translation adjustment included in net loss 0 0 3,413 0
Foreign currency translation adjustments, net 4,997 (7,939) 7,427 (8,964)
Less: Other comprehensive income attributable to Amneal Pharmaceuticals LLC pre-Combination 0 0 0 (1,721)
Less: Other comprehensive (income) loss attributable to non-controlling interests (2,813) 4,555 (4,207) 6,131
Other comprehensive income (loss) attributable to Amneal Pharmaceuticals, Inc. 2,184 (3,384) 3,220 (4,554)
Comprehensive (loss) income attributable to Amneal Pharmaceuticals, Inc. $ (262,822) $ 3,568 $ (326,569) $ (16,706)
v3.19.3
Consolidated Balance Sheets - USD ($)
$ in Thousands
Sep. 30, 2019
Dec. 31, 2018
Current assets:    
Cash and cash equivalents $ 212,738 $ 213,394
Restricted cash 4,320 5,385
Trade accounts receivable, net 518,109 481,495
Inventories 401,827 457,219
Prepaid expenses and other current assets 66,699 128,321
Related party receivables 2,138 830
Total current assets 1,205,831 1,286,644
Property, plant and equipment, net 490,712 544,146
Goodwill 419,671 426,226
Intangible assets, net 1,435,801 1,654,969
Deferred tax asset, net   373,159
Operating lease right-of-use assets 71,385  
Other assets 18,607 67,592
Total assets 3,703,943 4,352,736
Current liabilities:    
Accounts payable and accrued expenses 495,857 514,440
Current portion of long-term debt, net 21,468 21,449
Related party payables 765 17,695
Total current liabilities 534,910 553,850
Long-term debt, net 2,614,412 2,630,598
Deferred income taxes 0 1,178
Liabilities under tax receivable agreement   192,884
Other liabilities 38,532 38,780
Total long-term liabilities 2,773,309 2,902,523
Commitments and contingencies (Notes 5, 11 and 13)
Stockholders' Equity    
Preferred stock, $0.01 par value, 2,000 shares authorized; none issued at both September 30, 2019 and December 31, 2018 0 0
Additional paid-in capital 565,641 530,438
Stockholders' accumulated deficit (345,752) (20,920)
Accumulated other comprehensive loss (4,879) (7,755)
Total Amneal Pharmaceuticals, Inc. stockholders' equity 218,001 504,750
Non-controlling interests 177,723 391,613
Total stockholders' equity 395,724 896,363
Total liabilities and stockholders' equity 3,703,943 4,352,736
Common Class A    
Stockholders' Equity    
Common stock 1,340 1,151
Common Class B    
Stockholders' Equity    
Common stock 1,651 1,713
Common Class B-1    
Stockholders' Equity    
Common stock   123
Excluding Related Party    
Current assets:    
Operating lease right-of-use assets 56,455  
Current liabilities:    
Current portion of operating lease liabilities 13,467  
Operating lease liabilities 44,375  
Related Party    
Current assets:    
Operating lease right-of-use assets 14,930  
Financing lease right-of-use assets - related party 61,936  
Current liabilities:    
Current portion of operating lease liabilities 2,299  
Current portion of operating and financing lease liabilities - related party 3,353  
Current portion of financing obligation - related party   266
Operating lease liabilities 14,271  
Financing lease liabilities - related party $ 61,719  
Financing obligation - related party   $ 39,083
v3.19.3
Consolidated Balance Sheets (Parenthetical) - $ / shares
Sep. 30, 2019
Dec. 31, 2018
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized (in shares) 2,000,000 2,000,000
Preferred stock, shares issued (in shares) 0 0
Class A Common Stock    
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 900,000,000 900,000,000
Common stock, shares issued (in shares) 134,090,000 115,047,000
Common stock, shares outstanding (in shares) 134,090,000 115,047,000
Class B Common Stock    
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 300,000,000 300,000,000
Common stock, shares issued (in shares) 165,005,000 171,261,000
Common stock, shares outstanding (in shares) 165,005,000 171,261,000
Class B-1 Common Stock    
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 18,000,000 18,000,000
Common stock, shares issued (in shares) 0 12,329,000
Common stock, shares outstanding (in shares) 0 12,329,000
v3.19.3
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Cash flows from operating activities:    
Net loss $ (538,670) $ (180,973)
Adjustments to reconcile net loss to net cash used in operating activities:    
Gain from reduction of tax receivable agreement liability (192,884) 0
Depreciation and amortization 152,932 89,910
Amortization of Levothyroxine Transition Agreement asset 36,393 0
Unrealized foreign currency loss 10,552 21,560
Amortization of debt issuance costs 4,849 4,220
Loss on extinguishment of debt 0 19,667
(Gain) loss on sale of international businesses, net (6,930) 2,812
Intangible asset impairment charges 158,610 8,474
Non-cash restructuring and asset-related charges 11,923 0
Deferred tax provision (benefit) 371,683 (9,111)
Stock-based compensation and PPU expense 16,666 163,991
Inventory provision 67,844 20,755
Other operating charges and credits, net 5,945 (1,955)
Changes in assets and liabilities:    
Trade accounts receivable, net (46,457) (74,711)
Inventories (25,906) (53,708)
Prepaid expenses, other current assets and other assets 41,256 9,803
Related party receivables (1,305) 10,828
Accounts payable, accrued expenses and other liabilities (13,932) (26,858)
Related party payables 25 (14,125)
Net cash provided by (used in) operating activities 52,594 (9,421)
Cash flows from investing activities:    
Purchases of property, plant and equipment (42,664) (63,065)
Acquisition of product rights and licenses (50,000) (14,000)
Acquisitions, net of cash acquired 0 (324,634)
Proceeds from surrender of corporate owned life insurance 43,017 0
Proceeds from sale of international businesses, net of cash sold 34,834 0
Net cash used in investing activities (14,813) (401,699)
Cash flows from financing activities:    
Payments of deferred financing costs and debt extinguishment costs 0 (54,955)
Proceeds from issuance of debt 0 1,325,383
Payments of principal on debt and capital leases (20,250) (610,482)
Net borrowings on revolving credit line 0 25,000
Proceeds from exercise of stock options 1,385 3,162
Employee payroll tax withholding on restricted stock unit vesting (926) 0
Equity contributions 0 27,742
Capital contribution from non-controlling interest 0 360
Acquisition of non-controlling interest (3,543) (11,775)
Tax distribution to non-controlling interest (13,494) 0
Distributions to members 0 (182,998)
Payments of principal on financing lease - related party (1,118)  
Repayment of related party note 0 (14,842)
Net cash (used in) provided by financing activities (38,535) 506,595
Effect of foreign exchange rate on cash (967) (1,204)
Net (decrease) increase in cash, cash equivalents, and restricted cash (1,721) 94,271
Cash, cash equivalents, and restricted cash - beginning of period 218,779 77,922
Cash, cash equivalents, and restricted cash - end of period 217,058 172,193
Cash and cash equivalents - end of period 212,738 165,192
Restricted cash - end of period 4,320 7,001
Supplemental disclosure of cash flow information:    
Cash paid for interest 121,872 89,075
Cash received (paid) for income taxes, net 11,857 (5,379)
Supplemental disclosure of non-cash investing and financing activity:    
Tax distribution to non-controlling interest 0 35,543
Distribution to members 0 8,562
Related Party    
Cash flows from financing activities:    
Payments of principal on financing lease - related party $ (1,707) $ 0
v3.19.3
Consolidated Statement of Stockholders' Equity / Members' Deficit - USD ($)
shares in Thousands, $ in Thousands
Total
Period Subsequent to the Combination
Period Subsequent to the Combination
Private Placement
Period Subsequent to the Combination
PPU Holders Distribution
Period Prior to the Combination
Common Stock
Class A Common Stock
Common Stock
Class A Common Stock
Period Subsequent to the Combination
Common Stock
Class A Common Stock
Period Subsequent to the Combination
Private Placement
Common Stock
Class A Common Stock
Period Subsequent to the Combination
PPU Holders Distribution
Common Stock
Class B Common Stock
Common Stock
Class B Common Stock
Period Subsequent to the Combination
Common Stock
Class B Common Stock
Period Subsequent to the Combination
Private Placement
Common Stock
Class B Common Stock
Period Subsequent to the Combination
PPU Holders Distribution
Common Stock
Class B-1 Common Stock
Common Stock
Class B-1 Common Stock
Period Subsequent to the Combination
Private Placement
Additional Paid-in Capital
Additional Paid-in Capital
Period Subsequent to the Combination
Additional Paid-in Capital
Period Subsequent to the Combination
Private Placement
Additional Paid-in Capital
Period Subsequent to the Combination
PPU Holders Distribution
Additional Paid-in Capital
Period Prior to the Combination
Members' and Stockholders' Accumulated Deficit
Members' and Stockholders' Accumulated Deficit
Period Subsequent to the Combination
Members' and Stockholders' Accumulated Deficit
Period Prior to the Combination
Accumulated Other Comprehensive (Loss) Income
Accumulated Other Comprehensive (Loss) Income
Period Subsequent to the Combination
Accumulated Other Comprehensive (Loss) Income
Period Subsequent to the Combination
Private Placement
Accumulated Other Comprehensive (Loss) Income
Period Subsequent to the Combination
PPU Holders Distribution
Accumulated Other Comprehensive (Loss) Income
Period Prior to the Combination
Non-Controlling Interests
Non-Controlling Interests
Period Subsequent to the Combination
Non-Controlling Interests
Period Subsequent to the Combination
Private Placement
Non-Controlling Interests
Period Subsequent to the Combination
PPU Holders Distribution
Non-Controlling Interests
Period Prior to the Combination
Members' Equity
Members' Equity
Period Subsequent to the Combination
Members' Equity
Period Prior to the Combination
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                                                        
Cumulative-effective adjustment from adoption of Topic 842 | Adoption of ASU 2014-09 (Topic 606)         $ 4,977                                   $ 4,977                          
Members' equity beginning balance at Dec. 31, 2017 $ (375,582)                             $ 8,562         $ (382,785)     $ (14,232)         $ 10,157         $ 2,716    
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                                                        
Net (loss) income (180,973) $ (32,331)                                       $ (10,976)               $ (21,355)            
Net (loss) income, Period Prior to the Combination (148,806)       (148,709)                                   (148,806)                   $ 97      
Capital contribution from non-controlling interest         360                                                       $ 360      
Distributions to members         (191,560)                             $ (8,562)     $ (182,998)                          
PPU expense         158,757                                                             $ 158,757
Foreign currency translation adjustment (8,964) (10,685)     1,721                                       $ (4,554)     $ 1,721   (6,131)            
Capital contribution by Amneal Holdings for employee bonuses         $ 27,742                                                             $ 27,742
Effect of the Combination   1,483,143         $ 733       $ 2,250           $ 323,589         709,612     9,437         626,737         $ (189,215)  
Effect of the Combination (in shares)             73,289       224,996                                                  
Stock-based compensation   5,234                             5,234                                      
Exercise of stock options   3,162         $ 3                   3,610               (7)         (444)            
Exercise of stock options (in shares)             279                                                          
Redemption of Class B Common Stock     $ 32,714 $ 4,823       $ 345 $ 69     $ (468) $ (69)   $ 123     $ 165,180 $ 24,293             $ (1,965) $ (289)       $ (130,501) $ (19,181)        
Redemption of Class B Common Stock (in shares)               34,520 6,886     (46,849) (6,886)   12,329                                          
Reclassification of redeemable non-controlling interest   (11,708)                                       (1,176)               (10,532)            
Non-controlling interests from acquisition of Gemini   2,518                                                       2,518            
Tax distribution   (35,543)                                                       (35,543)            
Other   (3,714)                             (1,746)                         (1,968)            
Stockholders' equity ending balance at Sep. 30, 2018 915,319         $ 1,150       $ 1,713       $ 123   520,160         (12,152)     (9,889)         414,214              
Shares ending balance (in shares) at Sep. 30, 2018           114,974       171,261       12,329                                            
Increase (Decrease) in Temporary Equity [Roll Forward]                                                                        
Net income   67                                                                    
Reclassification of redeemable non- controlling interest   11,708                                                                    
Acquisition of redeemable non-controlling interest   (11,775)                                                                    
Stockholders' equity beginning balance at Jun. 30, 2018 939,486         $ 1,149       $ 1,713       $ 123   517,122         (19,104)     (6,502)         444,985              
Shares beginning balance (in shares) at Jun. 30, 2018           114,859       171,261       12,329                                            
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                                                        
Net (loss) income 17,465 17,398                                       6,888               10,510            
Net (loss) income, Period Prior to the Combination 0                                                                      
Foreign currency translation adjustment (7,939) (7,939)                                             (3,384)         (4,555)            
Effect of the Combination   (2,329)                             (2,329)                                      
Stock-based compensation   3,590                             3,590                                      
Exercise of stock options   1,185         $ 1                   1,369               $ (3)         (182)            
Exercise of stock options (in shares)             115                                                          
Reclassification of redeemable non-controlling interest   150                                       $ 64               86            
Non-controlling interests from acquisition of Gemini   (531)                                                       (531)            
Tax distribution   (35,543)                                                       (35,543)            
Other   (148)                             $ 408                         $ (556)            
Stockholders' equity ending balance at Sep. 30, 2018 915,319         $ 1,150       $ 1,713       $ 123   520,160         (12,152)     (9,889)         414,214              
Shares ending balance (in shares) at Sep. 30, 2018           114,974       171,261       12,329                                            
Redeemable Noncontrolling Interest, balance at Jun. 30, 2018 11,858                                                                      
Increase (Decrease) in Temporary Equity [Roll Forward]                                                                        
Net income   67                                                                    
Reclassification of redeemable non- controlling interest   (150)                                                                    
Acquisition of redeemable non-controlling interest   $ (11,775)                                                                    
Cumulative-effective adjustment from adoption of Topic 842 | Adoption of Topic 842 13,561                                       4,957               8,604              
Stockholders' equity beginning balance at Dec. 31, 2018 896,363         $ 1,151       $ 1,713       $ 123   530,438         (20,920)     (7,755)         391,613              
Shares beginning balance (in shares) at Dec. 31, 2018           115,047       171,261       12,329                                            
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                                                        
Net (loss) income (538,670)                                       (329,789)               (208,881)              
Net (loss) income, Period Prior to the Combination 0                                                                      
Foreign currency translation adjustment 4,014                                             1,759         2,255              
Stock-based compensation 16,666                             16,666                                        
Exercise of stock options 1,385         $ 2                   922               (7)         468              
Exercise of stock options (in shares)           205                                                            
Restricted stock unit vesting, net of shares withheld to cover payroll taxes (926)         $ 2                   10               (5)         (933)              
Restricted stock unit vesting, net of shares withheld to cover payroll taxes (in shares)           253                                                            
Redemption of Class B Common Stock           $ 62       $ (62)           17,605               (332)         (17,273)              
Redemption of Class B Common Stock (in shares)           6,256       (6,256)                                                    
Conversion of Class B-1 Common Stock           $ 123               $ (123)                                            
Conversion of Class B-1 Common Stock (in shares)           12,329               (12,329)                                            
Tax distribution (82)                                                       (82)              
Reclassification of foreign currency translation adjustment included in net loss 3,413                                             1,461         1,952              
Stockholders' equity ending balance at Sep. 30, 2019 395,724         $ 1,340       $ 1,651           565,641         (345,752)     (4,879)         177,723              
Shares ending balance (in shares) at Sep. 30, 2019           134,090       165,005                                                    
Stockholders' equity beginning balance at Jun. 30, 2019 749,352         $ 1,281       $ 1,710           544,161         (80,746)     (6,750)         289,696              
Shares beginning balance (in shares) at Jun. 30, 2019           128,151       170,941                                                    
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                                                        
Net (loss) income (363,392)                                       (265,006)               (98,386)              
Net (loss) income, Period Prior to the Combination 0                                                                      
Foreign currency translation adjustment 4,997                                             2,184         2,813              
Stock-based compensation 6,095                             6,095                                        
Restricted stock unit vesting, net of shares withheld to cover payroll taxes (5)                             4                         (9)              
Restricted stock unit vesting, net of shares withheld to cover payroll taxes (in shares)           3                                                            
Redemption of Class B Common Stock (223)         $ 59       $ (59)           16,481               (313)         (16,391)              
Redemption of Class B Common Stock (in shares)           5,936       (5,936)                                                    
Other (1,100)                             (1,100)                                        
Stockholders' equity ending balance at Sep. 30, 2019 $ 395,724         $ 1,340       $ 1,651           $ 565,641         $ (345,752)     $ (4,879)         $ 177,723              
Shares ending balance (in shares) at Sep. 30, 2019           134,090       165,005                                                    
v3.19.3
Nature of Operations
9 Months Ended
Sep. 30, 2019
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
Nature of Operations

1. Nature of Operations

Amneal Pharmaceuticals, Inc., formerly known as Atlas Holdings, Inc. (the "Company"), was formed along with its wholly owned subsidiary, K2 Merger Sub Corporation, a Delaware corporation ("Merger Sub"), on October 4, 2017, for the purpose of facilitating the combination of Impax Laboratories, Inc. (now Impax Laboratories, LLC), a Delaware corporation then listed on the Nasdaq Stock Market ("Impax") and Amneal Pharmaceuticals LLC, a Delaware limited liability company ("Amneal"). The Company is a holding company, whose principal assets are Amneal Common Units.

Amneal was formed in 2002 and operates through various subsidiaries. Amneal is a vertically integrated developer, manufacturer, and seller of generic pharmaceutical products. Amneal’s pharmaceutical research includes analytical and formulation development and stability. Amneal operates principally in the United States, Switzerland, India, and Ireland. Amneal divested its operations in the United Kingdom on March 30, 2019 and Germany on May 3, 2019. For additional information, refer to Note 3. Acquisitions and Divestitures. Amneal sells to wholesalers, distributors, hospitals, chain pharmacies and individual pharmacies, either directly or indirectly.

On October 17, 2017, Amneal, Impax, the Company and Merger Sub entered into the Business Combination Agreement, as amended on November 21, 2017 and December 16, 2017 (the "BCA").

On May 4, 2018, pursuant to the BCA, Impax and Amneal combined the generics and specialty pharmaceutical business of Impax with the generic drug development and manufacturing business of Amneal to create the Company as a new generics and specialty pharmaceutical company, through the following transactions (together, the "Combination", and the closing of the Combination, the "Closing"): (i) Merger Sub merged with and into Impax, with Impax surviving as a wholly owned subsidiary of the Company, (ii) each share of Impax’s common stock, par value $0.01 per share ("Impax Common Stock"), issued and outstanding immediately prior to the Closing, other than Impax Common Stock held by Impax in treasury, by the Company or by any of their respective subsidiaries, was converted into the right to receive one fully paid and non-assessable share of Class A common stock of the Company, par value $0.01 per share ("Class A Common Stock"), (iii) Impax converted to a Delaware limited liability company, (iv) the Company contributed to Amneal all of the Company’s equity interests in Impax, in exchange for Amneal common units ("Amneal Common Units"), (v) the Company issued an aggregate number of shares of Class B common stock of the Company, par value $0.01 per share ("Class B Common Stock", and collectively, with the Class A Common Stock and Class B-1 common stock of the Company, par value $0.01 , ("Class B-1 Common Stock"), the "Company Common Stock") to APHC Holdings, LLC, (formerly Amneal Holdings, LLC), the parent entity of Amneal as of the Closing ("Holdings"), and (vi) the Company became the managing member of Amneal.

Immediately upon the Closing, holders of Impax Common Stock prior to the Closing collectively held approximately 25% of the Company and Holdings held a majority interest in the Company with an effective voting interest of approximately 75% on a fully diluted and as converted basis through its ownership of Class B Common Stock. Holdings also held a corresponding number of Amneal Common Units, which entitled it to approximately 75% of the economic interests in the combined businesses of Impax and Amneal. The Company held an interest in Amneal of approximately 25%.

In connection with the Combination, on May 4, 2018, Holdings entered into definitive purchase agreements which provided for a private placement of certain shares of Class A Common Stock and Class B-1 Common Stock (the "PIPE Investment") with select institutional investors (the "PIPE Investors"). Pursuant to the terms of the purchase agreements, upon the Closing, Holdings exercised its right to cause the Company to redeem approximately 15% of its ownership interests in the Company in exchange for 34.5 million shares of Class A Common Stock and 12.3 million unregistered shares of Class B-1 Common Stock (the "Redemption"). The shares of Class A Common Stock and Class B-1 Common Stock received in the Redemption were sold immediately following the Closing by Holdings to the PIPE Investors at a per share purchase price of $18.25 for gross proceeds of $855 million. Following the PIPE Investment, the PIPE Investors owned collectively approximately 15% of the Company Common Stock on a fully diluted and as converted basis.

On May 4, 2018, Holdings also caused Amneal to redeem (the "Closing Date Redemption") 6.9 million of Amneal Common Units held by Holdings for a like number of shares of Class A Common Stock, for future distribution to certain direct and indirect members of Holdings who were or are employees of the Company and to whom were previously issued (prior to the Closing) profit participation units ("PPUs") in Amneal. As a result of the PIPE Investment and Closing Date Redemption, the voting and economic interest of approximately 75% held by Holdings immediately upon Closing was reduced by approximately 18%. The overall interest percentage held by non-controlling interest holders (the "Amneal Group") upon the consummation of the Combination, PIPE Investment and Closing Date Redemption was approximately 57%. As of September 30, 2019 and December 31, 2018, the overall interest percentage held by non-controlling interest holders was approximately 55% and 57%, respectively.

On July 5, 2018, Holdings distributed to its members all Amneal Common Units and shares of Class B Common Stock held by Holdings. As a result, as of September 30, 2019, Holdings did not hold any equity interest in Amneal or the Company.

During the three months ended June 30, 2019, pursuant to the Company's certificate of incorporation, the Company converted all (12.3 million) of its issued and outstanding shares of Class B-1 Common Stock to Class A Common Stock and such shares of Class B-1 Common Stock have been retired and may not be reissued by the Company. The rights of Class A Common Stock and Class B-1 Common Stock are identical, except that the Class B-1 Common Stock had certain director appointment rights and the Class B-1 Common Stock had no voting rights (other than with respect to its director appointment right and as otherwise required by law).

v3.19.3
Summary of Significant Accounting Policies
9 Months Ended
Sep. 30, 2019
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements, which are prepared in accordance with generally accepted accounting principles in the United States of America, should be read in conjunction with Amneal’s annual audited financial statements for the year ended December 31, 2018 included in the Company’s 2018 Annual Report on Form 10-K. Certain information and footnote disclosures normally included in annual financial statements have been omitted from the accompanying unaudited consolidated financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the Company's financial position as of September 30, 2019, cash flows for the nine months ended September 30, 2019 and 2018 and the results of its operations, its comprehensive loss and changes in stockholders' equity for the three and nine months ended September 30, 2019 and 2018. The consolidated balance sheet data at December 31, 2018 was derived from the Company's audited annual financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

The accounting policies of the Company are set forth in Note 2. Summary of Significant Accounting Policies contained in the Company’s 2018 Annual Report on Form 10-K, except for the impact of the adoption of new accounting standards discussed under Recently Adopted Accounting Pronouncements.

Use of Estimates

The preparation of financial statements requires the Company's management to make estimates and assumptions that affect the reported financial position at the date of the financial statements and the reported results of operations during the reporting period. Such estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities in the consolidated financial statements and accompanying notes. The following are some, but not all, of such estimates: the determination of chargebacks, sales returns, rebates, billbacks, allowances for accounts receivable, accrued liabilities, stock-based compensation, valuation of inventory balances, the determination of useful lives for product rights, allowances for deferred tax assets and the assessment of expected cash flows used in evaluating goodwill and other long-lived assets for impairment. Actual results could differ from those estimates.

Reclassifications

Certain prior period balances have been reclassified to conform to the current period presentation.

Recently Adopted Accounting Pronouncements

Leases

In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, Leases, which was subsequently supplemented by clarifying guidance (collectively, "Topic 842") to improve financial reporting of leasing transactions. Topic 842 requires a lessee to recognize most leases, including those classified as operating, on its balance sheets as right of use ("ROU") assets and lease liabilities and requires disclose of additional key information about leases.

The Company elected to apply the modified retrospective transition provisions of Topic 842 on January 1, 2019, the date of adoption. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard. This allowed the Company to carry forward historical lease classifications. Adoption of this standard resulted in the recording of operating lease ROU assets and operating lease liabilities of $85 million and $86 million, respectively.

The transition guidance of Topic 842 also required the Company to de-recognize the build to suit accounting associated with a related party lease for integrated manufacturing and office space and recognize that transaction as a financing lease as of January 1, 2019. The resulting de-recognition reduced leasehold improvements and a financing obligation by $24 million and $39 million, respectively, and increased non-controlling interests and stockholders' accumulated deficit, net of income taxes, by $9 million and $5 million, respectively. The arrangement was then recognized as a financing lease with an ROU asset and lease liability of $64 million on January 1, 2019. Leases with related parties, the details of which are described in Note 15. Related Party Transactions, are presented separately in the Company's balance sheets.

The adoption of Topic 842 did not have a material impact on the Company's consolidated statements of operations. ROU assets and lease liabilities for reporting periods beginning on or after January 1, 2019 are presented under the new guidance, while prior periods amounts were not adjusted and continue to be reported in accordance with previous guidance.

All significant lease arrangements after January 1, 2019 are recognized as ROU assets and lease liabilities at lease commencement. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the present value of the future lease payments using the Company's incremental borrowing rate, which is assessed quarterly.

Operating lease expense is recognized on a straight-line basis over the lease term. At each balance sheet date, operating and financing lease liabilities continue to represent the present value of the future payments. Financing lease ROU assets are expensed using the straight-line method, unless another basis is more representative of the pattern of economic benefit, to lease expense. Interest on financing lease liabilities is recognized in interest expense.

Leases with an initial term of 12 months or less (short-term leases) are not recognized in the balance sheet and the related lease payments are recognized as incurred over the lease term. The Company separates lease and non-lease components. A portion of the Company's real estate leases are subject to periodic changes in the Consumer Price Index ("CPI"). The changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred.

For further details regarding the Company's leases, refer to Note 11. Leases.

Financial Instruments

In January 2016, the FASB issued ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The Company adopted ASU 2016-01 as of January 1, 2019 and it did not have a material impact on the Company's consolidated financial statements.

Goodwill

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment that eliminates the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of today’s goodwill impairment test) to measure a goodwill impairment charge. The Company adopted ASU 2017-04 as of April 1, 2019 on a prospective basis and it did not have a material impact on the Company's consolidated financial statements.

Recently Issued Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 82): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurement. The guidance is effective for annual periods beginning after December 15, 2019 and interim periods within those annual periods, and early adoption is permitted. The Company is evaluating the impact of this new guidance on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, guidance that changes the impairment model for most financial assets including trade receivables and certain other instruments that are not measured at fair value through net income. The standard will replace today’s "incurred loss" approach with an "expected loss" model for instruments measured at amortized cost and require entities to record allowances for available-for-sale debt securities rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. Entities will apply the standard’s provisions as a cumulative effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The guidance is effective for the Company for the annual period beginning after December 15, 2019. The Company is evaluating the impact of this new guidance on its consolidated financial statements.

v3.19.3
Acquisitions and Divestitures
9 Months Ended
Sep. 30, 2019
Business Combinations [Abstract]  
Acquisitions and Divestitures

3. Acquisitions and Divestitures

Impax Acquisition Unaudited Pro Forma Information

On May 4, 2018, the Company completed the Combination, as described in Note 1. Nature of Operations.  The unaudited pro forma combined results of operations for the nine months ended September 30, 2018 (assuming the closing of the Combination occurred on January 1, 2017) are as follows (in thousands):

 

 

 

Nine Months Ended

September 30, 2018

 

Net revenue

 

$

1,341,555

 

Net loss

 

$

(143,585

)

Net loss attributable to Amneal Pharmaceuticals, Inc.

 

$

(21,502

)

 

The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the actual results of operations had the closing of the Combination taken place on January 1, 2017. Furthermore, the pro forma results do not purport to project the future results of operations of the Company.

The unaudited pro forma information reflects primarily the following non-recurring adjustments (all of which were adjusted for the applicable tax impact):

 

 

Adjustments to costs of goods sold related to the inventory acquired; and

 

Adjustments to selling, general and administrative expense related to transaction costs directly attributable to the transactions. 

UK Divestiture

On March 30, 2019, the Company sold 100% of the stock of its Creo Pharma Holding Limited subsidiary, which comprised substantially all of the Company's operations in the United Kingdom, to AI Sirona (Luxembourg) Acquisition S.a.r.l ("AI Sirona") for net cash consideration of approximately $32 million which was received in April 2019. The carrying value of the net assets sold was $22 million, including intangible assets of $7 million and goodwill of $5 million. As a result of the sale, the Company recognized a pre-tax gain of $9 million, inclusive of transaction costs and the recognition of accumulated foreign currency translation adjustment losses of $3 million, within (loss) gain on sale of international business for the nine months ended September 30, 2019. As part of the disposition, the Company entered into a supply and license agreement with AI Sirona to supply certain products for a period of up to two years.

Germany Divestiture

On May 3, 2019, the Company sold 100% of the stock of its Amneal Deutschland GmbH subsidiary, which comprised substantially all of the Company's operations in Germany, to EVER Pharma Holding Ges.m.b.H. (“EVER”) for net cash consideration of approximately $3 million which was received in May 2019. The carrying value of the net assets sold was $7 million, including goodwill of $0.5 million. As a result of the sale, the Company recognized a pre-tax loss of $2 million, inclusive of transaction costs and the recognition of accumulated foreign currency translation adjustment losses, within (loss) gain on sale of international business for the nine months ended September 30, 2019. As part of the disposition, the Company also entered into a license and supply agreement with EVER to supply certain products for an 18 month period.

v3.19.3
Revenue Recognition
9 Months Ended
Sep. 30, 2019
Revenue From Contract With Customer [Abstract]  
Revenue Recognition

4. Revenue Recognition

Performance Obligations

The Company’s performance obligation is the supply of finished pharmaceutical products to its customers. The Company’s customers consist primarily of major wholesalers, retail pharmacies, managed care organizations, purchasing co-ops, hospitals, government agencies and pharmaceutical companies. The Company’s customer contracts generally consist of both a master agreement, which is signed by the Company and its customer, and a customer submitted purchase order, which is governed by the terms and conditions of the master agreement. Customers purchase product by direct channel sales from the Company or by indirect channel sales through various distribution channels.

Revenue is recognized when the Company transfers control of its products to the customer, which typically occurs at a point-in-time, upon delivery. Substantially all of the Company’s net revenues relate to products which are transferred to the customer at a point-in-time.

The Company offers standard payment terms to its customers and has elected the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing, since the period between when the Company transfers the product to the customer and when the customer pays for that product is one year or less. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenues. The consideration amounts due from customers as a result of product sales are subject to variable consideration, as described further below.

The Company offers standard product warranties which provide assurance that the product will function as expected and in accordance with specifications. Customers cannot purchase warranties separately and these warranties do not give rise to a separate performance obligation.

The Company permits the return of product under certain circumstances, mainly upon product expiration, instances of shipping errors or where product is damaged in transit. The Company accrues for the customer’s right to return as part of its variable consideration. See below for further details.

Variable Consideration

The Company includes an estimate of variable consideration in its transaction price at the time of sale, when control of the product transfers to the customer. Variable consideration includes but is not limited to: chargebacks, rebates, group purchasing organization ("GPO") fees, prompt payment (cash) discounts, consideration payable to the customer, billbacks, Medicaid and other government pricing programs, price protection and shelf stock adjustments, sales returns, and profit shares.

The Company assesses whether or not an estimate of its variable consideration is constrained and has determined that the constraint does not apply, since it is probable that a significant reversal in the amount of cumulative revenue will not occur in the future when the uncertainty associated with the variable consideration is subsequently resolved. The Company’s estimates for variable consideration are adjusted as required at each reporting period for specific known developments that may result in a change in the amount of total consideration it expects to receive.

Chargebacks

In the case an indirect customer purchases product from their preferred wholesaler instead of directly from the Company, and the contract price charged to the indirect customer is lower than the wholesaler pricing, the Company pays the direct customer (wholesaler) a chargeback for the price differential. The Company estimates its chargeback accrual based on its estimates of the level of inventory of its products in the distribution channel that remain subject to chargebacks and historical chargeback rates. The estimate of the level of products in the distribution channel is based primarily on data provided by key customers.

Rebates

The Company pays fixed or volume-based rebates to its customers based on a fixed amount, fixed percentage of product sales or based on the achievement of a specified level of purchases. The Company’s rebate accruals are based on actual net sales, contractual rebate rates negotiated with customers, and expected purchase volumes / corresponding tiers based on actual sales to date and forecasted amounts.

Group Purchasing Organization Fees

The Company pays fees to GPOs for administrative services that the GPOs perform in connection with the purchases of product by the GPO participants who are the Company’s customers. The Company’s GPO fee accruals are based on actual net sales, contractual fee rates negotiated with GPOs and the mix of the products in the distribution channel that remain subject to GPO fees.

Prompt Payment (Cash) Discounts

The Company provides customers with prompt payment discounts which may result in adjustments to the price that is invoiced for the product transferred, in the case that payments are made within a defined period. The Company’s prompt payment discount accruals are based on actual net sales and contractual discount rates.

Consideration Payable to the Customer

The Company pays administrative and service fees to its customers based on a fixed percentage of the product price. These fees are not in exchange for a distinct good or service and therefore are recognized as a reduction of the transaction price. The Company accrues for these fees based on actual net sales, contractual fee rates negotiated with the customer and the mix of the products in the distribution channel that remain subject to fees.

Billbacks

In the case an indirect customer purchases product from their preferred wholesaler instead of directly from the Company, and the contract price charged to the indirect customer is higher than contractual pricing, the Company pays the indirect customer a billback for the price differential. The Company estimates its billback accrual based on its estimates of the level of inventory of its products in the distribution channel that remain subject to billbacks and historical billback rates. The estimate of the level of products in the distribution channel is based primarily on data provided by key customers.

Medicaid and Other Government Pricing Programs

The Company complies with required rebates mandated by law under Medicaid and other government pricing programs. The Company estimates its government pricing accruals based on monthly sales, historical experience of claims submitted by the various states and jurisdictions, historical rates and estimated lag time of the rebate invoices.

Price Protection and Shelf Stock Adjustments

The Company provides customers with price protection and shelf stock adjustments which may result in an adjustment to the price charged for the product transferred, based on differences between old and new prices which may be applied to the customer’s on-hand inventory at the time of the price change. The Company accrues for these adjustments when its expected value of an adjustment is greater than zero, based on contractual pricing, actual net sales, accrual rates based on historical average rates, and estimates of the level of inventory of its products in the distribution channel that remain subject to these adjustments. The estimate of the level of products in the distribution channel is based primarily on data provided by key customers.

Sales Returns

The Company permits the return of product under certain circumstances, mainly upon product expiration, instances of shipping errors or where product is damaged in transit, and occurrences of product recalls. The Company’s product returns accrual is primarily based on estimates of future product returns based generally on actual net sales, estimates of the level of inventory of its products in the distribution channel that remain subject to returns, estimated lag time of returns and historical return rates. The estimate of the level of products in the distribution channel is based primarily on data provided by key customers.

Profit Shares

For certain product sale arrangements, the Company earns a profit share upon the customer’s sell-through of the product purchased from the Company. The Company estimates its profit shares based on actual net sales, estimates of the level of inventory of its products in the distribution channel that remain subject to profit shares, and historical rates of profit shares earned. The estimate of the level of products in the distribution channel is based primarily on data provided by key customers.

Concentration of Revenue

The Company's three largest customers accounted for approximately 81% and 80% of total gross sales of products for the three and nine months ended September 30, 2019, respectively. The Company's three largest customers accounted for approximately 83% and 82% of total gross sales of products for the three and nine months ended September 30, 2018, respectively.

Significant Products

The Company generally consolidates net revenue by "product family," meaning that it consolidates net revenue from products containing the same active ingredient(s) irrespective of dosage strength, delivery method or packaging size. The Company's significant product families, as determined based on net revenue, and their percentage of the Company's consolidated net revenue for each of the three and nine months ended September 30, 2019 and 2018 are set forth below (in thousands, except for percentages):

 

Segment

 

Product Family

 

Three Months Ended September 30, 2019

 

 

 

 

 

$

 

 

%

 

Generics

 

Levothyroxine Sodium

 

$

39,767

 

 

11%

 

Specialty

 

Rytary®

 

 

33,710

 

 

9%

 

Generics

 

Epinephrine Auto-Injector (generic Adrenaclick®)

 

 

22,687

 

 

6%

 

Generics

 

Diclofenac Sodium Gel

 

 

19,264

 

 

5%

 

Specialty (1)

 

Oxymorphone

 

$

17,142

 

 

5%

 

 

Segment

 

Product Family

 

Three Months Ended September 30, 2018

 

 

 

 

 

$

 

 

%

 

Generics

 

Yuvafem-Estradiol

 

$

48,466

 

 

10%

 

Specialty

 

Rytary®

 

 

33,073

 

 

7%

 

Generics

 

Epinephrine Auto-Injector (generic Adrenaclick®)

 

 

30,259

 

 

6%

 

Generics

 

Diclofenac Sodium Gel

 

 

26,455

 

 

6%

 

Generics

 

Aspirin; Dipyridamole ER Capsule

 

$

22,777

 

 

5%

 

 

Segment

 

Product Family

 

Nine Months Ended September 30, 2019

 

 

 

 

 

$

 

 

%

 

Generics

 

Levothyroxine Sodium

 

$

135,220

 

 

11%

 

Specialty

 

Rytary®

 

 

95,538

 

 

8%

 

Generics

 

Diclofenac Sodium Gel

 

 

67,741

 

 

6%

 

Generics

 

Epinephrine Auto-Injector (generic Adrenaclick®)

 

 

53,841

 

 

4%

 

Specialty (1)

 

Oxymorphone

 

$

45,191

 

 

4%

 

 

(1)

For the six months ended June 30, 2019 Oxymorphone net revenue was recorded in the Generics segment.

 

Segment

 

Product Family

 

Nine Months Ended September 30, 2018

 

 

 

 

 

$

 

 

%

 

Generics

 

Yuvafem-Estradiol

 

$

106,477

 

 

9%

 

Generics

 

Diclofenac Sodium Gel

 

 

78,551

 

 

7%

 

Generics

 

Aspirin; Dipyridamole ER Capsule

 

 

67,718

 

 

6%

 

Specialty

 

Rytary®

 

 

53,593

 

 

5%

 

Generics

 

Epinephrine Auto-Injector (generic Adrenaclick®)

 

$

49,425

 

 

4%

 

 

A rollforward of the major categories of sales-related deductions for the nine months ended September 30, 2019 is as follows (in thousands):

 

 

 

Contract

Charge- backs

and Sales

Volume

Allowances

 

 

Cash Discount

Allowances

 

 

Accrued

Returns

Allowance

 

 

Accrued

Medicaid and

Commercial

Rebates

 

Balance at December 31, 2018

 

$

829,596

 

 

$

36,157

 

 

$

154,503

 

 

$

74,202

 

Provision related to sales recorded in the period

 

 

3,413,718

 

 

 

101,285

 

 

 

71,126

 

 

 

143,145

 

Credits/payments issued during the period

 

 

(3,444,048

)

 

 

(109,309

)

 

 

(85,666

)

 

 

(110,319

)

Balance at September 30, 2019

 

$

799,266

 

 

$

28,133

 

 

$

139,963

 

 

$

107,028

 

 

v3.19.3
Alliance and Collaboration
9 Months Ended
Sep. 30, 2019
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
Alliance and Collaboration

5. Alliance and Collaboration

The Company has entered into several alliance, collaboration, license, distribution and similar agreements with respect to certain of its products and services with third-party pharmaceutical companies. The consolidated statements of operations include revenue recognized under agreements the Company has entered into to develop marketing and/or distribution relationships with its partners to fully leverage the technology platform and revenue recognized under development agreements which generally obligate the Company to provide research and development services over multiple periods. The Company's significant arrangements are discussed below.

Levothyroxine License and Supply Agreement; Transition Agreement

On August 16, 2018, the Company entered into a license and supply agreement with Jerome Stevens Pharmaceuticals, Inc. ("JSP") for levothyroxine sodium tablets ("Levothyroxine"). This agreement designated the Company as JSP's exclusive commercial partner for Levothyroxine in the U.S. market for a 10 -year term commencing on March 22, 2019. Under this license and supply agreement with JSP, the Company accrued the up-front license payment of $50 million on March 22, 2019, which was paid in April 2019. The agreement also provides for the Company to pay a profit share to JSP based on net profits of the Company's sales of Levothyroxine, after considering product costs.

On November 9, 2018, the Company entered into a transition agreement ("Transition Agreement") with Lannett Company (“Lannett”) and JSP. Under the terms of the Transition Agreement, the Company assumed the distribution and marketing of Levothyroxine from Lannett beginning December 1, 2018 through March 22, 2019, ahead of the commencement date of the license and supply agreement with JSP described above.

In accordance with the terms of the Transition Agreement, the Company made $47 million of non-refundable payments to Lannett. For the nine months ended September 30, 2019 and the year ended December 31, 2018, $37 million and $10 million, respectively, were expensed to cost of goods sold, as the Company sold Levothyroxine (none in the three months ended September 30, 2019). As of December 31, 2018 , the Company had a $4 million transition contract liability, which was fully settled in February 2019.

Biosimilar Licensing and Supply Agreement

On May 7, 2018, the Company entered into a licensing and supply agreement, with Mabxience S.L., for its biosimilar candidate for Avastin® (bevacizumab). The Company will be the exclusive partner in the U.S. market. The Company will pay development and regulatory milestone payments as well as commercial milestone payments on reaching pre-agreed sales targets in the market to Mabxience, up to $72 million. For the nine months ended September 30, 2019 the Company expensed a milestone payment of $1 million (none for the three months ended September 30, 2019), to research and development. For the nine months ended September 30, 2018, the Company expensed a milestone payment of $0.5 million to research and development (none for the three months ended September 30, 2018).

Distribution, License, Development and Supply Agreement with AstraZeneca UK Limited

In January 2012, Impax entered into an agreement with AstraZeneca UK Limited ("AstraZeneca") to distribute branded products under the terms of a distribution, license, development and supply Agreement (the "AZ Agreement"). The parties subsequently entered into a First Amendment to the AZ Agreement dated May 31, 2016 (as amended, the "AZ Amendment"). Under the terms of the AZ Agreement, AstraZeneca granted to Impax an exclusive license to commercialize the tablet, orally disintegrating tablet and nasal spray formulations of Zomig® (zolmitriptan) products for the treatment of migraine headaches in the United States and in certain U.S. territories, except during an initial transition period when AstraZeneca fulfilled all orders of Zomig® products on Impax’s behalf and AstraZeneca paid to Impax the gross profit on such Zomig® products. Pursuant to the AZ Amendment, under certain conditions, and depending on the nature and terms of the study agreed to with the FDA, Impax agreed to conduct, at its own expense, the juvenile toxicity study and pediatric study required by the FDA under the Pediatric Research Equity Act ("PREA") for approval of the nasal formulation of Zomig ® for the acute treatment of migraine in pediatric patients ages six through eleven years old, as further described in the study protocol mutually agreed to by the parties (the "PREA Study"). In consideration for Impax conducting the PREA Study at its own expense, the AZ Amendment provides for the total royalty payments payable by Impax to AstraZeneca on net sales of Zomig ® products under the AZ Agreement to be reduced by an aggregate amount of $30 million to be received in quarterly amounts specified in the AZ Amendment beginning from the quarter ended June 30, 2016 and through the quarter ended December 31, 2020 . In the event the royalty reduction amounts exceed the royalty payments payable by Impax to AstraZeneca pursuant to the AZ Agreement in any given quarter, AstraZeneca will be required to pay Impax an amount equal to the difference between the royalty reduction amount and the royalty payment payable by Impax to AstraZeneca. Impax’s commitment to perform the PREA Study may be terminated, without penalty, under certain circumstances as set forth in the AZ Amendment. The Company recognizes the amounts received from AstraZeneca for the PREA Study as a reduction to research and development expense.

In May 2013, Impax’s exclusivity period for branded Zomig® tablets and orally disintegrating tablets expired and Impax launched authorized generic versions of those products in the United States. As discussed above, pursuant to the AZ Amendment, the total royalty payments payable by Impax to AstraZeneca on net sales of Zomig ® products under the AZ Agreement is reduced by certain specified amounts beginning from the quarter ended June 30, 2016 and through the quarter ended December 31, 2020, with such reduced royalty amounts totaling an aggregate amount of $30 million. The Company recorded cost of sales for royalties under this agreement of $5 million and $14 million for the three and nine months ended September 30, 2019 , respectively, and $5 million and $8 million for the three and nine months ended September 30, 2018, respectively.

Adello License and Commercialization Agreement

On October 1, 2017, Amneal and Adello Biologics, LLC ("Adello"), a related party, entered into a license and commercialization agreement. Adello granted Amneal an exclusive license, under its New Drug Application, to distribute and sell two bio-similar products in the U.S. Adello is responsible for development, regulatory filings, obtaining FDA approval, and manufacturing, and Amneal is responsible for marketing, selling and pricing activities. The term of the agreement is 10 -years from the respective product’s launch date. In connection with the agreement, Amneal paid an upfront amount of $2 million in October 2017 for execution of the agreement which was expensed in research and development. The agreement also provides for potential future milestone payments to Adello of (i) up to $21 million relating to regulatory approval, (ii) up to $43 million for successful delivery of commercial launch inventory, (iii) between $20 million and $50 million relating to number of competitors at launch for one product, and (iv) between $15 million and $68 million for the achievement of cumulative net sales for both products. The milestones are subject to certain performance conditions which may or may not be achieved, including FDA filing, FDA approval, launch activities and commercial sales volume objectives. In addition, the agreement provides for Amneal to pay a profit share equal to 50% of net profits, after considering manufacturing and marketing costs.  The research and development expenses for payments made to Adello for the three and nine months ended September 30, 2019 and 2018 were immaterial.

v3.19.3
Restructuring and Other Charges
9 Months Ended
Sep. 30, 2019
Restructuring And Related Activities [Abstract]  
Restructuring and Other Charges

6. Restructuring and Other Charges

During the three months ended June 30, 2018, in connection with the Combination, the Company committed to a restructuring plan to achieve cost savings. The Company expected to integrate its operations and reduce its combined cost structure through workforce reductions that eliminate duplicative positions and the consolidation of certain administrative, manufacturing and research and development facilities. In connection with this plan, the Company announced on May 10, 2018 that it intended to close its Hayward, California based operations.

In addition to the actions noted above, on July 10, 2019, the Company announced a plan to restructure its operations that is intended to reduce costs and optimize its organizational and manufacturing infrastructure. Pursuant to the restructuring plan as revised, the Company expects to reduce its headcount by approximately 300 to 350 employees, primarily by closing its manufacturing facility located in Hauppauge, NY.  As a result of the restructuring plan, the Company estimates that it will incur a pre-tax restructuring charge of approximately $6 to $8 million of cash expenditures related to severance benefits.

Other cash expenditures associated with this restructuring plan, including decommissioning and dismantling the sites and other third party costs cannot be estimated at this time (collectively these actions comprise the "Plans").

The following table sets forth the components of the Company's restructuring and other charges (in thousands):

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Employee restructuring separation charges (1)

 

$

6,187

 

 

$

(2,156

)

 

$

8,607

 

 

$

42,309

 

Asset-related charges (2)

 

 

10,609

 

 

 

 

 

 

11,923

 

 

 

 

Total employee and asset-related restructuring charges

 

 

16,796

 

 

 

(2,156

)

 

 

20,530

 

 

 

42,309

 

Other employee severance charges (3)

 

 

4,141

 

 

 

 

 

 

9,403

 

 

 

 

Total restructuring and other charges

 

$

20,937

 

 

$

(2,156

)

 

$

29,933

 

 

$

42,309

 

 

(1)

Employee restructuring separation charges include the cost of benefits provided pursuant to the Company's severance programs for employees impacted by the Plans at the Company's Hauppauge, NY, Hayward, CA and other facilities.

(2)

Asset-related charges are primarily associated with the impairment of property, plant and equipment and right of use asset associated with the Company's Hauppauge, NY facility.

(3)

For the three months ended September 30, 2019, other employee severance charges are primarily associated with the resignation of the Company’s former Chief Executive Officer.  For the nine months ended September 30, 2019, other employee severance charges are primarily associated with the resignation of the Company’s former Chief Executive Officer and other former senior executives.

The charges related to restructuring impacted segment earnings as follows (in thousands):

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Generics

 

$

14,888

 

 

$

(2,885

)

 

$

17,201

 

 

$

21,912

 

Specialty

 

 

213

 

 

 

(27

)

 

 

391

 

 

 

2,394

 

Corporate

 

 

1,695

 

 

 

756

 

 

 

2,938

 

 

 

18,003

 

Total employee and asset-related restructuring charges

 

$

16,796

 

 

$

(2,156

)

 

$

20,530

 

 

$

42,309

 

 

The following table shows the change in the employee separation-related liability associated with the Plans, which is included in accounts payable and accrued expenses (in thousands):

 

 

 

Employee

Restructuring

 

Balance at December 31, 2018

 

$

22,112

 

Charges to income

 

 

8,607

 

Payments

 

 

(28,422

)

Balance at September 30, 2019

 

$

2,297

 

 

v3.19.3
(Loss) Earnings per Share
9 Months Ended
Sep. 30, 2019
Earnings Per Share [Abstract]  
(Loss) Earnings per Share

7. (Loss) Earnings per Share

Basic (loss) earnings per share of Class A Common Stock and Class B-1 Common Stock is computed by dividing net loss attributable to Amneal Pharmaceuticals, Inc. by the weighted-average number of shares of Class A Common Stock and Class B-1 Common Stock outstanding during the period. Diluted (loss) earnings per share of Class A Common Stock and Class B-1 Common Stock is computed by dividing net (loss) earnings attributable to Amneal Pharmaceuticals, Inc. by the weighted-average number of shares of Class A Common Stock and Class B-1 Common Stock outstanding, adjusted to give effect to potentially dilutive securities.

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted (loss) earnings per share of Class A Common Stock and Class B-1 Common Stock (in thousands, except per share amounts):

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income attributable to Amneal Pharmaceuticals, Inc.

 

$

(265,006

)

 

$

6,952

 

 

$

(329,789

)

 

$

(12,152

)

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of Class A Common Stock and Class B-1 Common Stock outstanding - basic

 

 

130,729

 

 

 

127,247

 

 

 

128,822

 

 

 

127,196

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options

 

 

 

 

 

661

 

 

 

 

 

 

 

Restricted stock units

 

 

 

 

 

314

 

 

 

 

 

 

 

Weighted-average shares of Class A Common Stock and Class B-1 Common Stock outstanding - diluted

 

 

130,729

 

 

 

128,222

 

 

 

128,822

 

 

 

127,196

 

Net (loss) earnings per share attributable to Amneal Pharmaceuticals, Inc.'s common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A and Class B-1 basic

 

$

(2.03

)

 

$

0.05

 

 

$

(2.56

)

 

$

(0.10

)

Class A and Class B-1 diluted

 

$

(2.03

)

 

$

0.05

 

 

$

(2.56

)

 

$

(0.10

)

 

The allocation of net (loss) earnings to the holders of shares of Class A Common Stock and Class B-1 Common Stock began following the closing of the Combination on May 4, 2018. Shares of the Company's Class B Common Stock do not share in the earnings or losses of the Company and, therefore, are not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B Common Stock under the two-class method has not been presented.

The following table presents potentially dilutive securities excluded from the computations of diluted earnings per share of Class A Common Stock and Class B-1 Common Stock (in thousands):

 

 

 

Three Months Ended

September 30,

 

 

 

Nine Months Ended

September 30,

 

 

 

 

2019

 

 

 

2018

 

 

 

2019

 

 

 

2018

 

 

Stock options

 

 

7,973

 

(1)

 

 

965

 

(2)

 

 

7,973

 

(1)

 

 

5,862

 

(1)

Restricted stock units

 

 

2,915

 

(1)

 

 

 

 

 

 

2,915

 

(1)

 

 

1,324

 

(1)

Performance stock units

 

 

357

 

(1)

 

 

 

 

 

 

357

 

(1)

 

 

 

 

Shares of Class B Common Stock

 

 

165,004

 

(3)

 

 

171,261

 

(3)

 

 

165,004

 

(3)

 

 

171,261

 

(3)

 

(1)

Excluded from the computation of diluted loss per share of Class A Common Stock and Class B-1 Common Stock because the effect of their inclusion would have been anti-dilutive since there was a net loss attributable to the Company during the period.

(2)

Excluded from the computation of diluted earnings per share of Class A Common Stock and Class B-1 Common Stock because the exercise price of the stock options exceeded the average market price of the Class A Common Stock during the period (out-of-the-money).

(3)

Shares of Class B Common Stock are considered potentially dilutive shares of Class A Common Stock and Class B-1 Common Stock. Shares of Class B Common Stock have been excluded from the computations of diluted earnings per share of Class A Common Stock and Class B-1 Common Stock because the effect of their inclusion would have been anti-dilutive under the if-converted method.

v3.19.3
Income Taxes
9 Months Ended
Sep. 30, 2019
Income Tax Disclosure [Abstract]  
Income Taxes

8. Income Taxes

As a result of the Combination (refer to Note 1. Nature of Operations), the Company became the sole managing member of Amneal, with Amneal being the accounting predecessor for accounting purposes. Amneal is a limited liability company that is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, Amneal is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by Amneal is passed through to and included in the taxable income or loss of its members, including the Company, on a pro rata basis subject to applicable tax regulations. The Company is subject to U.S. federal income taxes, in addition to state and local income taxes with respect to its allocable share of any taxable income or loss of Amneal, as well as any stand-alone income or loss generated by the Company. Amneal provides for income taxes in the various foreign jurisdictions in which it operates.

The Company records its valuation allowances against its deferred tax assets (“DTAs”) when it is more likely than not that all or a portion of a DTA will not be realized. The Company routinely evaluates the realizability of its DTAs by assessing the likelihood that its DTAs will be recovered based on all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, estimates of future taxable income, tax planning strategies and results of operations. Estimating future taxable income is inherently uncertain and requires judgment. In projecting future taxable income, the Company considers its historical results and incorporates certain assumptions, including projected new product launches, revenue growth, and operating margins, among others.

A valuation allowance, if needed, reduces DTAs to the amount expected to be realized. When determining the amount of net DTAs that are more likely than not to be realized, the Company assesses all available positive and negative evidence. This evidence includes, but is not limited to, prior earnings history, projected future earnings, carryback and carry-forward periods and the feasibility of ongoing tax strategies that could potentially enhance the likelihood of the realization of a DTA. The weight given to the positive and negative evidence is commensurate with the extent the evidence may be objectively verified. As such, it is generally difficult for positive evidence regarding projected future taxable income to outweigh objective negative evidence of recent financial reporting losses.

In assessing the need for a valuation allowance in the third quarter of fiscal 2019, the Company considered all available objective and verifiable evidence both positive and negative, including historical levels of pre-tax income (loss) both on a consolidated basis and tax reporting entity basis, legislative developments, expectations and risks associated with estimates of future pre-tax income, and prudent and feasible tax planning strategies.  The Company currently estimates that as of September 30, 2019 it will have generated a cumulative consolidated three year pre-tax loss.  As a result of this analysis, the Company determined that it is more likely than not that it will not realize the benefits of its gross DTAs and therefore has recorded a valuation allowance of $372 million for the three months ended September 30, 2019 to reduce the carrying value of these gross DTAs, net of the impact of the reversal of taxable temporary differences, to zero.

In connection with the Combination, the Company entered into a tax receivable agreement (“TRA”) for which it is generally required to pay the other holders of Amneal Common Units 85% of the applicable tax savings, if any, in U.S. federal and state income tax that it is deemed to realize as a result of certain tax attributes of their Amneal Common Units sold to the Company (or exchanged in a taxable sale) and that are created as a result of (i) the sales of their Amneal Common Units for shares of Class A Common Stock and (ii) tax benefits attributable to payments made under the TRA (including imputed interest).  In conjunction with the valuation allowance recorded on the DTAs, the Company reversed the accrued TRA liability of $193 million, which resulted in a gain recorded as a component of Other income (expense), net.

The projection of future taxable income involves significant judgment. Actual taxable income may differ from our estimates, which could significantly impact the liability under the TRA.   As noted above, we have determined it is more-likely-than-not we will be unable to utilize all of our DTAs subject to TRA; therefore, we have reversed the liability under the TRA related to the tax savings we may realize from common units sold or exchanged through September 30, 2019. If utilization of these DTAs becomes more-likely- than-not in the future, at such time, we will record liabilities under the TRA of up to an additional $193 million as a result of basis adjustments under Internal Revenue Code Section 754, which will be recorded through charges to our consolidated statement of operations.  However, if the tax attributes are not utilized in future years, it is reasonably possible no amounts would be paid under the TRA.  Should we determine that a DTA with a valuation allowance is realizable in a subsequent period, the related valuation allowance will be released and if a resulting TRA payment is determined to be probable, a corresponding TRA liability will be recorded.

For the three months ended September 30, 2019 and 2018, the Company's provision for income taxes and effective tax rates were $390 million and 1483.0% and $5 million and 22.6%, respectively.  The change in provision for income taxes is primarily associated with the charge to record the valuation allowance against the Company’s DTAs.

For the nine months ended September 30, 2019, the Company’s provision for income taxes and effective tax rate were $376 million and (230.2%) For the nine months ended September 30, 2018, the Company’s benefit from income taxes and effective tax rate were $7 million and 3.7%  The change in income taxes was primarily due to the provision to record the valuation allowance against the Company’s DTAs.  The change is also due to the change in the Company's legal structure subsequent to the Combination. Prior to the Combination, as a limited liability company, income taxes were only provided for the international subsidiaries as all domestic taxes flowed to the members. Subsequent to May 4, 2018, domestic income taxes were also provided for the Company's allocable share of income or losses from Amneal at the prevailing U.S. federal, state, and local corporate income tax rates.

The Company and its subsidiaries file income tax returns in the U.S. federal, and various state, local and foreign jurisdictions. The Company is not currently under income tax audit in any jurisdiction, and it will file its first income tax returns for the period ended December 31, 2018. Impax's federal tax filings for the 2015, 2016 and 2017 tax years are currently under audit and these are the only tax years open under the IRS statute of limitations for Impax. If there were adjustments to the attributes of Impax, they could impact the carryforward losses at the Company, which is the successor in interest to Impax. The Amneal partnership was audited for the tax year ended December 31, 2015 without any adjustments to taxable income. Income tax returns are generally subject to examination for a period of 3 years in the U.S. The statute of limitations for the 2016 and 2017 tax years will, therefore, expire no earlier than 2020. However, any adjustments to the 2016 or 2017 tax years would be pre-transaction when the Company had no ownership interest in Amneal. Under the partnership income tax regulations and audit guidelines, the Company is not responsible for any hypothetical pre-transaction income tax liabilities which pass through to the owners as of the year of any potential income tax adjustment. Neither the Company nor any of its other affiliates is currently under audit for state income tax.

v3.19.3
Trade Accounts Receivable, Net
9 Months Ended
Sep. 30, 2019
Receivables [Abstract]  
Trade Accounts Receivable, Net

9. Trade Accounts Receivable, Net

Trade accounts receivable, net is comprised of the following (in thousands):

 

 

 

September 30,

2019

 

 

December 31,

2018

 

Gross accounts receivable

 

$

1,347,401

 

 

$

1,349,588

 

Allowance for doubtful accounts

 

 

(1,893

)

 

 

(2,340

)

Contract charge-backs and sales volume allowances

 

 

(799,266

)

 

 

(829,596

)

Cash discount allowances

 

 

(28,133

)

 

 

(36,157

)

Subtotal

 

 

(829,292

)

 

 

(868,093

)

Trade accounts receivable, net

 

$

518,109

 

 

$

481,495

 

 

Receivables from customers representing 10% or more of the Company’s gross trade accounts receivable reflected three customers at September 30, 2019, equal to 35%, 25%, and 25%, respectively.  Receivables from customers representing 10% or more of the Company’s gross trade accounts receivable reflected three customers at December 31, 2018, equal to 30%, 28%, and 24%, respectively.

v3.19.3
Inventories
9 Months Ended
Sep. 30, 2019
Inventory Disclosure [Abstract]  
Inventories

10. Inventories

Inventories, net of reserves, are comprised of the following (in thousands):

 

 

 

September 30,

2019

 

 

December 31,

2018

 

Raw materials

 

$

182,828

 

 

$

181,654

 

Work in process

 

 

50,763

 

 

 

54,152

 

Finished goods

 

 

168,236

 

 

 

221,413

 

Total inventories

 

$

401,827

 

 

$

457,219

 

 

v3.19.3
Leases
9 Months Ended
Sep. 30, 2019
Leases [Abstract]  
Leases

11. Leases

The majority of the Company's operating and financing lease portfolio consists of corporate offices, manufacturing sites, warehouse space, research and development facilities and manufacturing equipment. The Company's leases have remaining lease terms of 1 year to 25 years. Rent expense for the three and nine months ended September 30, 2019 was $7 million and $19 million, respectively. Rent expense for the three and nine months ended September 30, 2018 was $6 million and $13 million, respectively.  The Company recorded a $2 million impairment charge for the right of use asset associated with its Hauppauge, NY facility during the three and nine months ended September 30, 2019 because the Company’s latest forecast does not support recoverability of that asset.  For further details, see Note 6. Restructuring and Other Charges.

The components of total lease costs were as follows (in thousands):

 

 

 

Three Months Ended September 30, 2019

 

 

Nine Months Ended September 30, 2019

 

Operating lease cost (1)

 

$

5,960

 

 

$

16,850

 

Finance lease cost:

 

 

 

 

 

 

 

 

Amortization of right-of-use assets

 

 

652

 

 

 

1,956

 

Interest on lease liabilities

 

 

1,115

 

 

 

3,358

 

Total finance lease cost

 

 

1,767

 

 

 

5,314

 

Total lease cost

 

$

7,727

 

 

$

22,164

 

 

(1)

Includes variable and short-term lease costs.

Supplemental balance sheet information related to the Company's leases was as follows (in thousands):

 

Operating leases

 

September 30, 2019

 

Operating lease right-of-use assets

 

$

56,455

 

Operating lease right-of-use assets - related party

 

 

14,930

 

Total operating lease right-of-use assets

 

$

71,385

 

 

 

 

 

 

Operating lease liabilities

 

$

44,375

 

Operating lease liabilities - related party

 

 

14,271

 

Current portion of operating lease liabilities

 

 

13,467

 

Current portion of operating and financing lease liabilities - related party

 

 

2,299

 

Total operating lease liabilities

 

$

74,412

 

 

 

 

 

 

Financing leases

 

 

 

 

Financing lease right of use assets - related party

 

$

61,936

 

 

 

 

 

 

Financing lease liabilities - related party

 

$

61,719

 

Current portion of operating and financing lease liabilities - related party

 

 

1,054

 

Total financing lease liabilities

 

$

62,773

 

 

At September 30, 2019 financing right of use assets of $3 million, financing short-term liabilities of $1 million and financing long-term liabilities of $2 million associated with our auto fleet are recorded in Other assets, Accounts payable and accrued expenses and Other liabilities, respectively.

 

Supplemental cash flow information related to leases was as follows (in thousands):

 

 

 

Three Months Ended September 30, 2019

 

 

Nine Months Ended September 30, 2019

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

 

 

 

 

Operating cash flows from finance leases

 

$

1,117

 

 

$

2,987

 

Operating cash flows from operating leases

 

 

4,964

 

 

 

14,968

 

Financing cash flows from finance leases

 

 

252

 

 

 

1,118

 

Non-cash activity:

 

 

 

 

 

 

 

 

Right-of-use assets obtained in exchange for new operating lease liabilities

 

$

 

 

$

360

 

 

The table below reflects the weighted average remaining lease term and weighted average discount rate for the Company's operating and finance leases as of September 30, 2019.

 

 

 

September 30, 2019

 

Weighted average remaining lease term - operating leases

 

6 years

 

Weighted average remaining lease term - finance leases

 

23 years

 

Weighted average discount rate - operating leases

 

6.1%

 

Weighted average discount rate - finance leases

 

7.0%

 

 

Maturities of lease liabilities as of September 30, 2019 were as follows (in thousands):

 

 

 

Operating

Leases

 

 

Financing

Leases

 

2019 (1)

 

$

4,999

 

 

$

1,368

 

2020

 

 

19,812

 

 

 

5,474

 

2021

 

 

16,173

 

 

 

5,474

 

2022

 

 

12,327

 

 

 

5,474

 

2023

 

 

10,038

 

 

 

5,474

 

Thereafter

 

 

26,930

 

 

 

106,740

 

Total lease payments

 

 

90,279

 

 

 

130,004

 

Less: Imputed interest

 

 

(15,867

)

 

 

(67,231

)

Total

 

$

74,412

 

 

$

62,773

 

 

(1)

Excludes the nine months ended September 30, 2019.

As disclosed in the Company's 2018 Annual Report on Form 10-K, under the previous lease accounting standard, the table below reflects the future minimum lease payments, including reasonably assured renewals, due under non-cancelable leases and a financing obligation as of December 31, 2018 (in thousands):

 

 

 

Operating

Leases

 

 

Financing

Obligation

 

2019

 

$

25,885

 

 

$

5,474

 

2020

 

 

12,071

 

 

 

5,474

 

2021

 

 

11,105

 

 

 

5,474

 

2022

 

 

10,329

 

 

 

5,474

 

2023

 

 

10,043

 

 

 

5,474

 

Thereafter

 

 

28,128

 

 

 

107,196

 

Total lease payments

 

 

97,561

 

 

 

134,566

 

Less: Imputed interest

 

 

 

 

 

(95,217

)

Total

 

$

97,561

 

 

$

39,349

 

 

For additional information regarding lease transactions between related parties, refer to Note 15. Related Party Transactions.

Leases

11. Leases

The majority of the Company's operating and financing lease portfolio consists of corporate offices, manufacturing sites, warehouse space, research and development facilities and manufacturing equipment. The Company's leases have remaining lease terms of 1 year to 25 years. Rent expense for the three and nine months ended September 30, 2019 was $7 million and $19 million, respectively. Rent expense for the three and nine months ended September 30, 2018 was $6 million and $13 million, respectively.  The Company recorded a $2 million impairment charge for the right of use asset associated with its Hauppauge, NY facility during the three and nine months ended September 30, 2019 because the Company’s latest forecast does not support recoverability of that asset.  For further details, see Note 6. Restructuring and Other Charges.

The components of total lease costs were as follows (in thousands):

 

 

 

Three Months Ended September 30, 2019

 

 

Nine Months Ended September 30, 2019

 

Operating lease cost (1)

 

$

5,960

 

 

$

16,850

 

Finance lease cost:

 

 

 

 

 

 

 

 

Amortization of right-of-use assets

 

 

652

 

 

 

1,956

 

Interest on lease liabilities

 

 

1,115

 

 

 

3,358

 

Total finance lease cost

 

 

1,767

 

 

 

5,314

 

Total lease cost

 

$

7,727

 

 

$

22,164

 

 

(1)

Includes variable and short-term lease costs.

Supplemental balance sheet information related to the Company's leases was as follows (in thousands):

 

Operating leases

 

September 30, 2019

 

Operating lease right-of-use assets

 

$

56,455

 

Operating lease right-of-use assets - related party

 

 

14,930

 

Total operating lease right-of-use assets

 

$

71,385

 

 

 

 

 

 

Operating lease liabilities

 

$

44,375

 

Operating lease liabilities - related party

 

 

14,271

 

Current portion of operating lease liabilities

 

 

13,467

 

Current portion of operating and financing lease liabilities - related party

 

 

2,299

 

Total operating lease liabilities

 

$

74,412

 

 

 

 

 

 

Financing leases

 

 

 

 

Financing lease right of use assets - related party

 

$

61,936

 

 

 

 

 

 

Financing lease liabilities - related party

 

$

61,719

 

Current portion of operating and financing lease liabilities - related party

 

 

1,054

 

Total financing lease liabilities

 

$

62,773

 

 

At September 30, 2019 financing right of use assets of $3 million, financing short-term liabilities of $1 million and financing long-term liabilities of $2 million associated with our auto fleet are recorded in Other assets, Accounts payable and accrued expenses and Other liabilities, respectively.

 

Supplemental cash flow information related to leases was as follows (in thousands):

 

 

 

Three Months Ended September 30, 2019

 

 

Nine Months Ended September 30, 2019

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

 

 

 

 

Operating cash flows from finance leases

 

$

1,117

 

 

$

2,987

 

Operating cash flows from operating leases

 

 

4,964

 

 

 

14,968

 

Financing cash flows from finance leases

 

 

252

 

 

 

1,118

 

Non-cash activity:

 

 

 

 

 

 

 

 

Right-of-use assets obtained in exchange for new operating lease liabilities

 

$

 

 

$

360

 

 

The table below reflects the weighted average remaining lease term and weighted average discount rate for the Company's operating and finance leases as of September 30, 2019.

 

 

 

September 30, 2019

 

Weighted average remaining lease term - operating leases

 

6 years

 

Weighted average remaining lease term - finance leases

 

23 years

 

Weighted average discount rate - operating leases

 

6.1%

 

Weighted average discount rate - finance leases

 

7.0%

 

 

Maturities of lease liabilities as of September 30, 2019 were as follows (in thousands):

 

 

 

Operating

Leases

 

 

Financing

Leases

 

2019 (1)

 

$

4,999

 

 

$

1,368

 

2020

 

 

19,812

 

 

 

5,474

 

2021

 

 

16,173

 

 

 

5,474

 

2022

 

 

12,327

 

 

 

5,474

 

2023

 

 

10,038

 

 

 

5,474

 

Thereafter

 

 

26,930

 

 

 

106,740

 

Total lease payments

 

 

90,279

 

 

 

130,004

 

Less: Imputed interest

 

 

(15,867

)

 

 

(67,231

)

Total

 

$

74,412

 

 

$

62,773

 

 

(1)

Excludes the nine months ended September 30, 2019.

As disclosed in the Company's 2018 Annual Report on Form 10-K, under the previous lease accounting standard, the table below reflects the future minimum lease payments, including reasonably assured renewals, due under non-cancelable leases and a financing obligation as of December 31, 2018 (in thousands):

 

 

 

Operating

Leases

 

 

Financing

Obligation

 

2019

 

$

25,885

 

 

$

5,474

 

2020

 

 

12,071

 

 

 

5,474

 

2021

 

 

11,105

 

 

 

5,474

 

2022

 

 

10,329

 

 

 

5,474

 

2023

 

 

10,043

 

 

 

5,474

 

Thereafter

 

 

28,128

 

 

 

107,196

 

Total lease payments

 

 

97,561

 

 

 

134,566

 

Less: Imputed interest

 

 

 

 

 

(95,217

)

Total

 

$

97,561

 

 

$

39,349

 

 

For additional information regarding lease transactions between related parties, refer to Note 15. Related Party Transactions.

v3.19.3
Fair Value Measurements of Financial Instruments
9 Months Ended
Sep. 30, 2019
Fair Value Disclosures [Abstract]  
Fair Value Measurements of Financial Instruments

12. Fair Value Measurements of Financial Instruments

Fair value is the exit price that would be received to sell an asset or paid to transfer a liability. Fair value is a market-based measurement that should be determined using assumptions that market participants would use in pricing an asset or liability. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs other than Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Value is determined using pricing models, discounted cash flow methodologies, or similar techniques and also includes instruments for which the determination of fair value requires significant judgment or estimation.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level of classification for each reporting period. The following table sets forth the Company’s financial assets and liabilities that were measured at fair value on a recurring basis as of September 30, 2019 and December 31, 2018 (in thousands):

 

 

 

 

 

 

 

Fair Value Measurement Based on

 

September 30, 2019

 

Total

 

 

Quoted

Prices in

Active

Markets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred Compensation Plan liabilities (1)

 

$

21,637

 

 

$

 

 

$

21,637

 

 

$

 

December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred Compensation Plan asset (1)

 

$

40,101

 

 

$

 

 

$

40,101

 

 

$

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred Compensation Plan liabilities (1)

 

$

27,978

 

 

$

 

 

$

27,978

 

 

$

 

 

(1)

As of September 30, 2019, deferred compensation plan liabilities of $8 million and $14 million were recorded in current and non-current liabilities, respectively. As of December 31, 2018, deferred compensation plan liabilities were recorded in non-current liabilities. They are recorded at the value of the amount owed to the plan participants, with changes in value recognized as compensation expense. 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 other long-term liabilities. The Company invested participant contributions in corporate-owned life insurance policies, for which the cash surrender value was included in Other non-current assets as of December 31, 2018.  In July 2019, the Company surrendered all corporate-owned life insurance for approximately $43 million in cash proceeds.

There were no transfers between levels in the fair value hierarchy during the nine months ended September 30, 2019.

Assets and Liabilities Not Measured at Fair Value on a Recurring Basis

The carrying amounts of cash, accounts receivable and accounts payable approximate their fair values due to the short-term maturity of these instruments.

The $2.7 billion term loan under the Company’s senior credit agreement entered into on May 4, 2018 (the "Term Loan") falls into the Level 2 category within the fair value level hierarchy. The fair value was determined using market data for valuation. The fair value of the Term Loan at September 30, 2019 and December 31, 2018 was approximately $2.3 billion and $2.5 billion, respectively.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

There were no non-recurring fair value measurements during the nine months ended September 30, 2019 and 2018.

v3.19.3
Commitments and Contingencies
9 Months Ended
Sep. 30, 2019
Commitments And Contingencies Disclosure [Abstract]  
Commitments and Contingencies

13. Commitments and Contingencies

Commitments

Commercial Manufacturing, Collaboration, License, and Distribution Agreements

The Company continues to seek to enhance its product line and develop a balanced portfolio of differentiated products through product acquisitions and in-licensing. Accordingly, the Company, in certain instances, may be contractually obligated to make potential future development, regulatory, and commercial milestone, royalty and/or profit sharing payments in conjunction with collaborative agreements or acquisitions that the Company has entered into with third parties. The Company has also licensed certain technologies or intellectual property from various third parties. The Company is generally required to make upfront payments as well as other payments upon successful completion of regulatory or sales milestones. The agreements generally permit the Company to terminate the agreement with no significant continuing obligation. The Company could be required to make significant payments pursuant to these arrangements. These payments are contingent upon the occurrence of certain future events and, given the nature of these events, it is unclear when, if ever, the Company may be required to pay such amounts. Further, the timing of any future payment is not reasonably estimable.

Contingencies

Legal Proceedings

The Company's legal proceedings are complex, constantly evolving and subject to uncertainty. As such, the Company cannot predict the outcome or impact of the legal proceedings set forth below. Additionally, the Company is subject to legal proceedings that are not set forth below. While the Company believes it has valid claims and/or defenses to the matters described below, the nature of litigation is unpredictable, and the outcome of the following proceedings could include damages, fines, penalties and injunctive or administrative remedies. For any proceedings where losses are probable and reasonably capable of estimation, the Company accrues for a potential loss. While these accruals have been deemed reasonable by the Company’s management, the assessment process relies heavily on estimates and assumptions that may ultimately prove inaccurate or incomplete. Additionally, unforeseen circumstances or events may lead the Company to subsequently change its estimates and assumptions. Unless otherwise indicated below, the Company is at this time unable to estimate the possible loss, if any, associated with such litigation.

The Company currently intends to vigorously prosecute and/or defend these proceedings as appropriate. From time to time, however, the Company may settle or otherwise resolve these matters on terms and conditions that it believes to be in its best interest. For the three and nine months ended September 30, 2019, the Company recorded a net charge of $15 million for the commercial and governmental legal proceedings and claims.  The ultimate resolution of any or all claims, legal proceedings or investigations could differ materially from our estimate and have a material adverse effect on the Company's results of operations and/or cash flow in any given accounting period, or on the Company's overall financial condition.  As of September 30, 2019 and December 31, 2018, the Company had liabilities for commercial and governmental legal proceedings and claims of $30 million and $15 million, respectively.

Additionally, the Company manufactures and derives a portion of its revenue from the sale of pharmaceutical products in the opioid class of drugs, and may therefore face claims arising from the regulation and/or consumption of such products.

Although the outcome and costs of the asserted and unasserted claims is difficult to predict, based on the information presently known to management, the Company does not currently expect the ultimate liability, if any, for such matters to have a material adverse effect on its business, financial condition, results of operations, or cash flows.

Medicaid Reimbursement and Price Reporting Matters

The Company is required to provide pricing information to state agencies, including agencies that administer federal Medicaid programs. Certain state agencies have alleged that manufacturers have reported improper pricing information, which allegedly caused them to overpay reimbursement costs.  Other agencies have alleged that manufacturers have failed to timely file required reports concerning pricing information.  Reserves are periodically established by the Company for any potential claims or settlements of overpayment. The Company intends to vigorously defend against any such claims.  The ultimate settlement of any potential liability for such claims may be higher or lower than estimated.

Patent Litigation

There is substantial litigation in the pharmaceutical, biological, and biotechnology industries with respect to the manufacture, use, and sale of new products which are the subject of conflicting patent and intellectual property claims. One or more patents often cover the brand name products for which the Company is developing generic versions and the Company typically has patent rights covering the Company’s branded products.

Under federal law, when a drug developer files an Abbreviated New Drug Application ("ANDA") for a generic drug seeking approval before expiration of a patent which has been listed with the FDA as covering the brand name product, the developer must certify its product will not infringe the listed patent(s) and/or the listed patent is invalid or unenforceable (commonly referred to as a "Paragraph IV" certification). Notices of such certification must be provided to the patent holder, who may file a suit for patent infringement within 45 days of the patent holder’s receipt of such notice. If the patent holder files suit within the 45-day period, the FDA can review and tentatively approve the ANDA, but generally is prevented from granting final marketing approval of the product until a final judgment in the action has been rendered in favor of the generic drug developer, or 30 months from the date the notice was received, whichever is sooner. The Company’s Generics segment is typically subject to patent infringement litigation brought by branded pharmaceutical manufacturers in connection with the Company’s Paragraph IV certifications seeking an order delaying the approval of the Company’s ANDA until expiration of the patent(s) at issue in the litigation. Likewise, the Company’s Specialty segment is currently involved in patent infringement litigation against generic drug manufacturers that have filed Paragraph IV certifications to market their generic drugs prior to expiration of the Company’s patents at issue in the litigation.

The uncertainties inherent in patent litigation make the outcome of such litigation difficult to predict. For the Company’s Generics segment, the potential consequences in the event of an unfavorable outcome in such litigation include delaying launch of its generic products until patent expiration. If the Company were to launch its generic product prior to successful resolution of a patent litigation, the Company could be liable for potential damages measured by the profits lost by the branded product manufacturer rather than the profits earned by the Company if it is found to infringe a valid, enforceable patent, or enhanced treble damages in cases of willful infringement. For the Company’s Specialty segment, an unfavorable outcome may significantly accelerate generic competition ahead of expiration of the patents covering the Company’s branded products. All such litigation typically involves significant expense.

The Company is generally responsible for all of the patent litigation fees and costs associated with current and future products not covered by its alliance and collaboration agreements. The Company has agreed to share legal expenses with respect to third-party and Company products under the terms of certain of the alliance and collaboration agreements. The Company records the costs of patent litigation as expense in the period when incurred for products it has developed, as well as for products which are the subject of an alliance or collaboration agreement with a third-party.

Patent Infringement Matter

Impax Laboratories, LLC. v. Zydus Pharmaceuticals USA, Inc. and Cadila Healthcare Ltd. (Rytary ®)

On December 21, 2017, Impax filed suit against Zydus Pharmaceuticals USA, Inc. and Cadila Healthcare Ltd. (collectively, "Zydus") in the United States District Court for the District of New Jersey, alleging infringement of U.S. Patent No. 9,089,608, based on the filing of Zydus’s ANDA relating to carbidopa and levodopa extended release capsules, generic to Rytary ®. Zydus answered the complaint on April 27, 2018, asserting counterclaims of non-infringement and invalidity of U.S. Pat. Nos. 7,094,427; 8,377,474; 8,454,998; 8,557,283; and 9,089,607. Impax answered Zydus’s counterclaims on June 1, 2018. Zydus filed a motion for judgment on the pleadings regarding its counterclaims. On November 29, 2018, the Court granted Zydus’s motion for judgment as to its counterclaims. A case schedule has been set with trial anticipated in February 2020.

Other Litigation Related to the Company’s Business

Opana ER® FTC Antitrust Litigation

On February 25, 2014, Impax received a Civil Investigative Demand (“CID”) from the Federal Trade Commission (“FTC”) concerning its investigation into the drug Opana® ER and its generic equivalents. On March 30, 2016, the FTC filed a complaint against Impax, Endo Pharmaceuticals Inc. ("Endo"), and others in the United States District Court for the Eastern District of Pennsylvania, alleging that Impax and Endo violated antitrust laws when they entered into a June 2010 co-promotion and development agreement and a June 2010 settlement agreement that resolved patent litigation in connection with the submission of Impax’s ANDA for generic original Opana® ER. In July 2016, the defendants filed a motion to dismiss the complaint, and a motion to sever the claims regarding Opana® ER from claims with respect to a separate settlement agreement that was challenged by the FTC. On October 20, 2016, the Court granted the motion to sever, formally terminating the suit against Impax, with an order that the FTC re-file no later than November 3, 2016 and dismissed the motion to dismiss as moot. On October 25, 2016, the FTC filed a notice of voluntary dismissal. On January 19, 2017, the FTC filed a Part 3 Administrative complaint against Impax with similar allegations regarding Impax’s June 2010 settlement agreement with Endo that resolved patent litigation in connection with the submission of Impax’s ANDA for generic original Opana® ER. Impax filed its answer to the Administrative Complaint on February 7, 2017. Trial concluded on November 15, 2017. On May 11, 2018, the Administrative Law Judge ruled in favor of Impax and dismissed the case in its entirety. The government appealed this ruling to the FTC. On March 28, 2019, the FTC issued an Opinion & Order reversing the Administrative Law Judge’s initial dismissal decision. The FTC found that Impax had violated Section 5 of the FTC Act by engaging in an unfair method of competition, and accordingly entered an order enjoining Impax from entering into anticompetitive reverse patent settlements (or agreements with other generic original Opana® ER manufacturers) and requiring Impax to maintain an antitrust compliance program. On June 6, 2019, the Company filed a Petition for Review of the FTC’s Opinion & Order with the United States Court of Appeals for the Fifth Circuit.  The Company filed its opening appellate brief with the Fifth Circuit on October 3, 2019.

On July 12, 2019, the Company received a CID from the FTC concerning an August 2017 settlement agreement between Impax and Endo, which resolved a dispute between the parties regarding, and amended, the above-referenced June 2010 settlement agreement related to Opana® ER. The Company has been cooperating and intends to continue cooperating with the FTC regarding the CID. However, no assurance can be given as to the timing or outcome of the FTC’s underlying investigation.

Opana ER® Antitrust Litigation

From June 2014 to April 2015, 14 complaints styled as class actions on behalf of direct purchasers and indirect purchasers (also known as end-payors) and several separate individual complaints on behalf of certain direct purchasers (the “opt-out plaintiffs”) were filed against the manufacturer of the brand drug Opana ER® and Impax.

The direct purchaser plaintiffs comprise Value Drug Company and Meijer Inc. The end-payor plaintiffs comprise the Fraternal Order of Police, Miami Lodge 20, Insurance Trust Fund; Wisconsin Masons’ Health Care Fund; Massachusetts Bricklayers; Pennsylvania Employees Benefit Trust Fund; International Union of Operating Engineers, Local 138 Welfare Fund; Louisiana Health Service & Indemnity Company d/b/a Blue Cross and Blue Shield of Louisiana; Kim Mahaffay; and Plumbers & Pipefitters Local 178 Health & Welfare Trust Fund. The opt-out plaintiffs comprise Walgreen Co.; The Kroger Co.; Safeway, Inc.; HEB Grocery Company L.P.; Albertson’s LLC; Rite Aid Corporation; Rite Aid Hdqtrs. Corp.; and CVS Pharmacy, Inc.

On December 12, 2014, the United States Judicial Panel on Multidistrict Litigation (the "JPML") ordered the pending class actions transferred to the United States District Court for the Northern District of Illinois (“N.D. Ill.”) for coordinated pretrial proceedings, as In Re: Opana ER Antitrust Litigation (MDL No. 2580). (Actions subsequently filed in other jurisdictions also were transferred by the JPML to the N.D. Ill. to be coordinated or consolidated with the coordinated proceedings, and the District Court likewise has consolidated the opt-out plaintiffs’ actions with the direct purchaser class actions for pretrial purposes.)

In each case, the complaints allege that Endo engaged in an anticompetitive scheme by, among other things, entering into an anticompetitive settlement agreement with Impax to delay generic competition of Opana ER® and in violation of state and federal antitrust laws. Plaintiffs seek, among other things, unspecified monetary damages and equitable relief, including disgorgement and restitution. Discovery, including expert discovery, is ongoing. On March 25, 2019, plaintiffs filed motions for class certification and served opening expert reports. Defendants’ oppositions to class certification and rebuttal expert reports were filed and served on August 29, 2019. No trial date has been scheduled.

The Company believes it has substantial meritorious defenses to the claims asserted with respect to the litigation. However, any adverse outcome could negatively affect the Company and could have a material adverse effect on the Company's results of operations, cash flows and/or overall financial condition.

Sergeants Benevolent Association Health & Welfare Fund v. Actavis, PLC, et. al.

In August 2015, a complaint styled as a class action was filed against Forest Laboratories (a subsidiary of Actavis plc) and numerous generic drug manufacturers, including Amneal, in the United States District Court for the Southern District of New York involving patent litigation settlement agreements between Forest Laboratories and the generic drug manufacturers concerning generic versions of Forest’s Namenda IR product. The complaint (as amended on February 12, 2016) asserts federal and state antitrust claims on behalf of indirect purchasers, who allege in relevant part that during the class period they indirectly purchased Namenda® IR or its generic equivalents in various states at higher prices than they would have absent the defendants’ allegedly unlawful anticompetitive conduct. Plaintiffs seek, among other things, unspecified monetary damages and equitable relief, including disgorgement and restitution. On September 13, 2016, the Court stayed the indirect purchaser plaintiffs’ claims pending factual development or resolution of claims brought in a separate, related complaint by direct purchasers (in which the Company is not a defendant). On September 10, 2018, the Court lifted the stay, referred the case to the assigned Magistrate Judge for supervision of supplemental, non-duplicative discovery in advance of mediation to be scheduled in 2019. The parties thereafter participated in supplemental discovery, as well as supplemental motion-to-dismiss briefing. On December 26, 2018, the Court granted in part and denied in part motions to dismiss the indirect purchaser plaintiffs’ claims. On January 7, 2019, Amneal, its relevant co-defendants, and the indirect purchaser plaintiffs informed the Magistrate Judge that they had agreed to mediation, which occurred in April 2019. In June 2019, the Company reached a settlement with plaintiffs, subject to Court approval.  On September 10, 2019, the Court entered an order preliminarily approving the settlement and indefinitely staying the case as to the settling defendants (including the Company).  The amount of the settlement is not material to the Company's consolidated financial statements.

Attorney General of the State of Connecticut Interrogatories and Subpoena Duces Tecum

On July 14, 2014, Impax received a subpoena and interrogatories (the "Subpoena") from the State of Connecticut Attorney General ("Connecticut AG") concerning its investigation into sales of Impax's generic product, digoxin. According to the Connecticut AG, the investigation is to determine whether anyone engaged in a contract, combination or conspiracy in restraint of trade or commerce which has the effect of (i) fixing, controlling or maintaining prices or (ii) allocating or dividing customers or territories relating to the sale of digoxin in violation of Connecticut state antitrust law. The Company has produced documents and information in response to the Subpoena. However, no assurance can be given as to the timing or outcome of this investigation.

United States Department of Justice Investigations

On November 6, 2014, Impax disclosed that one of its sales representatives received a grand jury subpoena from the Antitrust Division of the United States Department of Justice (the "DOJ"). In connection with this same investigation, on March 13, 2015, Impax received a grand jury subpoena from the DOJ requesting the production of information and documents regarding the sales, marketing, and pricing of certain generic prescription medications. In particular, the DOJ’s investigation currently focuses on four generic medications: digoxin tablets, terbutaline sulfate tablets, prilocaine/lidocaine cream, and calcipotriene topical solution. The Company has been cooperating and intends to continue cooperating with the investigation. However, no assurance can be given as to the timing or outcome of the investigation.

On April 30, 2018, Impax received a CID from the Civil Division of the DOJ (the "Civil Division"). The CID requests the production of information and documents regarding the pricing and sale of Impax’s pharmaceuticals and Impax’s interactions with other generic pharmaceutical manufacturers. According to the CID, the investigation concerns allegations that generic pharmaceutical manufacturers, including Impax, engaged in market allocation and price-fixing agreements, paid illegal remuneration, and caused false claims to be submitted to the Federal government. The Company has been cooperating and intends to continue cooperating with the Civil Division’s investigation. However, no assurance can be given as to the timing or outcome of the investigation.

Texas State Attorney General Civil Investigative Demand

On May 27, 2014, a CID was served on Amneal by the Office of the Attorney General for the state of Texas (the "Texas AG") relating to products distributed by Amneal under a specific Amneal labeler code. Shortly thereafter, Amneal received a second CID with respect to the same products sold by Interpharm Holding, Inc. ("Interpharm"), the assets of which had been acquired by Amneal in June 2008. Amneal completed its production of the direct and indirect sales transaction data in connection with the products at issue and provided this information to the Texas AG in November 2015. In May 2016, the Texas AG delivered two settlement demands to Amneal in connection with alleged overpayments made by the State of Texas for such products under its Medicaid programs. For the Amneal and Interpharm products at issue, the Texas AG’s initial demand was for an aggregate total of $36 million based on $16 million in alleged overpayments. After analyzing the Texas AG’s demand, Amneal raised certain questions regarding the methodology used in the Texas AG’s overpayment calculations, including the fact that the calculations treated all pharmacy claims after 2012 for the products at issue as claims for over-the-counter ("OTC") drugs, even though the products were prescription pharmaceuticals. This had the effect of increasing the alleged overpayment because the dispensing fee for OTC drugs was lower than that for prescription drugs. Therefore, the Texas AG’s calculations were derived by subtracting a lower (and incorrect) OTC dispensing fee from the higher (and correct) prescription dispensing fee. The Texas AG later acknowledged this discrepancy. In March 2019, the Texas AG provided Amneal with a re-calculation of the alleged overpayment, and in October 2019, Amneal reached an agreement in principle with the Texas AG to settle the matter.

In Re Generic Pharmaceuticals Pricing Antitrust Litigation

Between March 2016 and January 2019, numerous complaints styled as antitrust class actions on behalf of direct purchasers and indirect purchasers (or end-payors) and several separate individual complaints on behalf of certain direct and indirect purchasers (the “opt-out plaintiffs”) have been filed against manufacturers of generic digoxin, lidocaine/prilocaine, glyburide-metformin, and metronidazole, including Impax.

The end-payor plaintiffs comprise Plaintiff International Union of Operating Engineers Local 30 Benefits Fund; Tulsa Firefighters Health and Welfare Trust; NECA-IBEW Welfare Trust Fund; Pipe Trade Services MN; Edward Carpinelli; Fraternal Order of Police, Miami Lodge 20, Insurance Trust Fund; Nina Diamond; UFCW Local 1500 Welfare Fund; Minnesota Laborers Health and Welfare Fund; The City of Providence, Rhode Island; Philadelphia Federation of Teachers Health and Welfare Fund; United Food & Commercial Workers and Employers Arizona Health and Welfare Trust; Ottis McCrary; Plumbers & Pipefitters Local 33 Health and Welfare Fund; Plumbers & Pipefitters Local 178 Health and Welfare Trust Fund; Unite Here Health; Valerie Velardi; and Louisiana Health Service Indemnity Company. The direct purchaser plaintiffs comprise KPH Healthcare Services, Inc. a/k/a Kinney Drugs, Inc.; Rochester Drug Co-Operative, Inc.; César Castillo, Inc.; Ahold USA, Inc.; and FWK Holdings, L.L.C. The opt-out plaintiffs comprise The Kroger Co.; Albertsons Companies, LLC; H.E. Butt Grocery Company L.P.; Humana Inc.; and United Healthcare Services, Inc.

On April 6, 2017, the JPML ordered the consolidation of all civil actions involving allegations of antitrust conspiracies in the generic pharmaceutical industry regarding 18 generic drugs in the United States District Court for the Eastern District of Pennsylvania (“E.D. Pa.”), as In Re: Generic Pharmaceuticals Pricing Antitrust Litigation (MDL No. 2724). Consolidated class action complaints were filed on August 15, 2017 for each of the 18 drugs; Impax is named as a defendant in the 2 complaints respecting digoxin and lidocaine-prilocaine. Impax also is a defendant in the class action complaint filed with the MDL court on June 22, 2018 by certain direct purchasers of glyburide-metformin and metronidazole.

Each of the various complaints alleges a conspiracy to fix, maintain, stabilize, and/or raise prices, rig bids, and allocate markets or customers for the particular drug products at issue. Plaintiffs seek, among other things, unspecified monetary damages and equitable relief, including disgorgement and restitution. On October 16, 2018, the Court denied Impax and its co-defendants’ motion to dismiss the digoxin complaint. On February 15, 2019, the Court granted in part and denied in part defendants’ motions to dismiss various state antitrust, consumer protection, and unjust enrichment claims brought by two classes of indirect purchasers in the digoxin action. The Court dismissed seven state law claims in the end-payor plaintiffs’ complaint and six state law claims in the indirect reseller plaintiffs’ complaint. Motions to dismiss the glyburide-metformin and metronidazole complaint, as well as 2 of the complaints filed by certain opt-out plaintiffs, were filed February 21, 2019. On March 11, 2019, the Court issued an order approving a stipulation withdrawing the direct purchaser plaintiffs’ glyburide-metformin claims against Impax. Document discovery otherwise is proceeding.

On May 10, 2019, the Company was named in a civil lawsuit filed by the Attorneys General of 43 States and the Commonwealth of Puerto Rico in the United States District Court for the District of Connecticut against numerous generic pharmaceutical manufacturers, as well as certain of their current or former sales and marketing executives, regarding an alleged conspiracy to fix prices and allocate or divide customers or markets for various products, including, with respect to the Company, bethanechol chloride tablets, norethindrone acetate, and ranitidine HCL tablets, in violation of federal and state antitrust and consumer protection laws. Plaintiff States seek, among other things, unspecified monetary damages (including treble damages and civil penalties), as well as equitable relief, including disgorgement and restitution. On June 4, 2019, the JPML transferred the lawsuit to the E.D. Pa. for coordination and consolidation with MDL No. 2724.  On November 1, 2019, the State Attorneys General filed an Amended Complaint in their lawsuit, bringing claims on behalf of 9 additional states and territories against several defendants; the relief sought and allegations concerning the Company (including the products allegedly at issue) are unchanged from the original complaint.

On July 31, 2019, the Company and Impax were served with a Praecipe to Issue Writ of Summons and Writ of Summons filed in the Philadelphia County Court of Common Pleas by 87 health insurance companies and managed health care providers (America’s 1st Choice of South Carolina, Inc., et al. v. Actavis Elizabeth, LLC, et al., No. 190702094), naming as defendants in the putative action the same generic pharmaceutical manufacturers and individuals named in the above-referenced State Attorneys General lawsuit. However, to date, no complaint has been filed or served in this action, and in October 2019, the parties stipulated that the case will be placed in deferred status pending further developments in MDL No. 2724.

 

On October 11, 2019, opt-out plaintiff United Healthcare Services, Inc. filed a second complaint, in the United States District Court for the District of Minnesota (United Healthcare Services, Inc. v. Teva Pharmaceuticals USA, Inc., et al., No. 0:19-cv-02696), following on and supplementing its original action, asserting antitrust claims against the Company and other generic pharmaceutical manufacturers arising from the facts alleged in the above-referenced State Attorneys General lawsuit. Plaintiff seeks, among other things, unspecified monetary damages and equitable relief, including disgorgement and restitution. The parties anticipate that the lawsuit will be transferred by the JPML to the E.D. Pa. for coordination and consolidation with MDL No. 2724.

On October 18, 2019, opt-out plaintiff Humana, Inc. also filed a second complaint, likewise following on supplementing its original action to assert antitrust claims against the Company and other generic pharmaceuticals manufacturers arising from the facts alleged in the above-referenced State Attorneys General lawsuit, and similarly seeking, among other things, unspecified monetary damages and equitable relief, including disgorgement and restitution.  The lawsuit was filed in the E.D. Pa. (Humana Inc. v. Actavis Elizabeth, LLC, et al., No. 2:19-cv 04862), and likely will be incorporated into MDL No. 2724 for coordinated pretrial proceedings.

The Company believes it has substantial meritorious defenses to the claims asserted with respect to the litigation. However, any adverse outcome could negatively affect the Company and could have a material adverse effect on the Company's results of operations, cash flows and/or overall financial condition.

Prescription Opioid Litigation

The Company and certain of its affiliates have been named as defendants in various matters relating to the promotion and sale of prescription opioid pain relievers. The Company is aware that other individuals and states and political subdivisions are filing comparable actions against, among others, manufacturers and parties that have promoted and sold prescription opioid pain relievers, and additional suits may be filed.

The complaints, asserting claims under provisions of different state and Federal law, generally contend that the defendants allegedly engaged in improper marketing of opioids, and seek a variety of remedies, including restitution, civil penalties, disgorgement of profits, treble damages, attorneys’ fees and injunctive relief. None of the complaints specifies the exact amount of damages at issue. The Company and its affiliates that are defendants in the various lawsuits deny all allegations asserted in these complaints and have filed or intend to file motions to dismiss where possible. Each of the opioid-related matters described below is in its early stages. The Company intends to continue to vigorously defend these cases. In light of the inherent uncertainties of civil litigation, the Company is not in a position to predict the likelihood of an unfavorable outcome or provide an estimate of the amount or range of potential loss in the event of an unfavorable outcome in any of these matters.

On August 17, 2017, plaintiff Linda Hughes, as the mother of Nathan Hughes, decedent, filed a complaint in Missouri state court naming Amneal Pharmaceuticals of New York LLC, Impax, five other pharmaceutical company defendants, and three healthcare provider defendants. Plaintiff alleges that use of defendants’ opioid medications caused the death of her son, Nathan Hughes. The complaint alleges causes of action against Amneal and Impax for strict product liability, negligent product liability, violation of Missouri Merchandising Practices Act and fraudulent misrepresentation. The case was removed to federal court on September 18, 2017. It was transferred to the United States District Court for the Northern District of Ohio on February 2, 2018 and is part of the multidistrict litigation pending as In Re National Prescription Opiate Litigation, MDL No. 2804 (the “MDL”). Plaintiff has filed a motion to remand the case to Missouri state court. That motion remains pending before the MDL court. All activity in the case is stayed by order of the MDL court.

On March 15, 2018, plaintiff Scott Ellington, purporting to represent the State of Arkansas, more than sixty counties and a dozen cities, filed a complaint in Arkansas state court naming Gemini Laboratories, LLC and fifty-one other pharmaceutical companies as defendants. Plaintiffs allege that Gemini and the other pharmaceutical company defendants improperly marketed, sold, and distributed opioid medications and failed to adequately warn about the risks of those medications. Plaintiffs allege causes of actions against Gemini and the other pharmaceutical company defendants for negligence and nuisance and alleged violations of multiple Arkansas statutes. Plaintiffs request past damages and restitution for monies allegedly spent by the State of Arkansas and the county and city plaintiffs for “extraordinary and additional services” for responding to what plaintiffs term the “Arkansas Opioid Epidemic.” Plaintiffs also seek prospective damages to allow them to “comprehensively intervene in the Arkansas Opioid Epidemic,” punitive and treble damages as provided by law, and their costs and fees. The complaint does not include any specific damage amounts. Gemini filed a general denial and, on June 28, 2018, it joined the other pharmaceutical company defendants in moving to dismiss plaintiffs’ complaint. On January 29, 2019, the Court granted without prejudice Gemini’s motion to dismiss and dismissed Gemini from the litigation on March 22, 2019.

On March 27, 2018, plaintiff American Resources Insurance Company, Inc. filed a complaint in the United States District Court for the Southern District of Alabama against Amneal, Amneal Pharmaceuticals of New York, LLC, Impax, and thirty-five other pharmaceutical company defendants. Plaintiff seeks certification of a class of insurers that since January 1, 2010, allegedly have been wrongfully required to: (i) reimburse for prescription opioids that allegedly were promoted, sold, and distributed illegally and improperly by the pharmaceutical company defendants; and (ii) incur costs for treatment of overdoses of opioid medications, misuse of those medications, or addiction to them. The complaint seeks compensatory and punitive damages, but plaintiff’s complaint does not include any allegation of specific damage amounts. On or about May 2, 2018, the case was transferred to the MDL. All activity in the case is stayed by order of the MDL court.

On May 30, 2018, plaintiff William J. Comstock filed a complaint in Washington state court against Amneal Pharmaceuticals of New York, LLC, and four other pharmaceutical company defendants. Plaintiff alleges he became addicted to opioid medications manufactured and sold by the pharmaceutical company defendants, which plaintiff contends caused him to experience opioid-induced psychosis, prolonged hospitalizations, pain, and suffering. Plaintiff asserts causes of action against Amneal and the other pharmaceutical company defendants for negligence, fraudulent misrepresentation, and violations of the Washington Consumer Protection Act. On July 12, 2018, Amneal and other defendants removed the case to the United States District Court for the Eastern District of Washington. On August 17, 2018, the case was transferred to the MDL. All activity in the case is stayed by order of the MDL court.

On June 18, 2018, a Subpoena and CID issued by the Office of the Attorney General of Kentucky, Office of Consumer Protection was served on Amneal. The CID contains eleven requests for production of documents pertaining to opioid medications

manufactured and/or sold by Amneal, or for which Amneal holds an Abbreviated New Drug Application. The Company is evaluating the CID and has been in communication with the Office of the Attorney General about the scope of the CID, the response to the CID, and the timing of the response. It is unknown if the Office of the Attorney General will pursue any claim or file a lawsuit against Amneal.

On July 9, 2018, the Muscogee (Creek) Nation filed a First Amended Complaint in its case pending in the MDL against the Company and 55 other defendants consisting of pharmaceutical companies, wholesalers, distributors, and pharmacies. Plaintiff alleges it has been damaged by the Company and the other pharmaceutical company defendants as a result of alleged improper marketing, including off-label marketing, failure to adequately warn of the risks of opioid medications, and failure to properly monitor and control diversion of opioid medications within the Nation. The case has been designated as a bellwether motion to dismiss case for the MDL, meaning it is a test case for arguments directed at the complaints filed by Indian tribes in the MDL cases. On August 31, 2018, the Company moved to dismiss the First Amended Complaint, and also joined in separate motions to dismiss filed by different defense subgroups. Plaintiff opposed these motions. Additionally, on September 28, 2018, plaintiff filed a motion to add Amneal and Amneal Pharmaceuticals of New York, LLC, and to dismiss the Company from the complaint. The Company opposed that motion, and plaintiff filed a reply on October 19, 2018. On April 1, 2019, the MDL court's designated magistrate judge issued a Report and Recommendation as to the Company’s motion to dismiss, recommending dismissal of plaintiff’s Lanham Act claims and state-law claims based on an alleged duty to correct alleged misrepresentations of brand-name manufacturers, but recommending denial of relief as to all other claims. On April 12, 2019, the magistrate judge overruled the Company’s objection to adding Amneal and Amneal Pharmaceuticals of New York, LLC, but dismissed the Company. Amneal and Amneal Pharmaceuticals of New York, LLC, filed an objection to the magistrate’s Report and Recommendation as to the Company’s motion to dismiss on April 29, 2019. On June 13, 2019, the MDL court denied the objections and subsequently ordered the defendants to file Answers to the First Amended Complaint. On August 16, 2019, Amneal and Amneal Pharmaceuticals of New York, LLC filed their respective answers.

On July 18, 2018, the County of Webb, Texas requested waivers of service from Amneal and Amneal Pharmaceuticals of New York, LLC, in its case pending in the MDL. Plaintiff’s Amended Complaint, filed against Amneal and forty-one other defendants consisting of pharmaceutical companies, wholesalers, distributors, and pharmacy benefit managers, alleges damages as a result of Amneal’s and the pharmaceutical company defendants’ improper marketing, failure to adequately warn of the risks of opioid medications, and failure to properly monitor and control diversion of opioid medications in or affecting Webb County. Amneal and Amneal Pharmaceuticals of New York, LLC have returned the requested waivers. All activity in the case is stayed by order of the MDL court.

On August 24, 2018, the Tucson Medical Center filed a complaint against the Company and 18 other defendants consisting of pharmaceutical companies, distributors, and unidentified John Doe defendants, in the Superior Court of the State of Arizona, Pima County. Plaintiff alleges damages as a result of Amneal’s and the pharmaceutical company defendants’ improper marketing, failure to adequately warn of the risks of opioid medications, and failure to properly monitor and control diversion of opioid medications. Plaintiff seeks economic damages related to its purchase of opioid medications and for the costs of unreimbursed healthcare it has provided as a result of the opioid epidemic over and above ordinary healthcare services. In addition, plaintiff seeks compensatory damages, treble damages, punitive damages, awards of attorney’s fees, and abatement of the alleged public nuisance, as provided by law. On September 24, 2018, the distributor defendants removed the case to the United States District Court for the District of Arizona. Plaintiff filed a motion to remand on September 25, 2018, which the distributor defendants opposed. The Company filed a motion to dismiss on October 1, 2018. On October 8, 2018, following the Court’s denial of its remand motion, plaintiff voluntarily dismissed its Complaint without prejudice. Plaintiff re-filed its Complaint on October 9, 2018, in the Superior Court of the State of Arizona, Pima County, along with a motion to designate the case as “complex.” The distributor defendants filed a notice of removal on October 29, 2018. Plaintiff filed an Emergency Motion to Remand on October 30, 2018. On December 19, 2018, the Court granted plaintiff’s motion and remanded the case to the Superior Court of Pima County, Arizona. On February 13, 2019, the Company again filed a motion to dismiss the complaint. The defendants (including the Company) also moved for a discovery stay pending resolution of their motions to dismiss. The Court entered an order on April 8, 2019 staying discovery until the earlier of June 25, 2019 or when the Court rules on the defendants’ separate motions to dismiss. On June 12, 13, and 14, 2019, the Court held hearings on all pending motions to dismiss. Immediately prior to the hearing on Amneal’s Motion to Dismiss, plaintiff agreed to a voluntary dismissal without prejudice of Amneal, which the parties then entered on the record. The co-defendants removed the case to federal court, but the federal court re-remanded the case to state court.  Plaintiff is attempting to amend its complaint in state court and will attempt to add Amneal as a defendant.

On October 4, 2018, the City of Martinsville, Virginia, filed a complaint in Virginia state court, naming the Company, Amneal, Amneal Pharmaceuticals of New York, LLC, Impax, and 45 other pharmaceutical companies and other entities as defendants. Plaintiff alleges that the defendants are liable for the economic and non-economic injuries allegedly suffered by resident doctors, health care payors, and opioid-addicted individuals, as well as for the costs incurred in addressing the opioid epidemic. Plaintiff requests an unspecified amount of damages against the defendants. The case was removed to federal court on December 13, 2018 and was conditionally transferred to the MDL on December 27, 2018. Plaintiff opposed the transfer to the MDL and moved to remand the case to Virginia state court. On February 14, 2019, the Western District of Virginia, Roanoke Division, remanded the case to the Martinsville Circuit Court in Martinsville, Virginia. Nine other Virginia municipalities have filed identical complaints naming the same defendants, but none have been served on the Company or its affiliates. The unserved Virginia cases have been removed and are in federal court, though plaintiffs have filed motions to remand and are opposing transfer of those cases to the MDL court. On April 24, 2019, the Court in Martinsville, Virginia, stayed this case until it is determined whether the other Virginia cases that were removed to federal court will be remanded, or until the parties or the court may determine whether consolidation of this case with others is possible in Virginia state court.

In October and November 2018, the SouthEast Alaska Regional Health Consortium, the Kodiak Area Native Association, and the Norton Sound Health Corporation requested that the Company execute waivers of service in their cases pending in the MDL. Plaintiffs’ complaints name the Company and 37 other entities as defendants. Plaintiffs allege damages and seek injunctive relief, compensatory and statutory damages, “as well as the means to abate the epidemic” that they allege was “created by Defendants’ wrongful and/or unlawful conduct.” All activity in these cases is stayed by order of the MDL court.

On December 3, 2018, Appalachian Regional Healthcare, Inc., filed a complaint in Kentucky state court, naming Amneal and 32 other pharmaceutical companies and other entities as defendants. Plaintiff alleges that the defendants are liable for the economic and non-economic injuries allegedly suffered by Kentucky’s hospitals and others. Plaintiff requested an unspecified amount of damages against the defendants. The case has now been removed to federal court, and all activity in these cases is stayed by order of the MDL court.

On January 23, 2019, Indian Health Council, Inc., requested that the Company execute a waiver of service in its case pending in the MDL. Plaintiff’s complaint names the Company and 18 other pharmaceutical companies and other entities as defendants. Plaintiff, an intertribal health organization which provides healthcare services to its consortium’s member tribes, alleges that the defendants are liable for the economic injuries it allegedly suffered as a result of its role in responding to an alleged “epidemic of opioid abuse”. Plaintiff requests an unspecified amount of damages against the defendants. The case has been transferred to the MDL. All activity in the case is stayed by order of the MDL court.

On February 7, 2019, Kentucky River District Health Department requested that the Company execute a waiver of service in its case pending in the MDL. Plaintiff’s putative class action complaint names Amneal and 20 other pharmaceutical companies and other entities as defendants. Plaintiff alleges that the defendants are liable for the economic injuries it suffered, on behalf of itself and similarly situated Kentucky health departments, as a result of their role in responding to an alleged “opioid epidemic.”  Plaintiff requests an unspecified amount of damages against the defendants. All activity in the case is stayed by order of the MDL court.

In February and March 2019, the Aleutian Pribilof Islands Association and Alaska Native Tribal Health Consortium requested that the Company execute waivers of service in their cases pending in the MDL. Plaintiffs’ complaints name the Company and 37 other entities as defendants. Plaintiffs allege damages and seek injunctive relief, compensatory and statutory damages, “as well as the means to abate the epidemic” that they allege was “created by Defendants’ wrongful and/or unlawful conduct.” All activity in these cases is stayed by order of the MDL court.

In March 2019, Glynn County, Georgia, requested waivers of service from the Company and Amneal in its case pending in the MDL. Plaintiff’s second amended short-form complaint, filed against Amneal and 39 other defendants consisting of pharmaceutical companies, wholesalers, retailers, and distributors, alleges damages as a result of defendants’ alleged improper marketing, fraud, including RICO violations, failure to adequately warn of the risks of opioid medications, failure to properly monitor and control diversion of opioid medications in or affecting Glynn County, negligence, public nuisance, and unjust enrichment. All activity in the case is stayed by order of the MDL court.

On March 14, 2019, the City of Concord, New Hampshire, filed a short-form amendment to its Second Amended Complaint in the MDL court adding the Company, Amneal, and Impax, to 31 other defendants, including pharmaceutical companies, corporate officers of certain brand manufacturer pharmaceutical companies, and distributors. As to the Company, Amneal, and Impax, plaintiff asserts claims for violation of the New Hampshire Consumer Protection Act, public nuisance, unjust enrichment, and violation of RICO. Plaintiff alleges that defendants are liable for economic injuries experienced by plaintiff, including unspecified restitution, civil penalties, disgorgement of unjust enrichment and attorneys’ fees, as well as for injunctive relief as to defendants’ further false or misleading statements as to opioids, and for exemplary damages. Amneal was served on April 25, 2019. All activity in the case is stayed by order of the MDL court.

On March 15, 2019, the International Union of Painters and Allied Trades, District Council No. 21 Welfare Fund, and, separately, the International Brotherhood of Electrical Workers Local 98 Health & Welfare Fund, and International Brotherhood of Electrical Workers Local 98 Sound and Communications Health and Welfare Fund, filed complaints in the Philadelphia County Common Pleas Court, naming Amneal, Impax, Amneal Pharmaceuticals of New York, LLC, and 29 other pharmaceutical companies as defendants. In each, plaintiffs allege that the defendants are liable for economic injuries allegedly suffered by the respective funds to the extent those funds paid for long term treatment of their benefit members with opioids, and for the costs incurred in addressing an alleged “opioid epidemic.” Plaintiffs request an unspecified amount of damages against the defendants. On April 17, 2019, Amneal and Amneal Pharmaceuticals of New York, LLC were served with both complaints. Both cases have been transferred to Delaware County, Pennsylvania, where numerous other opioid cases currently are pending. The cases are now stayed by order of the Delaware County court.

In March 2019, the State of New Mexico filed a Second Amended Complaint in its case pending against numerous generic drug manufacturers and distributors in the First District Court of Santa Fe County, naming as defendants Amneal and Amneal Pharmaceuticals of New York, LLC. Plaintiff seeks unspecified damages, and injunctive relief, “to eliminate the hazard to public health and safety caused by the opioid epidemic, to abate the nuisance in [the state], and to recoup State monies that have been spent” on account of defendants’ alleged “false, deceptive and unfair marketing and/or unlawful diversion of prescription opioids.” On July 17, 2019, the Amneal entities moved to dismiss for lack of personal jurisdiction and failure to state a claim upon which relief can be granted. On October 15, 2019, the court entered an order dismissing the plaintiff’s negligence per se claims, but declining to dismiss the Amneal entities for lack of personal jurisdiction.  Responsive pleadings are presently due to be filed on November 29, 2019.

In April 2019, several Virginia municipalities (the County Board of Arlington, Dinwiddie County, and Mecklenburg County) filed Complaints in their respective local circuit courts against the Company, Amneal, Amneal Pharmaceuticals of New York, LLC, and Impax along with numerous additional generic drug manufacturers, distributors, and pharmacies. In each Complaint, plaintiffs seek unspecified damages and equitable relief, alleging that defendants were negligent and/or grossly negligent in flooding the relevant municipalities with prescription opioid medications and engaged in civil conspiracies to do so. Each case had been removed to the United States District Court for the Eastern District of Virginia, but all three since have been remanded back to Virginia state court.  The Company was nonsuited (dismissed) from the Arlington case.  Amended Complaints are expected to be filed in the Dinwiddie and Mecklenburg cases before the end of November 2019.  There are no deadlines presently in those cases, and no responsive pleadings are due until after the Amended Complaints are filed.  

On June 10, 2019, in their cases currently pending in the MDL, West Virginia municipal-entity plaintiffs Cabell County Commission and the City of Huntington were granted leave to file, then filed, a Joint and Third Amended Complaint naming approximately 20 additional defendants, including the Company, Amneal, Amneal Pharmaceuticals of New York, LLC, and Impax. The plaintiff municipalities, seek unspecified actual, treble, and punitive damages and disgorgement “to eliminate the hazard to public health and safety, to abate the public nuisance caused by the opioid epidemic in the City and County and to compensate both for abatement measures undertaken or underway and damages sustained as a result of the opioid epidemic” they allege the defendants “proximately caused.” These actions have been designated “Track Two” bellwether cases by the MDL court (intended to be adjudicated following the “Track One” cases for which bellwether trials had been scheduled for October 2019). On December 31, 2018, the MDL court entered an Order directing the then-parties in these Track Two actions to work with one of the MDL court's appointed Special Masters to prepare case management deadlines. On May 12, 2019, the Special Master entered an Order acknowledging that the press of issues surrounding ongoing litigation of the Track One cases had prevented both the parties and the MDL court from acting on the directives of the prior Track Two Order, and setting deadlines of June 10, 2019 for plaintiffs to amend their complaints, and June 14, 2019 for the submission of proposals for case management by the then-parties to the cases (the Amneal entities were not served with plaintiffs’ Third Amended Complaints until June 25, 2019). However, to date, none of the existing parties to the cases have filed or submitted any case management proposals to the Special Master. Accordingly, the case management aspect of these Track Two cases remains pending.

 

In October 2019, the Company, Amneal, Amneal Pharmaceuticals of New York, LLC, and Impax were served with a putative class action complaint, which also names as defendants numerous manufacturers of opioid products (and certain corporate officers thereof), filed in the United States District Court for the Middle District of Tennessee by several individuals who allegedly purchased prescription opioid medication in cash and/or with an insurance co-payment (Rhodes, et al., v. Rhodes Technologies, Inc., et al., No. 3:19-cv-00885). Plaintiffs claim that they would not have purchased these prescription opioid products had defendants not allegedly misrepresented the products’ “addiction propensities,” and thereby suffered economic loss. Plaintiffs purport to represent a nationwide class of all individuals who directly or indirectly purchased prescription opioid medication from January 2008 to the present in 31 different states, allege causes of action for violations of those states’ antitrust laws and consumer protection statutes (and unjust enrichment), and seek, in addition to class certification, unspecified monetary damages (including actual, statutory, and punitive or treble damages) and equitable relief, including declaratory judgment and restitution. Responsive pleadings are not yet due to be filed.

Including the above-referenced cases, the Company and certain of its affiliates recently have been named in approximately 800 cases now pending in the MDL court or in various state and territorial courts, including cases brought by:

 

Political subdivision / municipal entity plaintiffs from the states of Alabama, Arkansas, Arizona, California, Colorado, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Puerto Rico, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming;

 

Third-party payor plaintiffs;

 

Indian tribe plaintiffs; and

 

Hospital / healthcare provider plaintiffs.

Requests for waivers for service of process have been transmitted by plaintiffs’ counsel to defense counsel in relation to the Company and certain of its affiliates in most of these cases. In each case where service on the Company or its affiliates has been perfected, and the case is not stayed, responsive pleadings or pre-answer motions have been filed.

The Company believes it has substantial meritorious defenses to the claims asserted with respect to the litigation.  However, any adverse outcome could negatively affect the Company and could have a material adverse effect on the Company's results of operations, cash flows and/or overall financial condition.

Securities Class Action

On April 17, 2017, Lead Plaintiff New York Hotel Trades Council & Hotel Association of New York City, Inc. Pension Fund filed an amended class action complaint in the United States District Court for the Northern District of California on behalf of itself and others similarly situated against Impax and four current or former Impax officers alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5. Plaintiff asserts claims regarding alleged misrepresentations about three generic drugs. Its principal claim alleges that Impax concealed that it colluded with competitor Lannett Corp. to fix the price of generic drug digoxin, and that its digoxin profits stemmed from this collusive pricing. Plaintiff also alleges that Impax concealed from the market anticipated erosion in the price of generic drug diclofenac and that Impax overstated the value of budesonide, a generic drug that it acquired from Teva. On June 1, 2017, Impax filed its motion to dismiss the amended complaint. On September 7, 2018, the Court granted Impax’s motion, dismissing plaintiff’s claims without prejudice and with leave to amend the complaint. Plaintiff filed a second amended complaint October 26, 2018. Impax filed a motion to dismiss the second amended complaint on December 6, 2018; plaintiffs’ opposition thereto was filed on January 17, 2019; and Impax’s reply in support of its motion to dismiss was filed on February 7, 2019. A hearing before the Court on the motion to dismiss took place on May 2, 2019.  On August 12, 2019, the Court entered an order granting Impax’s motion, dismissing plaintiff’s second amended complaint with prejudice.  On September 5, 2019, plaintiff filed a notice of appeal from both dismissal orders with the United States Court of Appeals for the Ninth Circuit.  

Teva v. Impax Laboratories, LLC.

On February 15, 2017, plaintiffs Teva Pharmaceuticals USA, Inc. and Teva Pharmaceuticals Curacao N.V. ("Teva") filed a Praecipe to Issue Writ of Summons and Writ of Summons in the Philadelphia County Court of Common Pleas against Impax alleging that Impax breached the Strategic Alliance Agreement between the parties by not indemnifying Teva in its two litigations with GlaxoSmithKline LLC regarding Wellbutrin ® XL (and therefore that Impax is liable to Teva for the amounts it paid to settle those litigations). Impax filed a Motion to Disqualify Teva’s counsel related to the matter, and on August 23, 2017, the trial court denied Impax's motion. Following the trial court’s order, Teva filed its complaint. On September 6, 2017, Impax appealed the trial court’s decision to the Pennsylvania Superior Court. On September 20, 2017, the Superior Court stayed the trial court action pending the outcome of Impax’s appeal. On November 2, 2018, the Superior Court affirmed the trial court’s decision. On November 16, 2018, Impax filed an application for reargument with the Superior Court, which was denied on December 28, 2018. On February 13, 2019, the Superior Court remitted the record to the trial court. On February 15, 2019, Impax filed its answer with new matter to Teva’s complaint. On February 19, 2019, the trial court issued a revised case management order providing that, absent any extensions or amendments thereto, discovery was to have closed on July 1, 2019 and the case is expected to be ready for trial by February 3, 2020. On or about March 4, 2019, Teva filed a motion for judgment on the pleadings. Impax filed its answer and brief in opposition to Teva’s motion for judgment on the pleadings on March 25, 2019. On April 4, 2019, the trial court denied Teva’s motion. On April 16, 2019, Impax filed a motion to stay the proceedings and compel Teva to arbitrate the dispute pursuant to an Indemnification Release Agreement negotiated and executed by the parties in 2012. Teva’s opposition to the motion was filed on May 7, 2019. On June 11, 2019, the trial court denied Impax’s motion. On June 24, 2019, Impax noticed its intent to appeal to the Superior Court the trial court’s denial of the motion to compel arbitration, and moved both to stay the trial court proceedings pending that appeal and for an extension of case management deadlines. On July 12, 2019, the trial court denied both motions.  On July 24, 2019, Impax moved the Superior Court to stay all trial court proceedings pending the outcome of Impax’s appeal of the trial court’s denial of the motion to compel arbitration and, on August 13, 2019, the Superior Court granted Impax’s motion.  Impax filed its opening appellate brief with the Superior Court on September 3, 2019 and Teva filed its response brief on October 3, 2019.  In October 2019, the parties reached an agreement in principle to resolve the matter, subject to finalized documentation.

California Wage and Hour Class Action

On August 3, 2017, plaintiff Emielou Williams filed a class action complaint in the Superior Court for the State of California in the County of Alameda on behalf of herself and others similarly situated against Impax alleging violation of California Business and Professions Code section 17200 by violating various California wage and hour laws, and seeking, among other things, declaratory judgment, restitution of allegedly unpaid wages, and disgorgement. On October 10, 2017, Impax filed a Demurrer and Motion to Strike Class Allegations. On December 12, 2017, the Court overruled Impax’s Demurrer to Plaintiff’s individual claims. However, it struck all of plaintiff’s class allegations. On March 13, 2018, plaintiff filed her First Amended Complaint once again including the same class allegations. The Company filed a Demurrer and Motion to Strike Class Allegations on April 12, 2018. On September 20, 2018, the Court again struck plaintiff’s class allegations; plaintiff has appealed this most recent order to the California State Court of Appeal. Plaintiff filed her opening appellate brief on February 22, 2019; Impax’s brief in response was filed on April 18, 2019; plaintiff filed her reply brief on May 7, 2019; and Impax filed a surreply on May 22, 2019. The appeal has now been fully submitted on the briefs.

United States Department of Justice / Drug Enforcement Administration Subpoenas

On July 7, 2017, Amneal Pharmaceuticals of New York, LLC received an administrative subpoena issued by the Long Island, NY District Office of the Drug Enforcement Administration (the “DEA”) requesting information related to compliance with certain recordkeeping and reporting requirements pursuant to regulations promulgated by the DEA. The Company is cooperating with this request for information and has provided relevant information responsive to the request. The Company and the U.S. Attorney for the Eastern District of New York (“E.D.N.Y.”) have entered into a tolling agreement with respect to the investigation. The material provisions of the tolling agreement provide that the investigation is ongoing, that the U.S. Attorney will not file a claim against the Company on or before December 19, 2019, and requests that the Company agree that the applicable statute(s) of limitations be tolled during the period from January 19, 2018 through December 20, 2019. The Company cannot predict at this time whether the U.S. Attorney will file a lawsuit or other claims against the Company with respect to the investigation.

On March 14, 2019, Amneal received a subpoena (the “Subpoena”) from an Assistant U.S. Attorney (“AUSA”) for the Southern District of Florida. The Subpoena requests information and documents generally related to the marketing, sale, and distribution of oxymorphone. The Company intends to cooperate with the AUSA regarding the Subpoena. However, no assurance can be given as to the timing or outcome of its underlying investigation.

On May 28, 2019, Amneal received a subpoena (the “Subpoena”) from an AUSA for the E.D.N.Y. requesting information and documents generally related to the Company’s compliance with Controlled Substances Act regulations. The Company intends to cooperate with the AUSA regarding the Subpoena. The Company and the U.S. Attorney for the E.D.N.Y. have entered into a tolling agreement with respect to the investigation. The material provisions of the tolling agreement provide that the E.D.N.Y. has made no decision as yet as to the appropriate resolution of its pending investigation, that the Company’s time to present evidence and arguments to the E.D.N.Y. concerning the investigation is extended to November 12, 2019, and that the Company agrees that the applicable statute(s) of limitations are tolled during the period from April 12, 2019 through November 12, 2019. The Company cannot predict at this time whether the U.S. Attorney will file a lawsuit or other claims against the Company with respect to the investigation.

v3.19.3
Segment Information
9 Months Ended
Sep. 30, 2019
Segment Reporting [Abstract]  
Segment Information

14. Segment Information

The Company has two reportable segments, Generics and Specialty. Generics develops, manufactures and commercializes complex oral solids, injectables, ophthalmics, liquids, topicals, softgels, inhalation products and transdermals across a broad range of therapeutic categories. The Company's retail and institutional portfolio contains approximately 200 product families, many of which represent difficult-to-manufacture products or products that have a high barrier-to-entry, such as oncologics, anti-infectives and supportive care products for healthcare providers.

Specialty delivers proprietary medicines to the U.S. market. The Company offers a growing portfolio in core therapeutic categories including central nervous system disorders, endocrinology, parasitic infections and other therapeutic areas. The Company's specialty products are marketed through skilled specialty sales and marketing teams, who call on neurologists, movement disorder specialists, endocrinologists and primary care physicians in key markets throughout the U.S.

Specialty also has a number of product candidates that are in varying stages of development.

The Company’s chief operating decision maker evaluates the financial performance of the Company’s segments based upon segment operating income (loss). Items below income (loss) from operations are not reported by segment, since they are excluded from the measure of segment profitability reviewed by the Company’s chief operating decision maker. Additionally, general and administrative expenses, certain selling expenses, certain litigation settlements, and non-operating income and expenses are included in "Corporate and Other." The Company does not report balance sheet information by segment since it is not reviewed by the Company’s chief operating decision maker.

The tables below present segment information reconciled to total Company financial results, with segment operating income or loss including gross profit less direct selling expenses, research and development expenses, and other operating expenses to the extent specifically identified by segment (in thousands):

 

Three Months Ended September 30, 2019

 

Generics (1)

 

 

Specialty (1)

 

 

Corporate

and Other

 

 

Total

Company

 

Net revenue

 

$

291,021

 

 

$

87,262

 

 

$

 

 

$

378,283

 

Cost of goods sold

 

 

217,773

 

 

 

49,944

 

 

 

 

 

 

267,717

 

Cost of goods sold impairment charges

 

 

49,115

 

 

 

7,017

 

 

 

 

 

 

56,132

 

Gross profit

 

 

24,133

 

 

 

30,301

 

 

 

 

 

 

54,434

 

Selling, general and administrative

 

 

14,256

 

 

 

20,228

 

 

 

29,313

 

 

 

63,797

 

Research and development

 

 

34,316

 

 

 

3,809

 

 

 

 

 

 

38,125

 

In-process research and development impairment charges

 

 

23,382

 

 

 

 

 

 

 

 

 

23,382

 

Charges (gains) related to legal matters, net

 

 

14,750

 

 

 

 

 

 

 

 

 

14,750

 

Intellectual property legal development expenses

 

 

2,586

 

 

 

 

 

 

 

 

 

2,586

 

Acquisition, transaction-related and integration expenses

 

 

502

 

 

 

2,455

 

 

 

174

 

 

 

3,131

 

Restructuring and other charges

 

 

14,702

 

 

 

213

 

 

 

6,022

 

 

 

20,937

 

Operating (loss) income

 

$

(80,361

)

 

$

3,596

 

 

$

(35,509

)

 

$

(112,274

)

 

Nine Months Ended September 30, 2019

 

Generics (1)

 

 

Specialty (1)

 

 

Corporate

and Other

 

 

Total

Company

 

Net revenue

 

$

1,008,562

 

 

$

220,483

 

 

$

 

 

$

1,229,045

 

Cost of goods sold

 

 

760,074

 

 

 

113,767

 

 

 

 

 

 

873,841

 

Cost of goods sold impairment charges

 

 

105,424

 

 

 

7,017

 

 

 

 

 

 

112,441

 

Gross profit

 

 

143,064

 

 

 

99,699

 

 

 

 

 

 

242,763

 

Selling, general and administrative

 

 

52,783

 

 

 

57,705

 

 

 

105,026

 

 

 

215,514

 

Research and development

 

 

129,915

 

 

 

10,084

 

 

 

 

 

 

139,999

 

In-process research and development impairment charges

 

 

46,169

 

 

 

 

 

 

 

 

 

46,169

 

Charges (gains) related to legal matters, net

 

 

14,750

 

 

 

 

 

 

 

 

 

14,750

 

Intellectual property legal development expenses

 

 

8,218

 

 

 

1,045

 

 

 

 

 

 

9,263

 

Acquisition, transaction-related and integration expenses

 

 

4,086

 

 

 

5,705

 

 

 

2,891

 

 

 

12,682

 

Restructuring and other charges

 

 

17,201

 

 

 

391

 

 

 

12,341

 

 

 

29,933

 

Operating (loss) income

 

$

(130,058

)

 

$

24,769

 

 

$

(120,258

)

 

$

(225,547

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) For the quarter ended September 30, 2019, operating results for Oxymorphone were reclassified from the Generics to the Specialty, where it is sold as a non-promoted product.  Prior period results have not been restated to reflect the reclassification.

 

 

Three Months Ended September 30, 2018

 

Generics

 

 

Specialty

 

 

Corporate

and Other

 

 

Total

Company

 

Net revenue

 

$

391,175

 

 

$

85,312

 

 

$

 

 

$

476,487

 

Cost of goods sold

 

 

230,051

 

 

 

38,516

 

 

 

 

 

 

268,567

 

Cost of goods sold impairment charges

 

 

7,815

 

 

 

 

 

 

 

 

 

7,815

 

Gross profit

 

 

153,309

 

 

 

46,796

 

 

 

 

 

 

200,105

 

Selling, general and administrative

 

 

21,030

 

 

 

19,716

 

 

 

34,740

 

 

 

75,486

 

Research and development

 

 

38,347

 

 

 

4,002

 

 

 

 

 

 

42,349

 

In-process research and development impairment charges

 

 

650

 

 

 

 

 

 

 

 

 

650

 

Intellectual property legal development expenses

 

 

3,929

 

 

 

472

 

 

 

 

 

 

4,401

 

Acquisition, transaction-related and integration expenses

 

 

 

 

 

 

 

 

2,231

 

 

 

2,231

 

Restructuring and other charges

 

 

(2,885

)

 

 

(27

)

 

 

756

 

 

 

(2,156

)

Charges (gains) related to legal matters, net

 

 

 

 

 

 

 

 

2,589

 

 

 

2,589

 

Operating income (loss)

 

$

92,238

 

 

$

22,633

 

 

$

(40,316

)

 

$

74,555

 

 

Nine Months Ended September 30, 2018

 

Generics

 

 

Specialty

 

 

Corporate

and Other

 

 

Total

Company

 

Net revenue

 

$

1,028,134

 

 

$

137,329

 

 

$

 

 

$

1,165,463

 

Cost of goods sold

 

 

572,179

 

 

 

62,474

 

 

 

 

 

 

634,653

 

Cost of goods sold impairment charges

 

 

7,815

 

 

 

 

 

 

 

 

 

7,815

 

Gross profit

 

 

448,140

 

 

 

74,855

 

 

 

 

 

 

522,995

 

Selling, general and administrative

 

 

51,854

 

 

 

33,265

 

 

 

71,491

 

 

 

156,610

 

Research and development

 

 

129,762

 

 

 

7,131

 

 

 

 

 

 

136,893

 

In-process research and development impairment charges

 

 

650

 

 

 

 

 

 

 

 

 

650

 

Intellectual property legal development expenses

 

 

12,509

 

 

 

515

 

 

 

 

 

 

13,024

 

Acquisition, transaction-related and integration expenses

 

 

114,622

 

 

 

 

 

 

102,251

 

 

 

216,873

 

Restructuring and other charges

 

 

21,912

 

 

 

2,394

 

 

 

18,003

 

 

 

42,309

 

Charges (gains) related to legal matters, net

 

 

(3,000

)

 

 

 

 

 

2,589

 

 

 

(411

)

Operating income (loss)

 

$

119,831

 

 

$

31,550

 

 

$

(194,334

)

 

$

(42,953

)

 

v3.19.3
Related Party Transactions
9 Months Ended
Sep. 30, 2019
Related Party Transactions [Abstract]  
Related Party Transactions

15. Related Party Transactions

The Company has various business agreements with certain third-party companies in which there is some common ownership and/or management between those entities, on the one hand, and the Company, on the other hand. The Company has no direct ownership or management in any of such related party companies. The related party relationships that generated income and/ or expense in the respective reporting periods are described below.

Financing Lease/Financing Obligation - Related Party

The Company has a financing lease for two buildings located in Long Island, New York, that are used as an integrated manufacturing and office facility. For annual payments required under the terms of the non-cancelable lease agreement over the next five years and thereafter, refer to Note 11. Leases.

Kanan, LLC

Kanan, LLC ("Kanan") is an independent real estate company which owns Amneal’s manufacturing facilities located at 65 Readington Road, Branchburg, New Jersey, 131 Chambers Brook Road, Branchburg, New Jersey and 1 New England Avenue, Piscataway, New Jersey. Amneal leases these facilities from Kanan under two separate triple-net lease agreements that expire in 2027 and 2031, respectively, at an annual rental cost of approximately $2 million combined, subject to CPI rent escalation adjustments as provided in the lease agreements. Rent expense paid to the related party for both of the three months ended September 30, 2019 and 2018 was $0.5 million. Rent expense paid to the related party for both of the nine months ended September 30, 2019 and 2018 was $1.5 million.

Asana Biosciences, LLC

Asana Biosciences, LLC (“Asana”) is an early stage drug discovery and research and development company focusing on several therapeutic areas, including oncology, pain and inflammation. Amneal provided research and development services to Asana under a development and manufacturing agreement. The total amount of income earned from this arrangement for the three and nine months ended September 30, 2019 was nil and $1.4 million, respectively. The total amount of income earned from this arrangement for both the three and nine months ended September 30, 2018 was $0.2 million. At September 30, 2019, receivables of approximately $1 million were due from the related party for research and development related services.

Industrial Real Estate Holdings NY, LLC

Industrial Real Estate Holdings NY, LLC ("IRE") is an independent real estate management entity which, among other activities, is the landlord of Amneal’s leased manufacturing facility located at 75 Adams Avenue, Hauppauge, New York. The lease expires in March 2021. Rent expense paid to the related party for the three months ended September 30, 2019 and 2018 was $0.3 million and $0.5 million, respectively. Rent expense paid for the related party for the nine months ended September 30, 2019 and 2018 was $0.8 million and $1.0 million, respectively.

Kashiv BioSciences LLC

Kashiv BioSciences, LLC ("Kashiv") is an independent contract development organization focused primarily on the development of 505(b) (2) NDA products. Amneal has various business agreements with Kashiv.

In May 2013, Amneal entered into a sublease agreement with Kashiv for a portion of one of its research and development facilities. The sublease automatically renews annually if not terminated and has an annual base rent of $2 million. On January 15, 2018, Amneal and Kashiv entered into an Assignment and Assumption of Lease Agreement. The lease was assigned to Kashiv, and Amneal was relieved of all obligations. Rental expense from the related party sublease for the nine months ended September 30, 2018 was $0.4 million (none for both the three months ended September 30, 2019 and 2018 and nine months ended September 30, 2019).

Amneal has also entered into various development and commercialization arrangements with Kashiv to collaborate on the development and commercialization of certain generic pharmaceutical products. The total reimbursable expenses associated with these arrangements for the nine months ended September 30, 2019 was $1 million, (none for the three months ended September 30, 2019 and for the three and nine months ended September 30, 2018). Kashiv receives a percentage of net profits with respect to Amneal’s sales of these products. The total profit share paid to Kashiv for the three months ended September 30, 2019 and 2018 was $0.6 million and $0.8 million, respectively. The total profit share paid to Kashiv for the nine months ended September 30, 2019 and 2018 were $2 million and $3 million, respectively. At September 30, 2019 and December 31, 2018 payables of approximately $0.6 million and $0.8 million, respectively, were due to the related party for royalty-related transactions. Additionally, as of September 30, 2019 a receivable of $0.7 million was due from the related party.

In June 2017, Amneal and Kashiv entered a product acquisition and royalty stream purchase agreement. The aggregate purchase price was $25 million on the closing, which has been paid, plus two potential future $5 million earn outs related to the Estradiol Product. The contingent earn outs were to be recorded in the period in which they are earned. The first and second $5 million earn outs were recognized in March 2018 and June 2018, respectively, as an increase to the cost of the Estradiol product intangible asset and amortized on a straight-line basis over the remaining life of the Estradiol intangible asset. The first earn out was paid in July 2018 and the second earn out was paid in September 2018.

Pursuant to a product development agreement, Amneal and Kashiv agreed to collaborate on the development and commercialization of Oxycodone HCI ER Oral Tablets. Under the agreement, this product is owned by Kashiv, with Amneal acting as the exclusive marketing partner and as Kashiv’s agent for filing the product ANDA. Under the agreement, Amneal was also responsible for assuming control of and managing all aspects of the patent litigation arising from the filing of the ANDA, including selecting counsel and settling such proceeding (subject to Kashiv’s consent). In December 2017, Amneal and Kashiv terminated the product development agreement and pursuant to the termination and settlement of the agreement, Kashiv agreed to pay Amneal $8 million, an amount equal to the legal costs incurred by Amneal related to the defense of the ANDA. The cash payment was received in February 2018.

Pursuant to a product development agreement, Amneal and Kashiv agreed to collaborate on the development and commercialization of Levothyroxine Sodium. Under the agreement, the IP and ANDA for this product is owned by Amneal and Kashiv is to receive a profit share for all sales of the product made by Amneal. Amneal is precluded from selling the product made by Kashiv during the term of the license and supply agreement with JSP. Under the terms of the amended agreement with Kashiv, Amneal paid $2 million in July 2019 and may be required to pay up to an additional $18 million upon certain regulatory milestones being met. For the nine months ended September 30, 2019, the Company recorded a $2 million as research and development expense to compensate Kashiv for costs incurred to develop the product.

Adello Biologics, LLC

Adello is an independent clinical stage company engaged in the development of biosimilar pharmaceutical products. Amneal and Adello are parties to a master services agreement pursuant to which, from time to time, Amneal provides human resources and product quality assurance services on behalf of Adello. The parties are also party to a license agreement for parking spaces in Piscataway, NJ. The total amount of income received from Adello from these agreements was less than $0.1 million for both the three and nine months ended September 30, 2019. The total amount of net expense paid to Adello from these agreements for both the three and nine months ended September 30, 2018 was less than $0.1 million.  At September 30, 2019, a receivable of approximately $0.1 million was due from the related party.  

In March 2017, Amneal entered into a product development agreement with Adello. The collaboration extended the remaining development process to Adello for a complex generic product, while Amneal retained its commercial rights upon approval. Pursuant to the agreement, Adello paid Amneal $10 million for reimbursement of past development costs, which Amneal deferred as a liability and will pay royalties upon commercialization.

In October 2017, Amneal and Adello terminated their product development agreement pursuant to which Amneal and Adello had been collaborating to develop and commercialize Glatiramer Acetate products. Pursuant to the termination agreement, Amneal owed Adello $11 million for the up-front payment plus interest. This amount was paid in January 2018.

On October 1, 2017, Amneal and Adello entered into a license and commercialization agreement pursuant to which the parties have agreed to cooperate with respect to certain development activities in connection with two biologic pharmaceutical products. In addition, under the agreement, Adello has appointed Amneal as its exclusive marketing partner for such products in the United States. In connection with the agreement, Amneal paid an upfront amount of $2 million in October 2017 which was recorded within research and development expenses. The agreement also provides for potential future milestone payments to Adello.

In October 2017, Amneal purchased a building from Adello in Ireland to further support its inhalation dosage form. Amneal issued a promissory note for 13 million euros ($15 million based on exchange rate as of December 31, 2017) which accrues interest at a rate of 2% per annum, due on or before July 1, 2019. The promissory note was paid in full in the second quarter of 2018. Refer to Note 5. Alliance and Collaboration for further information on collaboration agreements with Adello.

PharmaSophia, LLC

PharmaSophia, LLC ("PharmaSophia") is a joint venture formed by Nava Pharma, LLC ("Nava") and Oakwood Laboratories, LLC for the purpose of developing certain products. Currently PharmaSophia is actively developing two injectable products. PharmaSophia and Nava are parties to a research and development agreement pursuant to which Nava provides research and development services to PharmaSophia. Nava subcontracted this obligation to Amneal, entering into a subcontract research and development services agreement pursuant to which Amneal provides research and development services to Nava in connection with the products being developed by PharmaSophia. The total amount of income earned from these agreements for the three months ended September 30, 2019 and 2018 was $0.3 million and $0.2 million, respectively. The total amount of income earned from these agreements for the nine months ended September 30, 2019 and 2018 was $0.9 million and $0.5 million, respectively. At September 30, 2019 and December 31, 2018 receivables of $0.3 million and $0.1 million, respectively, were due from the related party.

Gemini Laboratories, LLC

Prior to the Company's acquisition of Gemini in May 2018, Amneal and Gemini were parties to various agreements. Total gross profit earned from the sale of inventory to Gemini for the nine months ended September 30, 2018 (through the acquisition date) was $0.1 million. The total profit share paid by Gemini for the nine months ended September 30, 2018 (through the acquisition date) was $5 million.

Fosun International Limited

Fosun International Limited (“Fosun”) is a Chinese international conglomerate and investment company that is a shareholder of the Company. On June 6, 2019, the Company entered into a license and supply agreement with a subsidiary of Fosun, which is a Chinese pharmaceutical company. Under the terms of the agreement, the Company will hold the imported drug license required for pharmaceutical products manufactured outside of China and will supply Fosun with finished, packaged products for Fosun to then sell in the China market. Fosun will be responsible for obtaining regulatory approval in China and for shipping the product from Amneal’s facility to Fosun’s customers in China. In consideration for access to the Company's U.S. regulatory filings to support its China regulatory filings and for the supply of product, Fosun paid the Company a $1 million non-refundable fee, net of tax, in July 2019 and will be required to pay the Company $0.3 million for each of 8 products upon the first commercial sale of each in China in addition to a supply price and a profit share. For the three and nine months ended September 30, 2019, the Company has not recognized any revenue from this agreement.

Tax Distributions

Under the terms of the Limited Liability Company Agreement, Amneal is obligated to make tax distributions to its members, which are also holders of non-controlling interests in the Company. For further details, refer to Note 19. Stockholders' Equity/ Members' Deficit contained in the Company's 2018 Annual Report on Form 10-K.

Non-Controlling Interests

During December 2018, the Company acquired the non-controlling interests in one of Amneal's non-public subsidiaries for approximately $3 million. As of December 31, 2018, the Company recorded a $3 million related party payable for this transaction which was paid in full as of September 30, 2019.

v3.19.3
Goodwill and Intangible Assets
9 Months Ended
Sep. 30, 2019
Goodwill And Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets

16. Goodwill and Intangible Assets

The changes in goodwill for the nine months ended September 30, 2019 and for the year ended December 31, 2018 were as follows (in thousands):

 

 

 

September 30,

2019

 

 

December 31,

2018

 

Balance, beginning of period

 

$

426,226

 

 

$

26,444

 

Impax acquisition adjustment

 

 

(1,255

)

 

 

 

Goodwill acquired during the period

 

 

 

 

 

401,488

 

Goodwill divested during the period

 

 

(5,175

)

 

 

 

Currency translation

 

 

(125

)

 

 

(1,706

)

Balance, end of period

 

$

419,671

 

 

$

426,226

 

 

As of September 30, 2019, $361 million and $59 million of goodwill was allocated to the Specialty and Generics segment, respectively. As of December 31, 2018, $360 million and $66 million of goodwill was allocated to the Specialty and Generics segment, respectively. For the nine months ended September 30, 2019, goodwill divested was associated with the sale of the Company's operations in the United Kingdom and Germany.  For the year ended December 31, 2018, goodwill acquired was associated with the Impax and Gemini acquisitions. Refer to Note 3. Acquisitions and Divestitures for additional information about the acquisition of Impax and the divestiture of the Company's operations in the United Kingdom and Germany.

 

Interim Goodwill Impairment Test

 

In light of the continued decline in the Company’s share price and financial performance, the Company performed an interim goodwill impairment test during the three months ended September 30, 2019 by evaluating its two reporting units, which are the same as the Company’s two reportable segments.  The fair values of the reporting units were determined by combining both the income and market approaches.  In performing this test, the Company utilized long-term growth rates for its reporting units ranging from no growth to 1.0% and discount rates ranging from 9.0% to 11.5% in its estimation of fair value.  The assumptions used in evaluating goodwill for impairment are subject to change and are tracked against historical performance by management.

 

Based on the results of the interim test performed as of August 31, 2019 and updated on September 30, 2019, the Company determined that the estimated fair values of the Generics and Specialty reporting units exceeded their respective carrying amounts; therefore, the Company did not record a goodwill impairment charge during the three months ended September 30, 2019.  The Generics reporting unit was in excess of its carrying value by approximately 15% and the Specialty reporting unit was in excess of its carrying value by approximately 9%.

While management believes the assumptions used were reasonable and commensurate with the views of a market participant, changes in key assumptions for these reporting units, including increasing the discount rate, lowering forecasts for revenue, operating margin or lowering the long-term growth rate, could result in a future impairment.

 

Intangible assets at September 30, 2019 and December 31, 2018 are comprised of the following (in thousands):

 

 

 

September 30, 2019

 

 

December 31, 2018

 

 

 

Weighted-Average

Amortization Period

(in years)

 

Cost

 

 

Accumulated

Amortization

 

 

Net

 

 

Cost

 

 

Accumulated

Amortization

 

 

Net

 

Amortizing intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product rights

 

9.9

 

$

1,213,195

 

 

$

(161,969

)

 

$

1,051,226

 

 

$

1,282,011

 

 

$

(88,081

)

 

$

1,193,930

 

Customer relationships

 

 

 

 

 

 

 

 

 

 

 

 

 

7,005

 

 

 

(1,955

)

 

 

5,050

 

Other intangible assets

 

10.3

 

 

3,000

 

 

 

(950

)

 

 

2,050

 

 

 

5,620

 

 

 

(1,561

)

 

 

4,059

 

Total

 

 

 

$

1,216,195

 

 

$

(162,919

)

 

$

1,053,276

 

 

$

1,294,636

 

 

$

(91,597

)

 

$

1,203,039

 

In-process research and development

 

 

 

 

382,525

 

 

 

 

 

 

382,525

 

 

 

451,930

 

 

 

 

 

 

451,930

 

Total intangible assets

 

 

 

$

1,598,720

 

 

$

(162,919

)

 

$

1,435,801

 

 

$

1,746,566

 

 

$

(91,597

)

 

$

1,654,969

 

 

The Company evaluated assets for potential impairment by comparing estimated future undiscounted net cash flows to the carrying amount of the asset. For the three months ended September 30, 2019, the Company recognized a total of $79 million of intangible asset impairment charges, of which $56 million was recognized in cost of goods sold impairment charges and $23 million was recognized in in-process research and development impairment charges. For the nine months ended September 30, 2019, the Company recognized a total of $158 million of intangible asset impairment charges, of which $112 million was recognized in cost of goods sold impairment charges and $46 million was recognized in in-process research and development expense.  

 

The impairment charges for the three months ended September 30, 2019 are primarily related to 4 currently marketed products and 4 IPR&D products, all acquired as part of the Combination.  For the currently marketed products, the impairment charges were the result of significant price erosion during the three months ended September 30, 2019, without an offsetting increase in customer demand, resulting in significantly lower than expected future cash flows. For the IPR&D products, the impairment charges were the result of expected significant price erosion for the products resulting in significantly lower than expected future cash flows.

 

The impairment charges for the nine months ended September 30, 2019 are primarily related to twelve products, six of which are currently marketed products and six of which are IPR&D products, all acquired as part of the Combination. For the currently marketed products, the impairment charges were the result of significant price erosion during 2019, without an offsetting increase in customer demand, resulting in significantly lower than expected future cash flows.  For one IPR&D product, the impairment charge was the result of increased competition at launch resulting in significantly lower than expected future cash flows.  For one IPR&D product, the impairment charge was the result of a strategic decision to no longer pursue approval of the product. For the other four IPR&D products, the impairment charges were the result of expected significant price erosion for the products resulting in significantly lower than expected future cash flows.

During the nine months ended September 30, 2019, the Company recognized a $50 million product rights intangible asset for the exclusive rights to sell Levothyroxine in the U.S. market under a license and supply agreement with JSP. Refer to Note 5. Alliance and Collaboration for additional information.

For the nine months ended September 30, 2019, included in the Company's divested United Kingdom operations were a net customer relationship intangible asset and a net trade name intangible asset of $5 million and $2 million, respectively. Refer to Note 3. Acquisitions and Divestitures for additional information.

Amortization expense related to intangible assets recognized is as follows (in thousands):

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Amortization

 

$

38,015

 

 

$

25,655

 

 

$

103,774

 

 

$

44,109

 

 

The following table presents future amortization expense for the next five years and thereafter, excluding $383 million of IPR&D intangible assets (in thousands):

 

 

 

Future

Amortization

 

Remainder of 2019

 

$

40,163

 

2020

 

 

147,242

 

2021

 

 

150,941

 

2022

 

 

140,971

 

2023

 

 

131,778

 

2024

 

 

127,107

 

Thereafter

 

 

315,074

 

Total

 

$

1,053,276

 

 

v3.19.3
Acquisition, Transaction-Related and Integration Expenses
9 Months Ended
Sep. 30, 2019
Business Combinations [Abstract]  
Acquisition, Transaction-Related and Integration Expenses

17. Acquisition, Transaction-Related and Integration Expenses

The following table sets forth the components of the Company’s acquisition, transaction-related and integration expenses for the three and nine months ended September 30, 2019 and 2018 (in thousands):

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Acquisition, transaction-related and integration expenses (1)

 

$

3,131

 

 

$

2,231

 

 

$

12,682

 

 

$

30,374

 

Profit participation units (2)

 

 

 

 

 

 

 

 

 

 

 

158,757

 

Transaction-related bonus (3)

 

 

 

 

 

 

 

 

 

 

 

27,742

 

Total

 

$

3,131

 

 

$

2,231

 

 

$

12,682

 

 

$

216,873

 

 

(1)

Acquisition, transaction-related and integration expenses include professional service fees (e.g. legal, investment banking and accounting), information technology systems conversions, and contract termination/renegotiation costs. These costs for the three and nine months ended September 30, 2019 primarily consist of integration costs.

(2)

Profit participation units expense relates to the accelerated vesting of certain of Amneal's profit participation units that occurred prior to the Closing of the Combination for current and former employees of Amneal for service prior to the Combination (see additional information in the paragraph below and Note 19. Stockholders' Equity/ Members' Deficit in the Company's 2018 Annual Report on Form 10-K ).

(3)

Transaction-related bonus is a cash bonus that was funded by Holdings for employees of Amneal for service prior to the closing of the Combination (see additional information in Note 19. Stockholders' Equity/ Members' Deficit in the Company's 2018 Annual Report on Form 10-K ).

Accelerated Vesting of Profit Participation Units

Amneal’s historical capital structure included several classifications of membership and profit participation units. During the second quarter of 2018, the board of managers of Amneal Pharmaceuticals LLC approved a discretionary modification to certain profit participation units concurrent with the Combination that immediately caused the vesting of all profit participation units that were previously issued to certain current or former employees for service prior to the Combination. The modification entitled the holders to 6,886,140 shares of Class A Common Stock with a fair value of $126 million on the date of the Combination and $33 million of cash. The cash and shares were distributed by Holdings with no additional shares issued by the Company. As a result of this transaction, the Company recorded a charge in acquisition, transaction-related and integration expenses and a corresponding capital contribution of $159 million for the three and nine months ended September 30, 2018.

Impax Acquisition

On May 4, 2018, the Company completed the Combination, as described in Note 1. Nature of Operations. For the nine months ended September 30, 2018, transaction costs associated with the Impax acquisition were $23 million (none for the three months ended September 30, 2018) were recorded in acquisition, transaction-related and integration expenses (none in 2019).

v3.19.3
Subsequent Events
9 Months Ended
Sep. 30, 2019
Subsequent Events [Abstract]  
Subsequent Events

18. Subsequent Events

Financial Instruments

Effective October 31 2019, the Company entered into an interest rate lock agreement for a total notional amount of $1.3 billion, with a maturity date of May 2025.  The hedge will be accounted for as a cash flow hedge.

Option Repricing

On October 10, 2019, the Compensation Committee of the Board of Directors of the Company, subject to the approval of the stockholders of the Company, approved a one-time stock option repricing (the “Option Repricing”).  Pursuant to the Option Repricing, the exercise price of each relevant option will be amended to reduce such exercise price to the closing price of a share of the Company’s Class A Common Stock as reported on the New York Stock Exchange on or around November 13, 2019.  The Company does not expect that the Option Repricing will have a material impact on its statement of operations.

Related Party Licensing Agreement

The Company has entered into a definitive licensing agreement with Kashiv for the development and commercialization of Kashiv’s orphan drug K127 (pyridostigmine) for the treatment of Myasthenia Gravis.  Through this agreement, the Company has an exclusive license within the United States to market and sell the K127 product under a New Drug Application (“NDA”).

Under the terms of the agreement, Kashiv will be responsible for all development and clinical work required to secure Food and Drug Administration (“FDA”) approval and Amneal will be responsible for filing the NDA and commercializing the product.  Kashiv will receive an upfront payment of approximately $2 million and is eligible to receive development and regulatory milestones totaling approximately $17 million.  Kashiv is also eligible to receive tiered royalties from the low double-digits to mid-teens on net sales of K127.  

Voluntary Recall

On September 13, 2019, the FDA announced that ranitidine may potentially contain NDMA, which is classified as a probable human carcinogen.  As a precautionary measure, the Company immediately halted shipments of ranitidine-based products and began evaluation of its externally sourced ranitidine active pharmaceutical ingredient.  Based on the FDA’s November 1, 2019 statement summarizing their NDMA results to date for numerous ranitidine products on the market, the Company has made the decision to conduct a voluntary recall of its ranitidine-based products.  As of September 30, 2019, the Company had approximately $6 million of ranitidine-based product inventory.   The Company is currently testing the impacted inventory and is unable to estimate the possible loss, if any, at this time.   

 

 

v3.19.3
Summary of Significant Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2019
Accounting Policies [Abstract]  
Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements, which are prepared in accordance with generally accepted accounting principles in the United States of America, should be read in conjunction with Amneal’s annual audited financial statements for the year ended December 31, 2018 included in the Company’s 2018 Annual Report on Form 10-K. Certain information and footnote disclosures normally included in annual financial statements have been omitted from the accompanying unaudited consolidated financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the Company's financial position as of September 30, 2019, cash flows for the nine months ended September 30, 2019 and 2018 and the results of its operations, its comprehensive loss and changes in stockholders' equity for the three and nine months ended September 30, 2019 and 2018. The consolidated balance sheet data at December 31, 2018 was derived from the Company's audited annual financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

The accounting policies of the Company are set forth in Note 2. Summary of Significant Accounting Policies contained in the Company’s 2018 Annual Report on Form 10-K, except for the impact of the adoption of new accounting standards discussed under Recently Adopted Accounting Pronouncements.

Use of Estimates

Use of Estimates

The preparation of financial statements requires the Company's management to make estimates and assumptions that affect the reported financial position at the date of the financial statements and the reported results of operations during the reporting period. Such estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities in the consolidated financial statements and accompanying notes. The following are some, but not all, of such estimates: the determination of chargebacks, sales returns, rebates, billbacks, allowances for accounts receivable, accrued liabilities, stock-based compensation, valuation of inventory balances, the determination of useful lives for product rights, allowances for deferred tax assets and the assessment of expected cash flows used in evaluating goodwill and other long-lived assets for impairment. Actual results could differ from those estimates.

Reclassifications

Reclassifications

Certain prior period balances have been reclassified to conform to the current period presentation.

Recently Adopted and Recently Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Leases

In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, Leases, which was subsequently supplemented by clarifying guidance (collectively, "Topic 842") to improve financial reporting of leasing transactions. Topic 842 requires a lessee to recognize most leases, including those classified as operating, on its balance sheets as right of use ("ROU") assets and lease liabilities and requires disclose of additional key information about leases.

The Company elected to apply the modified retrospective transition provisions of Topic 842 on January 1, 2019, the date of adoption. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard. This allowed the Company to carry forward historical lease classifications. Adoption of this standard resulted in the recording of operating lease ROU assets and operating lease liabilities of $85 million and $86 million, respectively.

The transition guidance of Topic 842 also required the Company to de-recognize the build to suit accounting associated with a related party lease for integrated manufacturing and office space and recognize that transaction as a financing lease as of January 1, 2019. The resulting de-recognition reduced leasehold improvements and a financing obligation by $24 million and $39 million, respectively, and increased non-controlling interests and stockholders' accumulated deficit, net of income taxes, by $9 million and $5 million, respectively. The arrangement was then recognized as a financing lease with an ROU asset and lease liability of $64 million on January 1, 2019. Leases with related parties, the details of which are described in Note 15. Related Party Transactions, are presented separately in the Company's balance sheets.

The adoption of Topic 842 did not have a material impact on the Company's consolidated statements of operations. ROU assets and lease liabilities for reporting periods beginning on or after January 1, 2019 are presented under the new guidance, while prior periods amounts were not adjusted and continue to be reported in accordance with previous guidance.

All significant lease arrangements after January 1, 2019 are recognized as ROU assets and lease liabilities at lease commencement. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the present value of the future lease payments using the Company's incremental borrowing rate, which is assessed quarterly.

Operating lease expense is recognized on a straight-line basis over the lease term. At each balance sheet date, operating and financing lease liabilities continue to represent the present value of the future payments. Financing lease ROU assets are expensed using the straight-line method, unless another basis is more representative of the pattern of economic benefit, to lease expense. Interest on financing lease liabilities is recognized in interest expense.

Leases with an initial term of 12 months or less (short-term leases) are not recognized in the balance sheet and the related lease payments are recognized as incurred over the lease term. The Company separates lease and non-lease components. A portion of the Company's real estate leases are subject to periodic changes in the Consumer Price Index ("CPI"). The changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred.

For further details regarding the Company's leases, refer to Note 11. Leases.

Financial Instruments

In January 2016, the FASB issued ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The Company adopted ASU 2016-01 as of January 1, 2019 and it did not have a material impact on the Company's consolidated financial statements.

Goodwill

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment that eliminates the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of today’s goodwill impairment test) to measure a goodwill impairment charge. The Company adopted ASU 2017-04 as of April 1, 2019 on a prospective basis and it did not have a material impact on the Company's consolidated financial statements.

Recently Issued Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 82): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurement. The guidance is effective for annual periods beginning after December 15, 2019 and interim periods within those annual periods, and early adoption is permitted. The Company is evaluating the impact of this new guidance on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, guidance that changes the impairment model for most financial assets including trade receivables and certain other instruments that are not measured at fair value through net income. The standard will replace today’s "incurred loss" approach with an "expected loss" model for instruments measured at amortized cost and require entities to record allowances for available-for-sale debt securities rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. Entities will apply the standard’s provisions as a cumulative effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The guidance is effective for the Company for the annual period beginning after December 15, 2019. The Company is evaluating the impact of this new guidance on its consolidated financial statements.

Revenue Recognition

Performance Obligations

The Company’s performance obligation is the supply of finished pharmaceutical products to its customers. The Company’s customers consist primarily of major wholesalers, retail pharmacies, managed care organizations, purchasing co-ops, hospitals, government agencies and pharmaceutical companies. The Company’s customer contracts generally consist of both a master agreement, which is signed by the Company and its customer, and a customer submitted purchase order, which is governed by the terms and conditions of the master agreement. Customers purchase product by direct channel sales from the Company or by indirect channel sales through various distribution channels.

Revenue is recognized when the Company transfers control of its products to the customer, which typically occurs at a point-in-time, upon delivery. Substantially all of the Company’s net revenues relate to products which are transferred to the customer at a point-in-time.

The Company offers standard payment terms to its customers and has elected the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing, since the period between when the Company transfers the product to the customer and when the customer pays for that product is one year or less. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenues. The consideration amounts due from customers as a result of product sales are subject to variable consideration, as described further below.

The Company offers standard product warranties which provide assurance that the product will function as expected and in accordance with specifications. Customers cannot purchase warranties separately and these warranties do not give rise to a separate performance obligation.

The Company permits the return of product under certain circumstances, mainly upon product expiration, instances of shipping errors or where product is damaged in transit. The Company accrues for the customer’s right to return as part of its variable consideration. See below for further details.

Variable Consideration

The Company includes an estimate of variable consideration in its transaction price at the time of sale, when control of the product transfers to the customer. Variable consideration includes but is not limited to: chargebacks, rebates, group purchasing organization ("GPO") fees, prompt payment (cash) discounts, consideration payable to the customer, billbacks, Medicaid and other government pricing programs, price protection and shelf stock adjustments, sales returns, and profit shares.

The Company assesses whether or not an estimate of its variable consideration is constrained and has determined that the constraint does not apply, since it is probable that a significant reversal in the amount of cumulative revenue will not occur in the future when the uncertainty associated with the variable consideration is subsequently resolved. The Company’s estimates for variable consideration are adjusted as required at each reporting period for specific known developments that may result in a change in the amount of total consideration it expects to receive.

Chargebacks

In the case an indirect customer purchases product from their preferred wholesaler instead of directly from the Company, and the contract price charged to the indirect customer is lower than the wholesaler pricing, the Company pays the direct customer (wholesaler) a chargeback for the price differential. The Company estimates its chargeback accrual based on its estimates of the level of inventory of its products in the distribution channel that remain subject to chargebacks and historical chargeback rates. The estimate of the level of products in the distribution channel is based primarily on data provided by key customers.

Rebates

The Company pays fixed or volume-based rebates to its customers based on a fixed amount, fixed percentage of product sales or based on the achievement of a specified level of purchases. The Company’s rebate accruals are based on actual net sales, contractual rebate rates negotiated with customers, and expected purchase volumes / corresponding tiers based on actual sales to date and forecasted amounts.

Group Purchasing Organization Fees

The Company pays fees to GPOs for administrative services that the GPOs perform in connection with the purchases of product by the GPO participants who are the Company’s customers. The Company’s GPO fee accruals are based on actual net sales, contractual fee rates negotiated with GPOs and the mix of the products in the distribution channel that remain subject to GPO fees.

Prompt Payment (Cash) Discounts

The Company provides customers with prompt payment discounts which may result in adjustments to the price that is invoiced for the product transferred, in the case that payments are made within a defined period. The Company’s prompt payment discount accruals are based on actual net sales and contractual discount rates.

Consideration Payable to the Customer

The Company pays administrative and service fees to its customers based on a fixed percentage of the product price. These fees are not in exchange for a distinct good or service and therefore are recognized as a reduction of the transaction price. The Company accrues for these fees based on actual net sales, contractual fee rates negotiated with the customer and the mix of the products in the distribution channel that remain subject to fees.

Billbacks

In the case an indirect customer purchases product from their preferred wholesaler instead of directly from the Company, and the contract price charged to the indirect customer is higher than contractual pricing, the Company pays the indirect customer a billback for the price differential. The Company estimates its billback accrual based on its estimates of the level of inventory of its products in the distribution channel that remain subject to billbacks and historical billback rates. The estimate of the level of products in the distribution channel is based primarily on data provided by key customers.

Medicaid and Other Government Pricing Programs

The Company complies with required rebates mandated by law under Medicaid and other government pricing programs. The Company estimates its government pricing accruals based on monthly sales, historical experience of claims submitted by the various states and jurisdictions, historical rates and estimated lag time of the rebate invoices.

Price Protection and Shelf Stock Adjustments

The Company provides customers with price protection and shelf stock adjustments which may result in an adjustment to the price charged for the product transferred, based on differences between old and new prices which may be applied to the customer’s on-hand inventory at the time of the price change. The Company accrues for these adjustments when its expected value of an adjustment is greater than zero, based on contractual pricing, actual net sales, accrual rates based on historical average rates, and estimates of the level of inventory of its products in the distribution channel that remain subject to these adjustments. The estimate of the level of products in the distribution channel is based primarily on data provided by key customers.

Sales Returns

The Company permits the return of product under certain circumstances, mainly upon product expiration, instances of shipping errors or where product is damaged in transit, and occurrences of product recalls. The Company’s product returns accrual is primarily based on estimates of future product returns based generally on actual net sales, estimates of the level of inventory of its products in the distribution channel that remain subject to returns, estimated lag time of returns and historical return rates. The estimate of the level of products in the distribution channel is based primarily on data provided by key customers.

Profit Shares

For certain product sale arrangements, the Company earns a profit share upon the customer’s sell-through of the product purchased from the Company. The Company estimates its profit shares based on actual net sales, estimates of the level of inventory of its products in the distribution channel that remain subject to profit shares, and historical rates of profit shares earned. The estimate of the level of products in the distribution channel is based primarily on data provided by key customers.

v3.19.3
Acquisitions and Divestitures (Tables)
9 Months Ended
Sep. 30, 2019
Business Combinations [Abstract]  
Schedule of Business Acquisition Pro Forma Data The unaudited pro forma combined results of operations for the nine months ended September 30, 2018 (assuming the closing of the Combination occurred on January 1, 2017) are as follows (in thousands):

 

 

Nine Months Ended

September 30, 2018

 

Net revenue

 

$

1,341,555

 

Net loss

 

$

(143,585

)

Net loss attributable to Amneal Pharmaceuticals, Inc.

 

$

(21,502

)

 

v3.19.3
Revenue Recognition (Tables)
9 Months Ended
Sep. 30, 2019
Revenue From Contract With Customer [Abstract]  
Schedule of Revenue by Product Family The Company's significant product families, as determined based on net revenue, and their percentage of the Company's consolidated net revenue for each of the three and nine months ended September 30, 2019 and 2018 are set forth below (in thousands, except for percentages):

 

Segment

 

Product Family

 

Three Months Ended September 30, 2019

 

 

 

 

 

$

 

 

%

 

Generics

 

Levothyroxine Sodium

 

$

39,767

 

 

11%

 

Specialty

 

Rytary®

 

 

33,710

 

 

9%

 

Generics

 

Epinephrine Auto-Injector (generic Adrenaclick®)

 

 

22,687

 

 

6%

 

Generics

 

Diclofenac Sodium Gel

 

 

19,264

 

 

5%

 

Specialty (1)

 

Oxymorphone

 

$

17,142

 

 

5%

 

 

Segment

 

Product Family

 

Three Months Ended September 30, 2018

 

 

 

 

 

$

 

 

%

 

Generics

 

Yuvafem-Estradiol

 

$

48,466

 

 

10%

 

Specialty

 

Rytary®

 

 

33,073

 

 

7%

 

Generics

 

Epinephrine Auto-Injector (generic Adrenaclick®)

 

 

30,259

 

 

6%

 

Generics

 

Diclofenac Sodium Gel

 

 

26,455

 

 

6%

 

Generics

 

Aspirin; Dipyridamole ER Capsule

 

$

22,777

 

 

5%

 

 

Segment

 

Product Family

 

Nine Months Ended September 30, 2019

 

 

 

 

 

$

 

 

%

 

Generics

 

Levothyroxine Sodium

 

$

135,220

 

 

11%

 

Specialty

 

Rytary®

 

 

95,538

 

 

8%

 

Generics

 

Diclofenac Sodium Gel

 

 

67,741

 

 

6%

 

Generics

 

Epinephrine Auto-Injector (generic Adrenaclick®)

 

 

53,841

 

 

4%

 

Specialty (1)

 

Oxymorphone

 

$

45,191

 

 

4%

 

 

(1)

For the six months ended June 30, 2019 Oxymorphone net revenue was recorded in the Generics segment.

 

Segment

 

Product Family

 

Nine Months Ended September 30, 2018

 

 

 

 

 

$

 

 

%

 

Generics

 

Yuvafem-Estradiol

 

$

106,477

 

 

9%

 

Generics

 

Diclofenac Sodium Gel

 

 

78,551

 

 

7%

 

Generics

 

Aspirin; Dipyridamole ER Capsule

 

 

67,718

 

 

6%

 

Specialty

 

Rytary®

 

 

53,593

 

 

5%

 

Generics

 

Epinephrine Auto-Injector (generic Adrenaclick®)

 

$

49,425

 

 

4%

 

 

Schedule of Major Categories of Sales-Related Deductions

A rollforward of the major categories of sales-related deductions for the nine months ended September 30, 2019 is as follows (in thousands):

 

 

 

Contract

Charge- backs

and Sales

Volume

Allowances

 

 

Cash Discount

Allowances

 

 

Accrued

Returns

Allowance

 

 

Accrued

Medicaid and

Commercial

Rebates

 

Balance at December 31, 2018

 

$

829,596

 

 

$

36,157

 

 

$

154,503

 

 

$

74,202

 

Provision related to sales recorded in the period

 

 

3,413,718

 

 

 

101,285

 

 

 

71,126

 

 

 

143,145

 

Credits/payments issued during the period

 

 

(3,444,048

)

 

 

(109,309

)

 

 

(85,666

)

 

 

(110,319

)

Balance at September 30, 2019

 

$

799,266

 

 

$

28,133

 

 

$

139,963

 

 

$

107,028

 

 

v3.19.3
Restructuring and Other Charges (Tables)
9 Months Ended
Sep. 30, 2019
Restructuring And Related Activities [Abstract]  
Restructuring and Related Costs and Charges By Segment

The following table sets forth the components of the Company's restructuring and other charges (in thousands):

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Employee restructuring separation charges (1)

 

$

6,187

 

 

$

(2,156

)

 

$

8,607

 

 

$

42,309

 

Asset-related charges (2)

 

 

10,609

 

 

 

 

 

 

11,923

 

 

 

 

Total employee and asset-related restructuring charges

 

 

16,796

 

 

 

(2,156

)

 

 

20,530

 

 

 

42,309

 

Other employee severance charges (3)

 

 

4,141

 

 

 

 

 

 

9,403

 

 

 

 

Total restructuring and other charges

 

$

20,937

 

 

$

(2,156

)

 

$

29,933

 

 

$

42,309

 

 

(1)

Employee restructuring separation charges include the cost of benefits provided pursuant to the Company's severance programs for employees impacted by the Plans at the Company's Hauppauge, NY, Hayward, CA and other facilities.

(2)

Asset-related charges are primarily associated with the impairment of property, plant and equipment and right of use asset associated with the Company's Hauppauge, NY facility.

(3)

For the three months ended September 30, 2019, other employee severance charges are primarily associated with the resignation of the Company’s former Chief Executive Officer.  For the nine months ended September 30, 2019, other employee severance charges are primarily associated with the resignation of the Company’s former Chief Executive Officer and other former senior executives.

The charges related to restructuring impacted segment earnings as follows (in thousands):

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Generics

 

$

14,888

 

 

$

(2,885

)

 

$

17,201

 

 

$

21,912

 

Specialty

 

 

213

 

 

 

(27

)

 

 

391

 

 

 

2,394

 

Corporate

 

 

1,695

 

 

 

756

 

 

 

2,938

 

 

 

18,003

 

Total employee and asset-related restructuring charges

 

$

16,796

 

 

$

(2,156

)

 

$

20,530

 

 

$

42,309

 

 

Schedule of Restructuring Reserve

The following table shows the change in the employee separation-related liability associated with the Plans, which is included in accounts payable and accrued expenses (in thousands):

 

 

 

Employee

Restructuring

 

Balance at December 31, 2018

 

$

22,112

 

Charges to income

 

 

8,607

 

Payments

 

 

(28,422

)

Balance at September 30, 2019

 

$

2,297

 

 

v3.19.3
(Loss) Earnings per Share (Tables)
9 Months Ended
Sep. 30, 2019
Earnings Per Share [Abstract]  
Schedule of (Loss) Earnings Per Share, Basic and Diluted

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted (loss) earnings per share of Class A Common Stock and Class B-1 Common Stock (in thousands, except per share amounts):

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income attributable to Amneal Pharmaceuticals, Inc.

 

$

(265,006

)

 

$

6,952

 

 

$

(329,789

)

 

$

(12,152

)

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of Class A Common Stock and Class B-1 Common Stock outstanding - basic

 

 

130,729

 

 

 

127,247

 

 

 

128,822

 

 

 

127,196

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options

 

 

 

 

 

661

 

 

 

 

 

 

 

Restricted stock units

 

 

 

 

 

314

 

 

 

 

 

 

 

Weighted-average shares of Class A Common Stock and Class B-1 Common Stock outstanding - diluted

 

 

130,729

 

 

 

128,222

 

 

 

128,822

 

 

 

127,196

 

Net (loss) earnings per share attributable to Amneal Pharmaceuticals, Inc.'s common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A and Class B-1 basic

 

$

(2.03

)

 

$

0.05

 

 

$

(2.56

)

 

$

(0.10

)

Class A and Class B-1 diluted

 

$

(2.03

)

 

$

0.05

 

 

$

(2.56

)

 

$

(0.10

)

 

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following table presents potentially dilutive securities excluded from the computations of diluted earnings per share of Class A Common Stock and Class B-1 Common Stock (in thousands):

 

 

 

Three Months Ended

September 30,

 

 

 

Nine Months Ended

September 30,

 

 

 

 

2019

 

 

 

2018

 

 

 

2019

 

 

 

2018

 

 

Stock options

 

 

7,973

 

(1)

 

 

965

 

(2)

 

 

7,973

 

(1)

 

 

5,862

 

(1)

Restricted stock units

 

 

2,915

 

(1)

 

 

 

 

 

 

2,915

 

(1)

 

 

1,324

 

(1)

Performance stock units

 

 

357

 

(1)

 

 

 

 

 

 

357

 

(1)

 

 

 

 

Shares of Class B Common Stock

 

 

165,004

 

(3)

 

 

171,261

 

(3)

 

 

165,004

 

(3)

 

 

171,261

 

(3)

 

(1)

Excluded from the computation of diluted loss per share of Class A Common Stock and Class B-1 Common Stock because the effect of their inclusion would have been anti-dilutive since there was a net loss attributable to the Company during the period.

(2)

Excluded from the computation of diluted earnings per share of Class A Common Stock and Class B-1 Common Stock because the exercise price of the stock options exceeded the average market price of the Class A Common Stock during the period (out-of-the-money).

(3)

Shares of Class B Common Stock are considered potentially dilutive shares of Class A Common Stock and Class B-1 Common Stock. Shares of Class B Common Stock have been excluded from the computations of diluted earnings per share of Class A Common Stock and Class B-1 Common Stock because the effect of their inclusion would have been anti-dilutive under the if-converted method.

v3.19.3
Trade Accounts Receivable, Net (Tables)
9 Months Ended
Sep. 30, 2019
Receivables [Abstract]  
Schedule of Trade Accounts Receivable, Net

Trade accounts receivable, net is comprised of the following (in thousands):

 

 

 

September 30,

2019

 

 

December 31,

2018

 

Gross accounts receivable

 

$

1,347,401

 

 

$

1,349,588

 

Allowance for doubtful accounts

 

 

(1,893

)

 

 

(2,340

)

Contract charge-backs and sales volume allowances

 

 

(799,266

)

 

 

(829,596

)

Cash discount allowances

 

 

(28,133

)

 

 

(36,157

)

Subtotal

 

 

(829,292

)

 

 

(868,093

)

Trade accounts receivable, net

 

$

518,109

 

 

$

481,495

 

 

v3.19.3
Inventories (Tables)
9 Months Ended
Sep. 30, 2019
Inventory Disclosure [Abstract]  
Components of Inventories, Net of Reserves

Inventories, net of reserves, are comprised of the following (in thousands):

 

 

 

September 30,

2019

 

 

December 31,

2018

 

Raw materials

 

$

182,828

 

 

$

181,654

 

Work in process

 

 

50,763

 

 

 

54,152

 

Finished goods

 

 

168,236

 

 

 

221,413

 

Total inventories

 

$

401,827

 

 

$

457,219

 

 

v3.19.3
Leases (Tables)
9 Months Ended
Sep. 30, 2019
Leases [Abstract]  
Schedule of Components of Lease Costs / Supplemental Cash Flow Information

The components of total lease costs were as follows (in thousands):

 

 

 

Three Months Ended September 30, 2019

 

 

Nine Months Ended September 30, 2019

 

Operating lease cost (1)

 

$

5,960

 

 

$

16,850

 

Finance lease cost:

 

 

 

 

 

 

 

 

Amortization of right-of-use assets

 

 

652

 

 

 

1,956

 

Interest on lease liabilities

 

 

1,115

 

 

 

3,358

 

Total finance lease cost

 

 

1,767

 

 

 

5,314

 

Total lease cost

 

$

7,727

 

 

$

22,164

 

 

(1)

Includes variable and short-term lease costs.

Supplemental cash flow information related to leases was as follows (in thousands):

 

 

 

Three Months Ended September 30, 2019

 

 

Nine Months Ended September 30, 2019

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

 

 

 

 

Operating cash flows from finance leases

 

$

1,117

 

 

$

2,987

 

Operating cash flows from operating leases

 

 

4,964

 

 

 

14,968

 

Financing cash flows from finance leases

 

 

252

 

 

 

1,118

 

Non-cash activity:

 

 

 

 

 

 

 

 

Right-of-use assets obtained in exchange for new operating lease liabilities

 

$

 

 

$

360

 

 

Schedule of Supplemental Balance Sheet Information

Supplemental balance sheet information related to the Company's leases was as follows (in thousands):

 

Operating leases

 

September 30, 2019

 

Operating lease right-of-use assets

 

$

56,455

 

Operating lease right-of-use assets - related party

 

 

14,930

 

Total operating lease right-of-use assets

 

$

71,385

 

 

 

 

 

 

Operating lease liabilities

 

$

44,375

 

Operating lease liabilities - related party

 

 

14,271

 

Current portion of operating lease liabilities

 

 

13,467

 

Current portion of operating and financing lease liabilities - related party

 

 

2,299

 

Total operating lease liabilities

 

$

74,412

 

 

 

 

 

 

Financing leases

 

 

 

 

Financing lease right of use assets - related party

 

$

61,936

 

 

 

 

 

 

Financing lease liabilities - related party

 

$

61,719

 

Current portion of operating and financing lease liabilities - related party

 

 

1,054

 

Total financing lease liabilities

 

$

62,773

 

 

Schedule of Lease Term and Discount Rate Information

The table below reflects the weighted average remaining lease term and weighted average discount rate for the Company's operating and finance leases as of September 30, 2019.

 

 

September 30, 2019

 

Weighted average remaining lease term - operating leases

 

6 years

 

Weighted average remaining lease term - finance leases

 

23 years

 

Weighted average discount rate - operating leases

 

6.1%

 

Weighted average discount rate - finance leases

 

7.0%

 

 

Schedule of Operating Lease Maturities, After Adopting 842

Maturities of lease liabilities as of September 30, 2019 were as follows (in thousands):

 

 

 

Operating

Leases

 

 

Financing

Leases

 

2019 (1)

 

$

4,999

 

 

$

1,368

 

2020

 

 

19,812

 

 

 

5,474

 

2021

 

 

16,173

 

 

 

5,474

 

2022

 

 

12,327

 

 

 

5,474

 

2023

 

 

10,038

 

 

 

5,474

 

Thereafter

 

 

26,930

 

 

 

106,740

 

Total lease payments

 

 

90,279

 

 

 

130,004

 

Less: Imputed interest

 

 

(15,867

)

 

 

(67,231

)

Total

 

$

74,412

 

 

$

62,773

 

 

(1)

Excludes the nine months ended September 30, 2019.

Schedule of Finance Lease Maturities, After Adopting 842

Maturities of lease liabilities as of September 30, 2019 were as follows (in thousands):

 

 

 

Operating

Leases

 

 

Financing

Leases

 

2019 (1)

 

$

4,999

 

 

$

1,368

 

2020

 

 

19,812

 

 

 

5,474

 

2021

 

 

16,173

 

 

 

5,474

 

2022

 

 

12,327

 

 

 

5,474

 

2023

 

 

10,038

 

 

 

5,474

 

Thereafter

 

 

26,930

 

 

 

106,740

 

Total lease payments

 

 

90,279

 

 

 

130,004

 

Less: Imputed interest

 

 

(15,867

)

 

 

(67,231

)

Total

 

$

74,412

 

 

$

62,773

 

 

(1)

Excludes the nine months ended September 30, 2019.

Schedule of Operating Lease Maturities, Before Adopting 842

As disclosed in the Company's 2018 Annual Report on Form 10-K, under the previous lease accounting standard, the table below reflects the future minimum lease payments, including reasonably assured renewals, due under non-cancelable leases and a financing obligation as of December 31, 2018 (in thousands):

 

 

Operating

Leases

 

 

Financing

Obligation

 

2019

 

$

25,885

 

 

$

5,474

 

2020

 

 

12,071

 

 

 

5,474

 

2021

 

 

11,105

 

 

 

5,474

 

2022

 

 

10,329

 

 

 

5,474

 

2023

 

 

10,043

 

 

 

5,474

 

Thereafter

 

 

28,128

 

 

 

107,196

 

Total lease payments

 

 

97,561

 

 

 

134,566

 

Less: Imputed interest

 

 

 

 

 

(95,217

)

Total

 

$

97,561

 

 

$

39,349

 

 

Schedule of Finance Lease Maturities, Before Adopting 842

As disclosed in the Company's 2018 Annual Report on Form 10-K, under the previous lease accounting standard, the table below reflects the future minimum lease payments, including reasonably assured renewals, due under non-cancelable leases and a financing obligation as of December 31, 2018 (in thousands):

 

 

Operating

Leases

 

 

Financing

Obligation

 

2019

 

$

25,885

 

 

$

5,474

 

2020

 

 

12,071

 

 

 

5,474

 

2021

 

 

11,105

 

 

 

5,474

 

2022

 

 

10,329

 

 

 

5,474

 

2023

 

 

10,043

 

 

 

5,474

 

Thereafter

 

 

28,128

 

 

 

107,196

 

Total lease payments

 

 

97,561

 

 

 

134,566

 

Less: Imputed interest

 

 

 

 

 

(95,217

)

Total

 

$

97,561

 

 

$

39,349

 

v3.19.3
Fair Value Measurements of Financial Instruments (Tables)
9 Months Ended
Sep. 30, 2019
Fair Value Disclosures [Abstract]  
Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table sets forth the Company’s financial assets and liabilities that were measured at fair value on a recurring basis as of September 30, 2019 and December 31, 2018 (in thousands):

 

 

 

 

 

 

 

Fair Value Measurement Based on

 

September 30, 2019

 

Total

 

 

Quoted

Prices in

Active

Markets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred Compensation Plan liabilities (1)

 

$

21,637

 

 

$

 

 

$

21,637

 

 

$

 

December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred Compensation Plan asset (1)

 

$

40,101

 

 

$

 

 

$

40,101

 

 

$

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred Compensation Plan liabilities (1)

 

$

27,978

 

 

$

 

 

$

27,978

 

 

$

 

 

(1)

As of September 30, 2019, deferred compensation plan liabilities of $8 million and $14 million were recorded in current and non-current liabilities, respectively. As of December 31, 2018, deferred compensation plan liabilities were recorded in non-current liabilities. They are recorded at the value of the amount owed to the plan participants, with changes in value recognized as compensation expense. 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 other long-term liabilities. The Company invested participant contributions in corporate-owned life insurance policies, for which the cash surrender value was included in Other non-current assets as of December 31, 2018.  In July 2019, the Company surrendered all corporate-owned life insurance for approximately $43 million in cash proceeds.

v3.19.3
Segment Information (Tables)
9 Months Ended
Sep. 30, 2019
Segment Reporting [Abstract]  
Schedule of Segment Reporting Information, by Segment

The tables below present segment information reconciled to total Company financial results, with segment operating income or loss including gross profit less direct selling expenses, research and development expenses, and other operating expenses to the extent specifically identified by segment (in thousands):

 

Three Months Ended September 30, 2019

 

Generics (1)

 

 

Specialty (1)

 

 

Corporate

and Other

 

 

Total

Company

 

Net revenue

 

$

291,021

 

 

$

87,262

 

 

$

 

 

$

378,283

 

Cost of goods sold

 

 

217,773

 

 

 

49,944

 

 

 

 

 

 

267,717

 

Cost of goods sold impairment charges

 

 

49,115

 

 

 

7,017

 

 

 

 

 

 

56,132

 

Gross profit

 

 

24,133

 

 

 

30,301

 

 

 

 

 

 

54,434

 

Selling, general and administrative

 

 

14,256

 

 

 

20,228

 

 

 

29,313

 

 

 

63,797

 

Research and development

 

 

34,316

 

 

 

3,809

 

 

 

 

 

 

38,125

 

In-process research and development impairment charges

 

 

23,382

 

 

 

 

 

 

 

 

 

23,382

 

Charges (gains) related to legal matters, net

 

 

14,750

 

 

 

 

 

 

 

 

 

14,750

 

Intellectual property legal development expenses

 

 

2,586

 

 

 

 

 

 

 

 

 

2,586

 

Acquisition, transaction-related and integration expenses

 

 

502

 

 

 

2,455

 

 

 

174

 

 

 

3,131

 

Restructuring and other charges

 

 

14,702

 

 

 

213

 

 

 

6,022

 

 

 

20,937

 

Operating (loss) income

 

$

(80,361

)

 

$

3,596

 

 

$

(35,509

)

 

$

(112,274

)

 

Nine Months Ended September 30, 2019

 

Generics (1)

 

 

Specialty (1)

 

 

Corporate

and Other

 

 

Total

Company

 

Net revenue

 

$

1,008,562

 

 

$

220,483

 

 

$

 

 

$

1,229,045

 

Cost of goods sold

 

 

760,074

 

 

 

113,767

 

 

 

 

 

 

873,841

 

Cost of goods sold impairment charges

 

 

105,424

 

 

 

7,017

 

 

 

 

 

 

112,441

 

Gross profit

 

 

143,064

 

 

 

99,699

 

 

 

 

 

 

242,763

 

Selling, general and administrative

 

 

52,783

 

 

 

57,705

 

 

 

105,026

 

 

 

215,514

 

Research and development

 

 

129,915

 

 

 

10,084

 

 

 

 

 

 

139,999

 

In-process research and development impairment charges

 

 

46,169

 

 

 

 

 

 

 

 

 

46,169

 

Charges (gains) related to legal matters, net

 

 

14,750

 

 

 

 

 

 

 

 

 

14,750

 

Intellectual property legal development expenses

 

 

8,218

 

 

 

1,045

 

 

 

 

 

 

9,263

 

Acquisition, transaction-related and integration expenses

 

 

4,086

 

 

 

5,705

 

 

 

2,891

 

 

 

12,682

 

Restructuring and other charges

 

 

17,201

 

 

 

391

 

 

 

12,341

 

 

 

29,933

 

Operating (loss) income

 

$

(130,058

)

 

$

24,769

 

 

$

(120,258

)

 

$

(225,547

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) For the quarter ended September 30, 2019, operating results for Oxymorphone were reclassified from the Generics to the Specialty, where it is sold as a non-promoted product.  Prior period results have not been restated to reflect the reclassification.

 

 

Three Months Ended September 30, 2018

 

Generics

 

 

Specialty

 

 

Corporate

and Other

 

 

Total

Company

 

Net revenue

 

$

391,175

 

 

$

85,312

 

 

$

 

 

$

476,487

 

Cost of goods sold

 

 

230,051

 

 

 

38,516

 

 

 

 

 

 

268,567

 

Cost of goods sold impairment charges

 

 

7,815

 

 

 

 

 

 

 

 

 

7,815

 

Gross profit

 

 

153,309

 

 

 

46,796

 

 

 

 

 

 

200,105

 

Selling, general and administrative

 

 

21,030

 

 

 

19,716

 

 

 

34,740

 

 

 

75,486

 

Research and development

 

 

38,347

 

 

 

4,002

 

 

 

 

 

 

42,349

 

In-process research and development impairment charges

 

 

650

 

 

 

 

 

 

 

 

 

650

 

Intellectual property legal development expenses

 

 

3,929

 

 

 

472

 

 

 

 

 

 

4,401

 

Acquisition, transaction-related and integration expenses

 

 

 

 

 

 

 

 

2,231

 

 

 

2,231

 

Restructuring and other charges

 

 

(2,885

)

 

 

(27

)

 

 

756

 

 

 

(2,156

)

Charges (gains) related to legal matters, net

 

 

 

 

 

 

 

 

2,589

 

 

 

2,589

 

Operating income (loss)

 

$

92,238

 

 

$

22,633

 

 

$

(40,316

)

 

$

74,555

 

 

Nine Months Ended September 30, 2018

 

Generics

 

 

Specialty

 

 

Corporate

and Other

 

 

Total

Company

 

Net revenue

 

$

1,028,134

 

 

$

137,329

 

 

$

 

 

$

1,165,463

 

Cost of goods sold

 

 

572,179

 

 

 

62,474

 

 

 

 

 

 

634,653

 

Cost of goods sold impairment charges

 

 

7,815

 

 

 

 

 

 

 

 

 

7,815

 

Gross profit

 

 

448,140

 

 

 

74,855

 

 

 

 

 

 

522,995

 

Selling, general and administrative

 

 

51,854

 

 

 

33,265

 

 

 

71,491

 

 

 

156,610

 

Research and development

 

 

129,762

 

 

 

7,131

 

 

 

 

 

 

136,893

 

In-process research and development impairment charges

 

 

650

 

 

 

 

 

 

 

 

 

650

 

Intellectual property legal development expenses

 

 

12,509

 

 

 

515

 

 

 

 

 

 

13,024

 

Acquisition, transaction-related and integration expenses

 

 

114,622

 

 

 

 

 

 

102,251

 

 

 

216,873

 

Restructuring and other charges

 

 

21,912

 

 

 

2,394

 

 

 

18,003

 

 

 

42,309

 

Charges (gains) related to legal matters, net

 

 

(3,000

)

 

 

 

 

 

2,589

 

 

 

(411

)

Operating income (loss)

 

$

119,831

 

 

$

31,550

 

 

$

(194,334

)

 

$

(42,953

)

 

v3.19.3
Goodwill and Intangible Assets (Tables)
9 Months Ended
Sep. 30, 2019
Goodwill And Intangible Assets Disclosure [Abstract]  
Schedule of Goodwill

The changes in goodwill for the nine months ended September 30, 2019 and for the year ended December 31, 2018 were as follows (in thousands):

 

 

 

September 30,

2019

 

 

December 31,

2018

 

Balance, beginning of period

 

$

426,226

 

 

$

26,444

 

Impax acquisition adjustment

 

 

(1,255

)

 

 

 

Goodwill acquired during the period

 

 

 

 

 

401,488

 

Goodwill divested during the period

 

 

(5,175

)

 

 

 

Currency translation

 

 

(125

)

 

 

(1,706

)

Balance, end of period

 

$

419,671

 

 

$

426,226

 

 

Schedule of Finite-Lived Intangible Assets

Intangible assets at September 30, 2019 and December 31, 2018 are comprised of the following (in thousands):

 

 

 

September 30, 2019

 

 

December 31, 2018

 

 

 

Weighted-Average

Amortization Period

(in years)

 

Cost

 

 

Accumulated

Amortization

 

 

Net

 

 

Cost

 

 

Accumulated

Amortization

 

 

Net

 

Amortizing intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product rights

 

9.9

 

$

1,213,195

 

 

$

(161,969

)

 

$

1,051,226

 

 

$

1,282,011

 

 

$

(88,081

)

 

$

1,193,930

 

Customer relationships

 

 

 

 

 

 

 

 

 

 

 

 

 

7,005

 

 

 

(1,955

)

 

 

5,050

 

Other intangible assets

 

10.3

 

 

3,000

 

 

 

(950

)

 

 

2,050

 

 

 

5,620

 

 

 

(1,561

)

 

 

4,059

 

Total

 

 

 

$

1,216,195

 

 

$

(162,919

)

 

$

1,053,276

 

 

$

1,294,636

 

 

$

(91,597

)

 

$

1,203,039

 

In-process research and development

 

 

 

 

382,525

 

 

 

 

 

 

382,525

 

 

 

451,930

 

 

 

 

 

 

451,930

 

Total intangible assets

 

 

 

$

1,598,720

 

 

$

(162,919

)

 

$

1,435,801

 

 

$

1,746,566

 

 

$

(91,597

)

 

$

1,654,969

 

 

Finite-lived Intangible Assets Amortization Expense

Amortization expense related to intangible assets recognized is as follows (in thousands):

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Amortization

 

$

38,015

 

 

$

25,655

 

 

$

103,774

 

 

$

44,109

 

 

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

The following table presents future amortization expense for the next five years and thereafter, excluding $383 million of IPR&D intangible assets (in thousands):

 

 

 

Future

Amortization

 

Remainder of 2019

 

$

40,163

 

2020

 

 

147,242

 

2021

 

 

150,941

 

2022

 

 

140,971

 

2023

 

 

131,778

 

2024

 

 

127,107

 

Thereafter

 

 

315,074

 

Total

 

$

1,053,276

 

 

v3.19.3
Acquisition, Transaction-Related and Integration Expenses (Tables)
9 Months Ended
Sep. 30, 2019
Business Combinations [Abstract]  
Summary of Acquisition, Transaction-Related and Integration Expenses

The following table sets forth the components of the Company’s acquisition, transaction-related and integration expenses for the three and nine months ended September 30, 2019 and 2018 (in thousands):

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Acquisition, transaction-related and integration expenses (1)

 

$

3,131

 

 

$

2,231

 

 

$

12,682

 

 

$

30,374

 

Profit participation units (2)

 

 

 

 

 

 

 

 

 

 

 

158,757

 

Transaction-related bonus (3)

 

 

 

 

 

 

 

 

 

 

 

27,742

 

Total

 

$

3,131

 

 

$

2,231

 

 

$

12,682

 

 

$

216,873

 

 

(1)

Acquisition, transaction-related and integration expenses include professional service fees (e.g. legal, investment banking and accounting), information technology systems conversions, and contract termination/renegotiation costs. These costs for the three and nine months ended September 30, 2019 primarily consist of integration costs.

(2)

Profit participation units expense relates to the accelerated vesting of certain of Amneal's profit participation units that occurred prior to the Closing of the Combination for current and former employees of Amneal for service prior to the Combination (see additional information in the paragraph below and Note 19. Stockholders' Equity/ Members' Deficit in the Company's 2018 Annual Report on Form 10-K ).

(3)

Transaction-related bonus is a cash bonus that was funded by Holdings for employees of Amneal for service prior to the closing of the Combination (see additional information in Note 19. Stockholders' Equity/ Members' Deficit in the Company's 2018 Annual Report on Form 10-K ).

v3.19.3
Nature of Operations - Additional Information (Details)
$ / shares in Units, $ in Millions
3 Months Ended
May 04, 2018
USD ($)
$ / shares
shares
Jun. 30, 2019
shares
Jun. 30, 2018
shares
Sep. 30, 2019
$ / shares
Dec. 31, 2018
$ / shares
Class Of Stock [Line Items]          
Shares repurchased percentage 15.00%        
Private Placement          
Class Of Stock [Line Items]          
Sale of stock price per share (in dollars per share) | $ / shares $ 18.25        
Gross proceeds from stock issuance | $ $ 855        
Holdings          
Class Of Stock [Line Items]          
Ownership percentage by noncontrolling owners 57.00%     55.00% 57.00%
Holdings | Private Placement And PPU Holders Distribution          
Class Of Stock [Line Items]          
Decrease in noncontrolling ownership interest percentage 18.00%        
Impax Acquisition | Holdings          
Class Of Stock [Line Items]          
Ownership percentage by noncontrolling owners 75.00%        
Ownership percentage by parent 25.00%        
Impax Common Stock Holders | Impax Acquisition          
Class Of Stock [Line Items]          
Shareholder ownership percentage 25.00%        
Amneal Holdings, LLC | Impax Acquisition          
Class Of Stock [Line Items]          
Shareholder ownership percentage 75.00%        
PIPE Investors          
Class Of Stock [Line Items]          
Shareholder ownership percentage 15.00%        
Class A Common Stock          
Class Of Stock [Line Items]          
Common stock, par value (in dollars per share) | $ / shares $ 0.01     $ 0.01 $ 0.01
Stock conversion ratio 1        
Conversion of Class B-1 Common Stock (in shares) | shares   12,300,000      
Class A Common Stock | Private Placement          
Class Of Stock [Line Items]          
Sale of stock, number of shares issued in transaction (in shares) | shares 34,500,000        
Class A Common Stock | PPU Holders Distribution          
Class Of Stock [Line Items]          
Sale of stock, number of shares issued in transaction (in shares) | shares 6,900,000   6,886,140    
Common Class B          
Class Of Stock [Line Items]          
Common stock, par value (in dollars per share) | $ / shares $ 0.01     0.01 0.01
Common Class B-1          
Class Of Stock [Line Items]          
Common stock, par value (in dollars per share) | $ / shares $ 0.01     $ 0.01 $ 0.01
Conversion of Class B-1 Common Stock (in shares) | shares   (12,300,000)      
Common Class B-1 | Private Placement          
Class Of Stock [Line Items]          
Sale of stock, number of shares issued in transaction (in shares) | shares 12,300,000        
Impax Laboratories, LLC          
Class Of Stock [Line Items]          
Common stock, par value (in dollars per share) | $ / shares $ 0.01        
v3.19.3
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Jan. 01, 2019
Dec. 31, 2018
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]      
Operating lease right-of-use assets $ 71,385 $ 85,000  
Lease liabilities 74,412 86,000 $ 97,561
De-recognition, leasehold improvements, adopting ASU (490,712)   (544,146)
Increase in non-controlling interests, net of income taxes 177,723   391,613
Increase in stockholders' accumulated deficit, net of income taxes (345,752)   (20,920)
Finance lease, ROU asset   64,000  
Finance lease liability 62,773 64,000  
Related Party      
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]      
Operating lease right-of-use assets 14,930    
De-recognition reduction, financing obligation, adopting ASU     $ (39,083)
Finance lease, ROU asset $ 61,936    
Accounting Standards Update 2016-02      
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]      
Increase in non-controlling interests, net of income taxes   9,000  
Increase in stockholders' accumulated deficit, net of income taxes   5,000  
Accounting Standards Update 2016-02 | Related Party      
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]      
De-recognition reduction, financing obligation, adopting ASU   39,000  
Accounting Standards Update 2016-02 | Leasehold improvements      
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]      
De-recognition, leasehold improvements, adopting ASU   $ 24,000  
v3.19.3
Acquisitions and Divestitures - Pro Forma (Details)
$ in Thousands
9 Months Ended
Sep. 30, 2018
USD ($)
Business Combinations [Abstract]  
Net revenue $ 1,341,555
Net loss (143,585)
Net loss attributable to Amneal Pharmaceuticals, Inc. $ (21,502)
v3.19.3
Acquisitions and Divestitures - Additional Information (Details) - USD ($)
$ in Thousands
1 Months Ended 3 Months Ended 9 Months Ended
May 03, 2019
Mar. 30, 2019
May 31, 2019
Apr. 30, 2019
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Business Acquisition [Line Items]                
Gain (loss) on sale         $ 0 $ (2,812) $ 6,930 $ (2,812)
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Creo Pharma Holding Limited                
Business Acquisition [Line Items]                
Ownership percentage sold   100.00%            
Cash consideration, subsidiary       $ 32,000        
Carrying value, net assets   $ 22,000            
Carrying value, intangible assets sold   7,000            
Carrying value, goodwill   $ 5,000            
Gain (loss) on sale             9,000  
Loss on disposition of business, release of foreign currency translation adjustments             3,000  
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Amneal Deutschland GmbH                
Business Acquisition [Line Items]                
Ownership percentage sold 100.00%              
Cash consideration, subsidiary     $ 3,000          
Carrying value, net assets $ 7,000              
Carrying value, goodwill $ 500              
Gain (loss) on sale             $ (2,000)  
Disposal Group, Disposed of by Sale, Not Discontinued Operations | AI Sirona | Creo Pharma Holding Limited                
Business Acquisition [Line Items]                
Supply agreement period (up to)   2 years            
Disposal Group, Disposed of by Sale, Not Discontinued Operations | EVER | Amneal Deutschland GmbH                
Business Acquisition [Line Items]                
Supply agreement period (up to) 18 months              
v3.19.3
Revenue Recognition - Additional Information (Details) - customer
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Dec. 31, 2018
Concentration Risk [Line Items]          
Concentration risk, number of largest customers 3 3 3 3 3
Sales Revenue, Gross | Three Largest Customers | Customer Concentration Risk          
Concentration Risk [Line Items]          
Concentration risk percentage 81.00% 83.00% 80.00% 82.00%  
v3.19.3
Revenue Recognition - Schedule of Revenue by Product Family (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Disaggregation Of Revenue [Line Items]        
Net revenue $ 378,283 $ 476,487 $ 1,229,045 $ 1,165,463
Levothyroxine Sodium        
Disaggregation Of Revenue [Line Items]        
Net revenue $ 39,767   $ 135,220  
Levothyroxine Sodium | Revenue from Contract with Customer | Product Concentration Risk        
Disaggregation Of Revenue [Line Items]        
Concentration risk percentage 11.00%   11.00%  
Yuvafem-Estradiol        
Disaggregation Of Revenue [Line Items]        
Net revenue   $ 48,466   $ 106,477
Yuvafem-Estradiol | Revenue from Contract with Customer | Product Concentration Risk        
Disaggregation Of Revenue [Line Items]        
Concentration risk percentage   10.00%   9.00%
Rytary®        
Disaggregation Of Revenue [Line Items]        
Net revenue $ 33,710 $ 33,073 $ 95,538 $ 53,593
Rytary® | Revenue from Contract with Customer | Product Concentration Risk        
Disaggregation Of Revenue [Line Items]        
Concentration risk percentage 9.00% 7.00% 8.00% 5.00%
Epinephrine Auto-Injector (generic Adrenaclick®)        
Disaggregation Of Revenue [Line Items]        
Net revenue $ 22,687 $ 30,259 $ 53,841 $ 49,425
Epinephrine Auto-Injector (generic Adrenaclick®) | Revenue from Contract with Customer | Product Concentration Risk        
Disaggregation Of Revenue [Line Items]        
Concentration risk percentage 6.00% 6.00% 4.00% 4.00%
Diclofenac Sodium Gel        
Disaggregation Of Revenue [Line Items]        
Net revenue $ 19,264 $ 26,455 $ 67,741 $ 78,551
Diclofenac Sodium Gel | Revenue from Contract with Customer | Product Concentration Risk        
Disaggregation Of Revenue [Line Items]        
Concentration risk percentage 5.00% 6.00% 6.00% 7.00%
Aspirin Dipyridamole E R Capsul        
Disaggregation Of Revenue [Line Items]        
Net revenue   $ 22,777   $ 67,718
Aspirin Dipyridamole E R Capsul | Revenue from Contract with Customer | Product Concentration Risk        
Disaggregation Of Revenue [Line Items]        
Concentration risk percentage   5.00%   6.00%
Oxymorphone        
Disaggregation Of Revenue [Line Items]        
Net revenue $ 17,142   $ 45,191  
Oxymorphone | Revenue from Contract with Customer | Product Concentration Risk        
Disaggregation Of Revenue [Line Items]        
Concentration risk percentage 5.00%   4.00%  
v3.19.3
Revenue Recognition - Schedule of Major Categories of Sales-Related Deductions (Details)
$ in Thousands
9 Months Ended
Sep. 30, 2019
USD ($)
Contract Charge-backs and Sales Volume Allowances  
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items]  
Balance, Beginning of Period $ 829,596
Provision related to sales recorded in the period 3,413,718
Credits/payments issued during the period (3,444,048)
Balance, End of Period 799,266
Cash Discount Allowances  
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items]  
Balance, Beginning of Period 36,157
Provision related to sales recorded in the period 101,285
Credits/payments issued during the period (109,309)
Balance, End of Period 28,133
Accrued Returns Allowance  
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items]  
Balance, Beginning of Period 154,503
Provision related to sales recorded in the period 71,126
Credits/payments issued during the period (85,666)
Balance, End of Period 139,963
Accrued Medicaid and Commercial Rebates  
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items]  
Balance, Beginning of Period 74,202
Provision related to sales recorded in the period 143,145
Credits/payments issued during the period (110,319)
Balance, End of Period $ 107,028
v3.19.3
Alliance and Collaboration - Additional Information (Details)
1 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended
Aug. 16, 2018
May 07, 2018
USD ($)
Oct. 01, 2017
USD ($)
product
Jun. 30, 2016
USD ($)
Apr. 30, 2019
USD ($)
Feb. 28, 2019
USD ($)
Sep. 30, 2019
USD ($)
Sep. 30, 2018
USD ($)
Sep. 30, 2019
USD ($)
Sep. 30, 2018
USD ($)
Dec. 31, 2018
USD ($)
Mar. 22, 2019
USD ($)
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]                        
Expensed to cost of goods sold             $ 267,717,000 $ 268,567,000 $ 873,841,000 $ 634,653,000    
Transition contract liability             495,857,000   495,857,000   $ 514,440,000  
Research and development             38,125,000 42,349,000 139,999,000 136,893,000    
JSP License And Commercialization Agreement                        
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]                        
Collaborative arrangement term 10 years                      
Accrued up-front license contingent payment                       $ 50,000,000
Payment of up-front license contingent payment         $ 50,000,000              
JSP And Lannett Company Transition Agreement                        
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]                        
Payment of non-refundable payment           $ 4,000,000     47,000,000      
Expensed to cost of goods sold                 37,000,000   10,000,000  
Transition contract liability                     $ 4,000,000  
Biosimilar Licensing and Supply Agreement                        
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]                        
Collaborative arrangement maximum contingent payments amount   $ 72,000,000                    
Research and development             0 0 1,000,000 500,000    
Astra Zeneca                        
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]                        
Collaborative arrangement reduced royalty       $ 30,000,000                
Astra Zeneca | Royalty                        
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]                        
Expensed to cost of goods sold             5,000,000 5,000,000 14,000,000 8,000,000    
Adello Biologics LLC License And Commercialization Agreement                        
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]                        
Collaborative arrangement term     10 years                  
Research and development             $ 0 $ 0 $ 0 $ 0    
Number of products | product     2                  
Collaborative arrangement, upfront payment     $ 2,000,000                  
Collaborative arrangement, profit share, percentage     50.00%                  
Adello Biologics LLC License And Commercialization Agreement | Regulatory Approval                        
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]                        
Collaborative arrangement maximum contingent payments amount     $ 21,000,000                  
Adello Biologics LLC License And Commercialization Agreement | Successful Delivery of Commercial Launch Inventory                        
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]                        
Collaborative arrangement maximum contingent payments amount     43,000,000                  
Adello Biologics LLC License And Commercialization Agreement | Minimum | Number of Competitors for Launch of one Product                        
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]                        
Collaborative arrangement maximum contingent payments amount     20,000,000                  
Adello Biologics LLC License And Commercialization Agreement | Minimum | Achievement of Cumulative Net Sales                        
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]                        
Collaborative arrangement maximum contingent payments amount     15,000,000                  
Adello Biologics LLC License And Commercialization Agreement | Maximum | Number of Competitors for Launch of one Product                        
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]                        
Collaborative arrangement maximum contingent payments amount     50,000,000                  
Adello Biologics LLC License And Commercialization Agreement | Maximum | Achievement of Cumulative Net Sales                        
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]                        
Collaborative arrangement maximum contingent payments amount     $ 68,000,000                  
v3.19.3
Restructuring and Other Charges - Additional Information (Details) - New York Manufacturing And New Jersey Packaging Facilities
$ in Millions
Jul. 10, 2019
USD ($)
employee
Minimum  
Restructuring Cost and Reserve [Line Items]  
Expected reduction to headcount | employee 300
Maximum  
Restructuring Cost and Reserve [Line Items]  
Expected reduction to headcount | employee 350
Severance charges | Minimum  
Restructuring Cost and Reserve [Line Items]  
Estimates restructuring charges | $ $ 6
Severance charges | Maximum  
Restructuring Cost and Reserve [Line Items]  
Estimates restructuring charges | $ $ 8
v3.19.3
Restructuring and Other Charges - Restructuring Charges (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Restructuring Cost and Reserve [Line Items]        
Employee restructuring separation charges $ 20,937 $ (2,156) $ 29,933 $ 42,309
Severance charges        
Restructuring Cost and Reserve [Line Items]        
Employee restructuring separation charges 6,187 (2,156) 8,607 42,309
Other employee severance charges 4,141 0 9,403 0
Asset-related charges        
Restructuring Cost and Reserve [Line Items]        
Employee restructuring separation charges 10,609 0 11,923 0
Employee and asset-related restructuring charges        
Restructuring Cost and Reserve [Line Items]        
Employee restructuring separation charges 16,796 (2,156) 20,530 42,309
Employee and asset-related restructuring charges | Corporate        
Restructuring Cost and Reserve [Line Items]        
Employee restructuring separation charges 1,695 756 2,938 18,003
Employee and asset-related restructuring charges | Generics | Operating Segments        
Restructuring Cost and Reserve [Line Items]        
Employee restructuring separation charges 14,888 (2,885) 17,201 21,912
Employee and asset-related restructuring charges | Specialty | Operating Segments        
Restructuring Cost and Reserve [Line Items]        
Employee restructuring separation charges $ 213 $ (27) $ 391 $ 2,394
v3.19.3
Restructuring and Other Charges - Restructuring Rollforward (Details) - Employee Restructuring
$ in Thousands
9 Months Ended
Sep. 30, 2019
USD ($)
Restructuring Reserve [Roll Forward]  
Beginning balance $ 22,112
Charges to income 8,607
Payments (28,422)
Ending balance $ 2,297
v3.19.3
(Loss) Earnings per Share - Computation of Basic and Diluted (Loss) Earnings per Share (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Numerator:        
Net (loss) income attributable to Amneal Pharmaceuticals, Inc. $ (265,006) $ 6,952 $ (329,789) $ (12,152)
Denominator:        
Weighted-average shares of Class A Common Stock and Class B-1 Common Stock outstanding - basic 130,729 127,247 128,822 127,196
Effect of dilutive securities:        
Weighted-average shares of Class A Common Stock and Class B-1 Common Stock outstanding - diluted 130,729 128,222 128,822 127,196
Net (loss) income per share attributable to Amneal Pharmaceuticals, Inc.'s common stockholders:        
Class A and Class B-1 basic $ (2.03) $ 0.05 $ (2.56) $ (0.10)
Class A and Class B-1 diluted $ (2.03) $ 0.05 $ (2.56) $ (0.10)
Stock options        
Effect of dilutive securities:        
Effect of dilutive securities (in shares)   661    
Restricted stock units        
Effect of dilutive securities:        
Effect of dilutive securities (in shares)   314    
v3.19.3
(Loss) Earnings per Share - Securities Excluded from Diluted Earnings per Share Computation (Details) - shares
shares in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Common Class B        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Potentially dilutive securities excluded from earnings per share (in shares) 165,004 171,261 165,004 171,261
Stock options        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Potentially dilutive securities excluded from earnings per share (in shares) 7,973 965 7,973 5,862
Restricted stock units        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Potentially dilutive securities excluded from earnings per share (in shares) 2,915 0 2,915 1,324
Performance stock units        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Potentially dilutive securities excluded from earnings per share (in shares) 357 0 357 0
v3.19.3
Income Taxes - Additional Information (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Operating Loss Carryforwards [Line Items]        
Valuation allowance $ 372,000   $ 372,000  
Percentage of tax receivable agreement paid to other holders of Amneal common units     85.00%  
Reversal of accrued tax receivable agreement liability 193,000   $ 193,000  
Income tax (benefit) provision $ 389,668 $ 5,109 $ 375,539 $ (6,943)
Effective tax rate, percent 1483.00% 22.60% (230.20%) 3.70%
Income tax returns subject to examination period     3 years  
Maximum        
Operating Loss Carryforwards [Line Items]        
Additional liabilities under tax receivable agreement $ 193,000   $ 193,000  
v3.19.3
Trade Accounts Receivable, Net - Schedule of Trade Accounts Receivable, Net (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Dec. 31, 2018
Receivables [Abstract]    
Gross accounts receivable $ 1,347,401 $ 1,349,588
Allowance for doubtful accounts (1,893) (2,340)
Contract charge-backs and sales volume allowances (799,266) (829,596)
Cash discount allowances (28,133) (36,157)
Subtotal (829,292) (868,093)
Trade accounts receivable, net $ 518,109 $ 481,495
v3.19.3
Trade Accounts Receivable, Net - Additional Information (Details) - customer
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Dec. 31, 2018
Concentration Risk [Line Items]          
Concentration risk, number of largest customers 3 3 3 3 3
Customer Concentration Risk | Accounts Receivable          
Concentration Risk [Line Items]          
Concentration risk percentage     10.00%   10.00%
Customer Concentration Risk | Accounts Receivable | Customer A          
Concentration Risk [Line Items]          
Concentration risk percentage     35.00%   30.00%
Customer Concentration Risk | Accounts Receivable | Customer B          
Concentration Risk [Line Items]          
Concentration risk percentage     25.00%   28.00%
Customer Concentration Risk | Accounts Receivable | Customer C          
Concentration Risk [Line Items]          
Concentration risk percentage     25.00%   24.00%
v3.19.3
Inventories - Components of Inventories, Net of Reserves (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Dec. 31, 2018
Inventory Disclosure [Abstract]    
Raw materials $ 182,828 $ 181,654
Work in process 50,763 54,152
Finished goods 168,236 221,413
Total inventories $ 401,827 $ 457,219
v3.19.3
Leases - Additional Information (Details) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Jan. 01, 2019
Lessee, Lease, Description [Line Items]          
Operating and finance lease, rent expense $ 7 $ 6 $ 19 $ 13  
Operating and finance lease impairment loss 2   2    
Financing right-of-use asset         $ 64
Other Assets          
Lessee, Lease, Description [Line Items]          
Financing right-of-use asset 3   3    
Accounts Payable and Accrued Expenses          
Lessee, Lease, Description [Line Items]          
Financing short-term liabilities 1   1    
Other Liabilities          
Lessee, Lease, Description [Line Items]          
Financing long-term liabilities $ 2   $ 2    
Minimum          
Lessee, Lease, Description [Line Items]          
Operating and finance lease term     1 year    
Maximum          
Lessee, Lease, Description [Line Items]          
Operating and finance lease term     25 years    
v3.19.3
Leases - Components of Total Lease Costs (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2019
Leases [Abstract]    
Operating lease cost $ 5,960 $ 16,850
Finance lease cost:    
Amortization of right-of-use assets 652 1,956
Interest on lease liabilities 1,115 3,358
Total finance lease cost 1,767 5,314
Total lease cost $ 7,727 $ 22,164
v3.19.3
Leases - Supplemental Balance Sheet Information (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Jan. 01, 2019
Dec. 31, 2018
Operating leases      
Operating lease right-of-use assets $ 71,385 $ 85,000  
Total operating lease liabilities 74,412 86,000 $ 97,561
Financing leases      
Financing lease right-of-use assets - related party   64,000  
Total financing lease liabilities 62,773 $ 64,000  
Excluding Related Party      
Operating leases      
Operating lease right-of-use assets 56,455    
Operating lease liabilities 44,375    
Current portion of operating lease liabilities 13,467    
Related Party      
Operating leases      
Operating lease right-of-use assets 14,930    
Operating lease liabilities 14,271    
Current portion of operating lease liabilities 2,299    
Financing leases      
Financing lease right-of-use assets - related party 61,936    
Financing lease liabilities - related party 61,719    
Current portion of operating and financing lease liabilities - related party $ 1,054    
v3.19.3
Leases - Supplemental Cash Flow Information (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:    
Operating cash flows from finance leases $ 1,117 $ 2,987
Operating cash flows from operating leases 4,964 14,968
Financing cash flows from finance leases 252 1,118
Non-cash activity:    
Right-of-use assets obtained in exchange for new operating lease liabilities $ 0 $ 360
v3.19.3
Leases - Term and Discount Rate Information (Details)
Sep. 30, 2019
Leases [Abstract]  
Weighted average remaining lease term - operating leases 6 years
Weighted average remaining lease term - finance leases 23 years
Weighted average discount rate - operating leases 6.10%
Weighted average discount rate - finance leases 7.00%
v3.19.3
Leases - Lease Maturities, After Adopting 842 (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Jan. 01, 2019
Dec. 31, 2018
Operating Leases      
2019 $ 4,999    
2020 19,812    
2021 16,173    
2022 12,327    
2023 10,038    
Thereafter 26,930    
Total lease payments 90,279    
Less: Imputed interest (15,867)   $ 0
Total 74,412 $ 86,000 $ 97,561
Financing Leases      
2019 1,368    
2020 5,474    
2021 5,474    
2022 5,474    
2023 5,474    
Thereafter 106,740    
Total lease payments 130,004    
Less: Imputed interest (67,231)    
Total $ 62,773 $ 64,000  
v3.19.3
Leases - Lease Maturities, Before Adopting 842 (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Jan. 01, 2019
Dec. 31, 2018
Operating Leases      
2019     $ 25,885
2020     12,071
2021     11,105
2022     10,329
2023     10,043
Thereafter     28,128
Total lease payments     97,561
Less: Imputed interest $ (15,867)   0
Total $ 74,412 $ 86,000 97,561
Financing Obligation      
2019     5,474
2020     5,474
2021     5,474
2022     5,474
2023     5,474
Thereafter     107,196
Total lease payments     134,566
Less: Imputed interest     (95,217)
Total     $ 39,349
v3.19.3
Fair Value Measurements of Financial Instruments - Assets and Liabilities Measured at Fair Value (Details) - USD ($)
$ in Thousands
1 Months Ended 9 Months Ended
Jul. 31, 2019
Sep. 30, 2019
Sep. 30, 2018
Dec. 31, 2018
Assets        
Cash proceeds, corporate-owned life insurance $ 43,000 $ 43,017 $ 0  
Recurring        
Liabilities        
Deferred Compensation Plan liabilities   21,637   $ 27,978
Assets        
Deferred Compensation Plan asset       40,101
Recurring | Current Liabilities        
Liabilities        
Deferred Compensation Plan liabilities   8,000    
Recurring | Non-current Liabilities        
Liabilities        
Deferred Compensation Plan liabilities   14,000    
Recurring | Quoted Prices in Active Markets (Level 1)        
Liabilities        
Deferred Compensation Plan liabilities   0   0
Assets        
Deferred Compensation Plan asset       0
Recurring | Significant Other Observable Inputs (Level 2)        
Liabilities        
Deferred Compensation Plan liabilities   21,637   27,978
Assets        
Deferred Compensation Plan asset       40,101
Recurring | Significant Unobservable Inputs (Level 3)        
Liabilities        
Deferred Compensation Plan liabilities   $ 0   0
Assets        
Deferred Compensation Plan asset       $ 0
v3.19.3
Fair Value Measurements of Financial Instruments - Additional Information (Details) - USD ($)
$ in Billions
Sep. 30, 2019
Dec. 31, 2018
May 04, 2018
Term Loan | Significant Other Observable Inputs (Level 2)      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Long-term debt fair value $ 2.3 $ 2.5 $ 2.7
v3.19.3
Commitments and Contingencies - Additional Information (Details)
$ in Thousands
1 Months Ended 2 Months Ended 3 Months Ended 9 Months Ended 11 Months Ended
Jul. 31, 2019
defendent
Jun. 10, 2019
defendent
Mar. 15, 2019
defendent
Mar. 14, 2019
defendent
Feb. 15, 2019
claim
Feb. 07, 2019
defendent
Jan. 23, 2019
defendent
Dec. 03, 2018
defendent
Oct. 04, 2018
defendent
Aug. 24, 2018
defendent
Jul. 18, 2018
defendent
Jul. 09, 2018
defendent
Jun. 18, 2018
request
May 30, 2018
defendent
Mar. 27, 2018
defendent
Mar. 15, 2018
defendent
company
Aug. 17, 2017
defendent
company
Apr. 06, 2017
complaint
drug
Oct. 31, 2019
Case
Mar. 31, 2019
defendent
May 31, 2016
USD ($)
settlement_demand
Mar. 31, 2019
defendent
Nov. 30, 2018
defendent
Sep. 30, 2019
USD ($)
Sep. 30, 2018
USD ($)
Sep. 30, 2019
USD ($)
Sep. 30, 2018
USD ($)
Apr. 30, 2015
complaint
Nov. 01, 2019
state
May 10, 2019
state
Feb. 21, 2019
complaint
Dec. 31, 2018
USD ($)
Feb. 15, 2017
litigation
Mar. 13, 2015
Medication
Loss Contingencies [Line Items]                                                                    
Net charge for legal proceedings                                               $ 2,586 $ 4,401 $ 9,263 $ 13,024              
Number of generic medication included in antitrust division of DOJ | Medication                                                                   4
Opana ER                                                                    
Loss Contingencies [Line Items]                                                                    
Number of complaints styled as class actions | complaint                                                       14            
Texas State Attorney General Civil Investigative Demand                                                                    
Loss Contingencies [Line Items]                                                                    
Number of settlement demands | settlement_demand                                         2                          
Damages sought, initial demand aggregate total                                         $ 36,000                          
Alleged overpayments                                         $ 16,000                          
Generic Digoxin and Doxycycline Antitrust Litigation                                                                    
Loss Contingencies [Line Items]                                                                    
Number of generic drugs included in consolidation of civil actions | drug                                   18                                
Number of states, filed civil lawsuit | state                                                           43        
Number of additional states, filed civil lawsuit | state                                                         9          
Number of defendants | defendent 87                                                                  
Digoxin And Lidocaine-prilocaine Litigation                                                                    
Loss Contingencies [Line Items]                                                                    
Number of complaints styled as class actions | complaint                                   2                                
Number of complaints filed by opt-out plaintiffs | complaint                                                             2      
Digoxin And Lidocaine-prilocaine Litigation | End-Payor Plaintiff                                                                    
Loss Contingencies [Line Items]                                                                    
Number of claims dismissed | claim         7                                                          
Digoxin And Lidocaine-prilocaine Litigation | Indirect Reseller Plaintiff                                                                    
Loss Contingencies [Line Items]                                                                    
Number of claims dismissed | claim         6                                                          
Opiod Medications Litigation                                                                    
Loss Contingencies [Line Items]                                                                    
Number of defendants | defendent   20 29 31   20 18 32 45 18 41 55   4 35 51 5     39   37 37                      
Number of healthcare provider defendants | company                                 3                                  
Number of counties filing a complaint (more than) | company                               60                                    
Number of cities filing a complaint | company                               12                                    
Number of CID requests | request                         11                                          
Opiod Medications Litigation | Subsequent Event                                                                    
Loss Contingencies [Line Items]                                                                    
Number of additional cases | Case                                     800                              
Teva VS Impax Laboratories, Inc.                                                                    
Loss Contingencies [Line Items]                                                                    
Number of litigations | litigation                                                                 2  
Commercial and Governmental Legal Proceedings and Claims                                                                    
Loss Contingencies [Line Items]                                                                    
Net charge for legal proceedings                                               15,000   15,000                
Liability related to legal proceedings                                               $ 30,000   $ 30,000           $ 15,000    
v3.19.3
Segment Information - Additional Information (Details)
3 Months Ended 9 Months Ended
Sep. 30, 2019
segment
Sep. 30, 2019
product
segment
Segment Reporting [Abstract]    
Number of reportable segments | segment 2 2
Number of product families | product   200
v3.19.3
Segment Information - Schedules of Segment Information (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Segment Reporting Information [Line Items]        
Net revenue $ 378,283 $ 476,487 $ 1,229,045 $ 1,165,463
Cost of goods sold 267,717 268,567 873,841 634,653
Cost of goods sold impairment charges 56,132 7,815 112,441 7,815
Gross profit 54,434 200,105 242,763 522,995
Selling, general and administrative 63,797 75,486 215,514 156,610
Research and development 38,125 42,349 139,999 136,893
In-process research and development impairment charges 23,382 650 46,169 650
Charges (gains) related to legal matters, net 14,750 2,589 14,750 (411)
Intellectual property legal development expenses 2,586 4,401 9,263 13,024
Acquisition, transaction-related and integration expenses 3,131 2,231 12,682 216,873
Restructuring and other charges 20,937 (2,156) 29,933 42,309
Operating (loss) income (112,274) 74,555 (225,547) (42,953)
Operating Segments | Generics        
Segment Reporting Information [Line Items]        
Net revenue 291,021 391,175 1,008,562 1,028,134
Cost of goods sold 217,773 230,051 760,074 572,179
Cost of goods sold impairment charges 49,115 7,815 105,424 7,815
Gross profit 24,133 153,309 143,064 448,140
Selling, general and administrative 14,256 21,030 52,783 51,854
Research and development 34,316 38,347 129,915 129,762
In-process research and development impairment charges 23,382 650 46,169 650
Charges (gains) related to legal matters, net 14,750   14,750 (3,000)
Intellectual property legal development expenses 2,586 3,929 8,218 12,509
Acquisition, transaction-related and integration expenses 502   4,086 114,622
Restructuring and other charges 14,702 (2,885) 17,201 21,912
Operating (loss) income (80,361) 92,238 (130,058) 119,831
Operating Segments | Specialty        
Segment Reporting Information [Line Items]        
Net revenue 87,262 85,312 220,483 137,329
Cost of goods sold 49,944 38,516 113,767 62,474
Cost of goods sold impairment charges 7,017   7,017  
Gross profit 30,301 46,796 99,699 74,855
Selling, general and administrative 20,228 19,716 57,705 33,265
Research and development 3,809 4,002 10,084 7,131
In-process research and development impairment charges     0  
Intellectual property legal development expenses 0 472 1,045 515
Acquisition, transaction-related and integration expenses 2,455 0 5,705 0
Restructuring and other charges 213 (27) 391 2,394
Operating (loss) income 3,596 22,633 24,769 31,550
Corporate and Other        
Segment Reporting Information [Line Items]        
Net revenue 0 0 0 0
Cost of goods sold 0 0 0 0
Cost of goods sold impairment charges 0   0  
Gross profit 0 0 0 0
Selling, general and administrative 29,313 34,740 105,026 71,491
Research and development 0 0 0 0
In-process research and development impairment charges     0  
Charges (gains) related to legal matters, net   2,589   2,589
Intellectual property legal development expenses 0 0 0 0
Acquisition, transaction-related and integration expenses 174 2,231 2,891 102,251
Restructuring and other charges 6,022 756 12,341 18,003
Operating (loss) income $ (35,509) $ (40,316) $ (120,258) $ (194,334)
v3.19.3
Related Party Transactions - Additional Information (Details)
€ in Millions
1 Months Ended 3 Months Ended 9 Months Ended 25 Months Ended
Jul. 31, 2019
USD ($)
Dec. 31, 2018
USD ($)
Jun. 30, 2018
USD ($)
Dec. 31, 2017
USD ($)
Oct. 31, 2017
USD ($)
Jun. 30, 2017
USD ($)
payment
Mar. 31, 2017
USD ($)
Sep. 30, 2019
USD ($)
Sep. 30, 2018
USD ($)
Sep. 30, 2019
USD ($)
building
lease_agreement
Sep. 30, 2018
USD ($)
Mar. 31, 2018
USD ($)
Jun. 06, 2019
USD ($)
product
Oct. 31, 2017
EUR (€)
Related Party Transaction [Line Items]                            
Related party receivables   $ 830,000           $ 2,138,000   $ 2,138,000        
Payments to acquire non-controlling interests of non-public subsidiaries   3,000,000                        
Due to related party, current   17,695,000           765,000   $ 765,000        
Related Party                            
Related Party Transaction [Line Items]                            
Number of buildings, financing lease | building                   2        
Related Party | Kanan, LLC                            
Related Party Transaction [Line Items]                            
Number of lease agreements | lease_agreement                   2        
Related Party | Kanan, LLC | Annual Rental Cost                            
Related Party Transaction [Line Items]                            
Amounts of transaction with related party                   $ 2,000,000        
Related Party | Kanan, LLC | Rent Expense                            
Related Party Transaction [Line Items]                            
Expenses from transactions with related party               500,000 $ 500,000 1,500,000 $ 1,500,000      
Related Party | Asana Biosciences, LLC                            
Related Party Transaction [Line Items]                            
Income from related parties                 0.2 1,400,000 200,000      
Related party receivables               1,000,000   1,000,000        
Related Party | Industrial Real Estate Holdings NY, LLC | Rent Expense                            
Related Party Transaction [Line Items]                            
Expenses from transactions with related party               300,000 500,000 800,000 1,000,000      
Related Party | Kashiv Pharmaceuticals LLC | Rent Expense                            
Related Party Transaction [Line Items]                            
Expenses from transactions with related party               0 0 0 400,000      
Related Party | Kashiv Pharmaceuticals LLC | Annual Base Rent                            
Related Party Transaction [Line Items]                            
Amounts of transaction with related party                   2,000,000        
Related Party | Kashiv Pharmaceuticals LLC | Profit Share On Various Arrangements                            
Related Party Transaction [Line Items]                            
Expenses from transactions with related party               600,000 800,000 2,000,000 3,000,000      
Related Party | Kashiv Pharmaceuticals LLC | Product Acquisition And Royalty Stream Purchase Agreement                            
Related Party Transaction [Line Items]                            
Amounts of transaction with related party           $ 25,000,000                
Number of earn out payments | payment           2                
Related Party | Kashiv Pharmaceuticals LLC | Product Acquisition And Royalty Stream Purchase Agreement, Earn-out Payment                            
Related Party Transaction [Line Items]                            
Amounts of transaction with related party           $ 5,000,000                
Related Party | Kashiv Pharmaceuticals LLC | Product Acquisition And Royalty Stream Purchase Agreement, Earn-out Payment One                            
Related Party Transaction [Line Items]                            
Amounts of transaction with related party     $ 5,000,000                 $ 5,000,000    
Related Party | Kashiv Pharmaceuticals LLC | Legal Cost Reimbursement                            
Related Party Transaction [Line Items]                            
Amounts of transaction with related party $ 2,000,000     $ 8,000,000                    
Additional amount due to related party, if circumstances met (up to)               18,000,000   18,000,000        
Related Party | Kashiv Pharmaceuticals LLC | R&D Reimbursement                            
Related Party Transaction [Line Items]                            
Related parties payable               2,000,000   2,000,000        
Related Party | Kashiv BioSciences LLC                            
Related Party Transaction [Line Items]                            
Related party receivables               700,000   700,000        
Related parties payable   800,000           600,000   600,000        
Related Party | Kashiv BioSciences LLC | Development And Commercialization Reimbursable Expense                            
Related Party Transaction [Line Items]                            
Amounts of transaction with related party               0 0 1,000,000 0      
Related Party | Adello Biologics, LLC                            
Related Party Transaction [Line Items]                            
Related party receivables               100,000   100,000        
Related parties payable         $ 11,000,000                  
Interest rate on related party notes receivable         2.00%                 2.00%
Face amount of related party notes receivable       $ 15,000,000                   € 13
Related Party | Adello Biologics, LLC | Human Resource And Product Quality Assurance Services And License Agreement Expense                            
Related Party Transaction [Line Items]                            
Expenses from transactions with related party               100,000   100,000        
Income from related parties                 100,000   100,000      
Related Party | Adello Biologics, LLC | Reimbursement Of Past Development Costs                            
Related Party Transaction [Line Items]                            
Expenses from transactions with related party             $ 10,000,000              
Related Party | Adello Biologics, LLC | License And Commercialization Agreement Up Front Payment                            
Related Party Transaction [Line Items]                            
Expenses from transactions with related party         $ 2,000,000                  
Related Party | PharmaSophia, LLC                            
Related Party Transaction [Line Items]                            
Income from related parties               300,000 $ 200,000 900,000 500,000      
Related party receivables   100,000           300,000   300,000        
Related Party | Gemini Laboratories, LLC | Profit Share On Various Arrangements                            
Related Party Transaction [Line Items]                            
Income from related parties                     5,000,000      
Related Party | Gemini Laboratories, LLC | Gross Profit From Sale Of Inventory                            
Related Party Transaction [Line Items]                            
Income from related parties                     $ 100,000      
Related Party | Fosun International Limited | Profit Share On Various Arrangements                            
Related Party Transaction [Line Items]                            
Income from related parties               $ 0   $ 0        
Related Party | Fosun International Limited | Non-Refundable Fee, Net of Tax                            
Related Party Transaction [Line Items]                            
Payment received, non-refundable fee $ 1,000,000                          
Related Party | Fosun International Limited | Fee Due Upon First Commercial Sale Of Products                            
Related Party Transaction [Line Items]                            
Additional amount due from related parties upon sale of each product                         $ 300,000  
Additional amount due from related parties upon sale of each product, number of products | product                         8  
Subsidiary of Common Parent                            
Related Party Transaction [Line Items]                            
Due to related party, current   $ 3,000,000                        
v3.19.3
Goodwill and Intangible Assets - Schedule of Goodwill (Details) - USD ($)
$ in Thousands
9 Months Ended 12 Months Ended
Sep. 30, 2019
Dec. 31, 2018
Goodwill [Roll Forward]    
Balance, beginning of period $ 426,226 $ 26,444
Impax acquisition adjustment (1,255) 0
Goodwill acquired during the period 0 401,488
Goodwill divested during the period (5,175) 0
Currency translation (125) (1,706)
Balance, end of period $ 419,671 $ 426,226
v3.19.3
Goodwill and Intangible Assets - Additional Information (Detail)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
USD ($)
product
segment
Unit
Sep. 30, 2019
USD ($)
product
segment
Mar. 30, 2019
USD ($)
Dec. 31, 2018
USD ($)
Dec. 31, 2017
USD ($)
Goodwill [Line Items]          
Goodwill $ 419,671 $ 419,671   $ 426,226 $ 26,444
Number of reporting units | Unit 2        
Number of reportable segments | segment 2 2      
Product rights intangible asset $ 1,216,195 $ 1,216,195   1,294,636  
In-process research and development 382,525 $ 382,525   451,930  
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Creo Pharma Holding Limited          
Goodwill [Line Items]          
Carrying value, intangible assets sold     $ 7,000    
Marketed products          
Goodwill [Line Items]          
Intangible assets impairment, number of products related to | product   6      
Product rights          
Goodwill [Line Items]          
Product rights intangible asset 1,213,195 $ 1,213,195   1,282,011  
Product rights | JSP License And Commercialization Agreement          
Goodwill [Line Items]          
Product rights intangible asset 50,000 50,000      
Customer relationships          
Goodwill [Line Items]          
Product rights intangible asset 0 0   7,005  
Customer relationships | Disposal Group, Disposed of by Sale, Not Discontinued Operations | Creo Pharma Holding Limited          
Goodwill [Line Items]          
Carrying value, intangible assets sold 5,000 5,000      
Trade Names          
Goodwill [Line Items]          
Product rights intangible asset 3,000 3,000   5,620  
Trade Names | Disposal Group, Disposed of by Sale, Not Discontinued Operations | Creo Pharma Holding Limited          
Goodwill [Line Items]          
Carrying value, intangible assets sold $ 2,000 2,000      
Minimum | Measurement Input, Long-term Revenue Growth Rate          
Goodwill [Line Items]          
Goodwill inputs, percentage 0.00%        
Minimum | Measurement Input, Discount Rate          
Goodwill [Line Items]          
Goodwill inputs, percentage 9.00%        
Maximum | Measurement Input, Long-term Revenue Growth Rate          
Goodwill [Line Items]          
Goodwill inputs, percentage 1.00%        
Maximum | Measurement Input, Discount Rate          
Goodwill [Line Items]          
Goodwill inputs, percentage 11.50%        
Specialty          
Goodwill [Line Items]          
Goodwill $ 361,000 $ 361,000   360,000  
Percentage of fair value in excess of carrying amount 9.00% 9.00%      
Generics          
Goodwill [Line Items]          
Goodwill $ 59,000 $ 59,000   $ 66,000  
Percentage of fair value in excess of carrying amount 15.00% 15.00%      
Impairment charges $ 79,000 $ 158,000      
Intangible assets impairment, number of products related to | product 4 12      
Generics | In-process research and development          
Goodwill [Line Items]          
Impairment charges $ 23,000 $ 46,000      
Intangible assets impairment, number of products related to | product 4 6      
Generics | Cost of goods sold          
Goodwill [Line Items]          
Impairment charges $ 56,000 $ 112,000      
v3.19.3
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2019
Dec. 31, 2018
Finite Lived Intangible Assets [Line Items]    
Cost $ 1,216,195 $ 1,294,636
Accumulated Amortization (162,919) (91,597)
Total 1,053,276 1,203,039
In-process research and development 382,525 451,930
Intangible assets, cost 1,598,720 1,746,566
Intangible assets, net $ 1,435,801 1,654,969
Product rights    
Finite Lived Intangible Assets [Line Items]    
Weighted-Average Amortization Period (in years) 9 years 10 months 24 days  
Cost $ 1,213,195 1,282,011
Accumulated Amortization (161,969) (88,081)
Total 1,051,226 1,193,930
Customer relationships    
Finite Lived Intangible Assets [Line Items]    
Cost 0 7,005
Accumulated Amortization 0 (1,955)
Total $ 0 5,050
Other intangible assets    
Finite Lived Intangible Assets [Line Items]    
Weighted-Average Amortization Period (in years) 10 years 3 months 18 days  
Cost $ 3,000 5,620
Accumulated Amortization (950) (1,561)
Total $ 2,050 $ 4,059
v3.19.3
Goodwill and Intangible Assets - Amortization Expense (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Goodwill And Intangible Assets Disclosure [Abstract]        
Amortization $ 38,015 $ 25,655 $ 103,774 $ 44,109
v3.19.3
Goodwill and Intangible Assets - Future Amortization Expense (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Dec. 31, 2018
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]    
Remainder of 2019 $ 40,163  
2020 147,242  
2021 150,941  
2022 140,971  
2023 131,778  
2024 127,107  
Thereafter 315,074  
Total $ 1,053,276 $ 1,203,039
v3.19.3
Acquisition, Transaction-Related and Integration Expenses - Summary of Acquisition, Transaction-Related and Integration Expenses (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Business Combinations [Abstract]        
Acquisition, transaction-related and integration expenses $ 3,131 $ 2,231 $ 12,682 $ 30,374
Profit participation units 0 0 0 158,757
Transaction-related bonus 0 0 0 27,742
Total $ 3,131 $ 2,231 $ 12,682 $ 216,873
v3.19.3
Acquisition, Transaction-Related and Integration Expenses - Additional Information (Details) - USD ($)
3 Months Ended 9 Months Ended
May 04, 2018
Sep. 30, 2019
Sep. 30, 2018
Jun. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Business Acquisition [Line Items]            
Profit participation units   $ 0 $ 0   $ 0 $ 158,757,000
Acquisition, transaction-related and integration expenses   3,131,000 2,231,000   $ 12,682,000 30,374,000
Impax Acquisition            
Business Acquisition [Line Items]            
Acquisition, transaction-related and integration expenses   $ 0 0     23,000,000
PPU Holders Distribution | Class A Common Stock            
Business Acquisition [Line Items]            
Sale of stock, number of shares issued in transaction (in shares) 6,900,000     6,886,140    
Accelerated vesting of profit participation units, fair value       $ 126,000,000    
Accelerated vesting cash payment       $ 33,000,000    
Profit participation units     $ 159,000,000     $ 159,000,000
v3.19.3
Subsequent Events - Additional Information (Details) - USD ($)
Oct. 31, 2019
Sep. 30, 2019
Dec. 31, 2018
Subsequent Event [Line Items]      
Inventories   $ 401,827,000 $ 457,219,000
Ranitidine-Based Product      
Subsequent Event [Line Items]      
Inventories   6,000,000  
Related Party | Kashiv Bio Sciences Licensing Agreement      
Subsequent Event [Line Items]      
Upfront payment payable   2,000,000  
Development and regulatory milestones amount   $ 17,000,000  
Subsequent Event | Interest Rate Lock Agreement      
Subsequent Event [Line Items]      
Notional amount $ 1,300,000,000    
Maturity date 2025-05