AMNEAL PHARMACEUTICALS, INC., 10-K filed on 3/1/2021
Annual Report
v3.20.4
Cover - USD ($)
12 Months Ended
Dec. 31, 2020
Feb. 12, 2021
Jun. 30, 2020
Entity Information [Line Items]      
Document Type 10-K    
Document Annual Report true    
Amendment Flag false    
Document Fiscal Period Focus FY    
Entity Central Index Key 0001723128    
Current Fiscal Year End Date --12-31    
Document Fiscal Year Focus 2020    
Document Period End Date Dec. 31, 2020    
Document Transition Report false    
Entity File Number 001-38485    
Entity Registrant Name Amneal Pharmaceuticals, Inc.    
Entity Incorporation, State or Country Code DE    
Entity Address, Address Line One 400 Crossing Boulevard    
Entity Address, City or Town Bridgewater    
Entity Address, State or Province NJ    
Entity Tax Identification Number 32-0546926    
Entity Address, Postal Zip Code 08807    
City Area Code 908    
Local Phone Number 947-3120    
Title of 12(b) Security Class A Common Stock, par value $0.01 per share    
Trading Symbol AMRX    
Security Exchange Name NYSE    
Entity Well-Known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Yes    
Entity Interactive Data Current Yes    
Entity Filer Category Large Accelerated Filer    
Entity Small Business false    
Entity Emerging Growth Company false    
ICFR Auditor Attestation Flag true    
Entity Shell Company false    
Entity Public Float     $ 696,012,893
Documents Incorporated by Reference Certain information required to be furnished pursuant to Part III of this Form 10-K will be set forth in, and is hereby incorporated by reference herein from, the registrant’s definitive proxy statement for its 2021 Annual Meeting of Stockholders, to be filed by the registrant with the Securities and Exchange Commission pursuant to Regulation 14A no later than 120 days after December 31, 2020 (the “2021 Proxy Statement”).    
Class A Common Stock      
Entity Information [Line Items]      
Entity Common Stock, Shares Outstanding (in shares)   147,704,364  
Class B Common Stock      
Entity Information [Line Items]      
Entity Common Stock, Shares Outstanding (in shares)   152,116,890  
v3.20.4
Consolidated Statements of Operations - USD ($)
shares in Thousands, $ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Income Statement [Abstract]      
Net revenue $ 1,992,523 $ 1,626,373 $ 1,662,991
Cost of goods sold 1,329,551 1,147,214 938,773
Cost of goods sold impairment charges 34,579 126,162 7,815
Gross profit 628,393 352,997 716,403
Selling, general and administrative 326,727 289,598 227,846
Research and development 179,930 188,049 194,190
In-process research and development impairment charges 2,680 46,619 39,259
Acquisition, transaction-related and integration expenses 8,988 16,388 221,818
Restructuring and other charges 2,398 34,345 56,413
Charges (gains) related to legal matters, net 5,860 12,442 (19,711)
Intellectual property legal development expenses 10,655 14,238 16,261
Operating income (loss) 91,155 (248,682) (19,673)
Other (expense) income:      
Interest expense, net (145,998) (168,205) (143,571)
Foreign exchange gain (loss), net 16,350 (4,962) (19,701)
Loss on extinguishment of debt 0 0 (19,667)
Gain (loss) on sale of international businesses 123 7,258 (2,958)
Gain from reduction of tax receivable agreement liability 0 192,884 1,665
Other income, net 2,590 1,465 1,183
Total other (expense) income, net (126,935) 28,440 (183,049)
Loss before income taxes (35,780) (220,242) (202,722)
(Benefit from) provision for income taxes (104,358) 383,331 (1,419)
Net income (loss) 68,578 (603,573) (201,303)
Less: Net loss attributable to Amneal Pharmaceuticals LLC pre-Combination 0 0 148,806
Less: Net loss attributable to non-controlling interests 22,481 241,656 32,753
Net income (loss) attributable to Amneal Pharmaceuticals, Inc. before accretion of redeemable non-controlling interest 91,059 (361,917) (19,744)
Accretion of redeemable non-controlling interest 0 0 (1,176)
Net income (loss) attributable to Amneal Pharmaceuticals, Inc. $ 91,059 $ (361,917) $ (20,920)
Net income (loss) per share attributable to Amneal Pharmaceuticals, Inc.'s common stockholders:      
Class A and Class B-1 basic (in dollars per share) $ 0.62 $ (2.74) $ (0.16)
Class A and Class B-1 diluted (in dollars per share) $ 0.61 $ (2.74) $ (0.16)
Weighted-average common shares outstanding:      
Class A and Class B-1 basic (in shares) 147,443 132,106 127,252
Class A and Class B-1 diluted (in shares) 148,913 132,106 127,252
v3.20.4
Consolidated Statements of Comprehensive Income (Loss) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Statement of Other Comprehensive Income [Abstract]      
Net income (loss) $ 68,578 $ (603,573) $ (201,303)
Less: Net loss attributable to Amneal Pharmaceuticals LLC pre-Combination 0 0 148,806
Less: Net loss attributable to non-controlling interests 22,481 241,656 32,753
Net income (loss) attributable to Amneal Pharmaceuticals, Inc. before accretion of redeemable non-controlling interest 91,059 (361,917) (19,744)
Accretion of redeemable non-controlling interest 0 0 (1,176)
Net income (loss) attributable to Amneal Pharmaceuticals, Inc. 91,059 (361,917) (20,920)
Other comprehensive (loss) income:      
Foreign currency translation adjustments arising during the period (13,500) (1,233) (3,952)
Less: Reclassification of foreign currency translation adjustment included in net loss 0 3,413 0
Foreign currency translation adjustments, net (13,500) 2,180 (3,952)
Less: Other comprehensive income attributable to Amneal Pharmaceuticals LLC pre-Combination 0 0 (1,721)
Unrealized (loss) gain on cash flow hedge, net of tax (70,276) 16,373 0
Less: Other comprehensive loss (income) attributable to non-controlling interests 42,573 (10,058) 3,256
Other comprehensive (loss) income attributable to Amneal Pharmaceuticals, Inc. (41,203) 8,495 (2,417)
Comprehensive income (loss) attributable to Amneal Pharmaceuticals, Inc. $ 49,856 $ (353,422) $ (23,337)
v3.20.4
Consolidated Balance Sheets - USD ($)
$ in Thousands
Dec. 31, 2020
Dec. 31, 2019
Current assets:    
Cash and cash equivalents $ 341,378 $ 151,197
Restricted cash 5,743 1,625
Trade accounts receivable, net 638,895 604,390
Inventories 490,649 381,067
Prepaid expenses and other current assets 73,467 70,164
Related party receivables 1,407 1,767
Total current assets 1,551,539 1,210,210
Property, plant and equipment, net 477,754 477,997
Goodwill 522,814 419,504
Intangible assets, net 1,304,626 1,382,753
Operating lease right-of-use assets 58,739 69,872
Financing lease right-of-use assets - related party 58,676 61,284
Other assets 31,885 44,270
Total assets 4,006,033 3,665,890
Current liabilities:    
Accounts payable and accrued expenses 613,661 507,483
Current portion of long-term debt, net 44,228 21,479
Related party payables - short term 7,561 5,969
Total current liabilities 676,902 550,406
Long-term debt, net 2,735,264 2,609,046
Other long-term liabilities 85,683 39,583
Total long-term liabilities 2,972,395 2,768,696
Commitments and contingencies (Notes 5 & 21)
Redeemable non-controlling interest 11,804 0
Stockholders' equity:    
Preferred stock, $0.01 par value, 2,000 shares authorized; none issued at both December 31, 2020 and 2019 0 0
Additional paid-in capital 628,413 606,966
Stockholders' accumulated deficit (286,821) (377,880)
Accumulated other comprehensive loss (41,318) (68)
Total Amneal Pharmaceuticals, Inc. stockholders' equity 303,271 232,010
Non-controlling interests 41,661 114,778
Total stockholders' equity 344,932 346,788
Total liabilities and stockholders' equity 4,006,033 3,665,890
Common Class A    
Stockholders' equity:    
Common stock 1,475 1,470
Common Class B    
Stockholders' equity:    
Common stock 1,522 1,522
Excluding Related Party    
Current assets:    
Operating lease right-of-use assets 33,947 53,344
Current liabilities:    
Current portion of operating lease liabilities 6,474 11,874
Operating lease liabilities 30,182 43,135
Related Party    
Current assets:    
Operating lease right-of-use assets 24,792 16,528
Financing lease right-of-use assets - related party 58,676 61,284
Current liabilities:    
Current portion of operating lease liabilities 2,820 2,547
Current portion of operating and financing lease liabilities - related party 3,978 3,601
Current portion of note payable - related party 1,000 0
Note payable - related party 36,440 0
Operating lease liabilities 23,049 15,469
Financing lease liabilities - related party 60,193 61,463
Related party payable - long term $ 1,584 $ 0
v3.20.4
Consolidated Balance Sheets (Parenthetical) - $ / shares
Dec. 31, 2020
Dec. 31, 2019
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) 147,674,000 147,070,000
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) 152,117,000 152,117,000
v3.20.4
Consolidated Statement of Stockholders' Equity / Members' Equity (Deficit) - USD ($)
$ in Thousands
Total
Period Prior to the Combination
Period Subsequent to the Combination
Period Subsequent to the Combination
Private Placement
Period Subsequent to the Combination
PPU Holders Distribution
Revision of Prior Period, Adjustment
Revision of Prior Period, Adjustment
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 Prior to the Combination
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
Members' and Stockholders' Accumulated Deficit
Members' and Stockholders' Accumulated Deficit
Period Prior to the Combination
Members' and Stockholders' Accumulated Deficit
Period Subsequent to the Combination
Members' and Stockholders' Accumulated Deficit
Revision of Prior Period, Adjustment
Members' and Stockholders' Accumulated Deficit
Revision of Prior Period, Adjustment
Period Prior to the Combination
Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Loss
Period Prior to the Combination
Accumulated Other Comprehensive Loss
Period Subsequent to the Combination
Accumulated Other Comprehensive Loss
Period Subsequent to the Combination
Private Placement
Accumulated Other Comprehensive Loss
Period Subsequent to the Combination
PPU Holders Distribution
Non- Controlling Interests
Non- Controlling Interests
Period Prior to the Combination
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
Revision of Prior Period, Adjustment
Members' Equity
Members' Equity
Period Prior to the Combination
Members' Equity
Period Subsequent to the Combination
Stockholders' equity beginning balance at Dec. 31, 2017             $ 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 income (loss) (201,303)   $ (52,661)                                           $ (19,744)                   $ (32,917)            
Foreign currency translation adjustment $ (3,952) $ 1,721 (5,673)                                                   $ 1,721 $ (2,417)         (3,256)            
Stock-based compensation     8,840                                 $ 8,840                                          
Exercise of stock options     3,797           $ 4                     2,184                   (10)         1,619            
Exercise of stock options (in shares) 351,668               352,000                                                                
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)                   34,520,000 6,886,000     46,849,000 6,886,000   12,329,000                                                
Tax distribution     (48,955)                                                               (48,955)            
Unrealized (loss) gain on cash flow hedge, net of tax $ 0                                                                                
Less: Net loss attributable to Amneal Pharmaceuticals LLC pre-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  
Capital contribution by Amneal Holdings for employee bonuses   $ 27,742                                                                           $ 27,742  
Effect of the Combination     1,490,232           $ 733       $ 2,250             330,678         709,612         $ 9,437         626,737           $ (189,215)
Effect of the Combination (in shares)                 73,289,000       224,996,000                                                        
Reclassification of redeemable non-controlling interest     (11,708)                                           $ (1,176)                   (10,532)            
Non-controlling interests from acquisition     2,518                                                               2,518            
Acquisition of non-controlling interests     (3,485)                                 (920)                             (2,565)            
Other     (1,785)                                 $ 183                             $ (1,968)            
Stockholders' equity ending balance at Dec. 31, 2018 $ 896,363         $ 13,561   $ 1,151       $ 1,713       $ 123   530,438         (20,920)     $ 4,957   (7,755)         391,613         $ 8,604      
Shares ending balance (in shares) at Dec. 31, 2018               115,047,000       171,261,000       12,329,000                                                  
Increase (Decrease) in Temporary Equity [Roll Forward]                                                                                  
Net income (loss)     67                                                                            
Reclassification of redeemable non-controlling interest     11,708                                                                            
Acquisition of redeemable non-controlling interest     $ (11,775)                                                                            
Accounting Standards Update [Extensible List] us-gaap:AccountingStandardsUpdate201602Member                                                                                
Net income (loss) $ (603,573)                                           (361,917)                   (241,656)                
Foreign currency translation adjustment (1,233)                                                     (729)         (504)                
Stock-based compensation 21,679                                 21,679                                              
Exercise of stock options $ 1,400             $ 2                   937                   (7)         468                
Exercise of stock options (in shares) 210,806             211,000                                                                  
Restricted stock unit vesting, net of shares withheld to cover payroll taxes $ (1,113)             $ 3                   54                   (7)         (1,163)                
Restricted stock unit vesting, net of shares withheld to cover payroll taxes (in shares)               339,000                                                                  
Redemption of Class B Common Stock               $ 191       $ (191)           53,858                   (795)         (53,063)                
Redemption of Class B Common Stock (in shares)               19,144,000       19,144,000                                                          
Conversion of Class B-1 Common Stock               $ 123               $ (123)                                                  
Conversion of Class B-1 Common Stock (in shares)               12,329,000               (12,329,000)                                                  
Tax distribution (82)                                                               (82)                
Unrealized (loss) gain on cash flow hedge, net of tax 16,373                                                     7,764         8,609                
Reclassification of foreign currency translation adjustment included in net loss 3,413                                                     1,461         1,952                
Less: Net loss attributable to Amneal Pharmaceuticals LLC pre-Combination 0                                                                                
Stockholders' equity ending balance at Dec. 31, 2019 346,788             $ 1,470       $ 1,522       $ 0   606,966         (377,880)         (68)         114,778                
Shares ending balance (in shares) at Dec. 31, 2019               147,070,000       152,117,000       0                                                  
Redeemable non-controlling interest, ending balance at Dec. 31, 2019 0                                                                                
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                                                                  
Net income (loss) 68,578                                           91,059                   (23,268)                
Foreign currency translation adjustment (13,500)                                                     (6,643)         (6,857)                
Stock-based compensation 20,750                                 20,750                                              
Exercise of stock options $ 321             $ 1                   323                   (15)         12                
Exercise of stock options (in shares) 116,681             117,000                                                                  
Restricted stock unit vesting, net of shares withheld to cover payroll taxes $ (863)             $ 4                   268                   (32)         (1,103)                
Restricted stock unit vesting, net of shares withheld to cover payroll taxes (in shares)               487,000                                                                  
Distribution of earnings to and acquisition of non-controlling interests (3,300)                                 106                             (3,406)                
Tax distribution (2,779)                                                               (2,779)                
Unrealized (loss) gain on cash flow hedge, net of tax (70,276)                                                     (34,560)         (35,716)                
Less: Net loss attributable to Amneal Pharmaceuticals LLC pre-Combination 0                                                                                
Stockholders' equity ending balance at Dec. 31, 2020 344,932             $ 1,475       $ 1,522           $ 628,413         $ (286,821)         $ (41,318)         $ 41,661                
Shares ending balance (in shares) at Dec. 31, 2020               147,674,000       152,117,000                                                          
Increase (Decrease) in Temporary Equity [Roll Forward]                                                                                  
Net income (loss) 787                                                                                
Tax distribution (458)                                                                                
Non-controlling interests from Rondo transaction 11,475                                                                                
Redeemable non-controlling interest, ending balance at Dec. 31, 2020 11,804                                                                                
Increase (Decrease) in Temporary Equity [Roll Forward]                                                                                  
Net Income (Loss), Including Portion Attributable To Noncontrolling Interest Excluding Temporary Equity Income $ 67,791                                                                                
v3.20.4
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Cash flows from operating activities:      
Net income (loss) $ 68,578 $ (603,573) $ (201,303)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:      
Gain from reduction of tax receivable agreement liability 0 (192,884) (1,665)
Depreciation and amortization 235,387 207,235 137,403
Amortization of Levothyroxine Transition Agreement asset 0 36,393 10,423
Unrealized foreign currency (gain) loss (16,728) 7,342 18,582
Amortization of debt issuance costs 8,678 6,478 5,859
Loss on extinguishment of debt 0 0 19,667
(Gain) loss on sale of international businesses, net (123) (7,258) 2,958
Intangible asset impairment charges 37,259 172,781 47,074
Non-cash restructuring and asset-related charges (536) 12,459 11,295
Deferred tax provision (benefit) 0 371,716 (9,439)
Stock-based compensation and PPU expense 20,750 21,679 167,597
Inventory provision 75,236 82,245 44,539
Other operating charges and credits, net 11,818 7,309 (1,866)
Changes in assets and liabilities:      
Trade accounts receivable, net 16,787 (132,726) 89,084
Inventories (113,782) (20,393) (42,021)
Prepaid expenses, other current assets and other assets 33,312 38,870 8,775
Related party receivables 412 (939) 10,928
Accounts payable, accrued expenses and other liabilities 307 (10,257) (53,547)
Related party payables 1,646 5,228 (14,113)
Net cash provided by operating activities 379,001 1,705 250,230
Cash flows from investing activities:      
Purchases of property, plant and equipment (56,445) (47,181) (83,088)
Acquisition of intangible assets (4,350) (50,250) (14,000)
Deposits for future acquisition of property, plant, and equipment (5,391) 0 0
Acquisitions, net of cash acquired (251,360) 0 (324,634)
Proceeds from surrender of corporate owned life insurance 0 43,017 0
Proceeds from sales of property, plant and equipment 0 0 25,344
Proceeds from sale of international businesses, net of cash sold 0 34,834 0
Net cash used in investing activities (317,546) (19,580) (396,378)
Cash flows from financing activities:      
Payments of deferred financing costs and debt extinguishment costs (4,102) 0 (54,955)
Proceeds from issuance of debt 180,000 0 1,325,383
Payments of principal on debt, financing leases and other (35,933) (27,000) (617,051)
Net payments on revolving credit line 0 0 (75,000)
Proceeds from exercise of stock options 321 1,400 3,797
Employee payroll tax withholding on restricted stock unit vesting (863) (926) 0
Equity contributions 0 0 27,742
Capital contribution from non-controlling interest 0 0 360
Acquisition of redeemable non-controlling interest 0 0 (11,775)
Distribution of earnings to and acquisition of non-controlling interest (3,300) (3,543) 0
Tax distribution to non-controlling interest (3,237) (13,494) (35,543)
Distributions to members 0 0 (182,998)
Payments of principal on financing lease - related party (2,768) (2,256)  
Repayment of related party notes 0 0 (92,042)
Net cash provided by (used in) financing activities 131,807 (45,833) 287,675
Effect of foreign exchange rate on cash 1,037 (2,249) (670)
Net increase (decrease) in cash, cash equivalents, and restricted cash 194,299 (65,957) 140,857
Cash, cash equivalents, and restricted cash - beginning of period 152,822 218,779 77,922
Cash, cash equivalents, and restricted cash - end of period 347,121 152,822 218,779
Cash and cash equivalents - end of period 341,378 151,197 213,394
Restricted cash - end of period 5,743 1,625 5,385
Supplemental disclosure of cash flow information:      
Cash paid for interest 130,186 158,568 131,505
Cash received for income taxes, net 100,141 10,255 34,952
Supplemental disclosure of non-cash investing and financing activity:      
Acquisition of non-controlling interest 0 0 3,485
Tax distribution to non-controlling interest 0 0 13,412
Distribution to members 0 0 8,562
Related Party      
Cash flows from financing activities:      
Payments of principal on financing obligation - related party 0 0 (243)
Payments of principal on financing lease - related party (1,079) (2,270) 0
Supplemental disclosure of non-cash investing and financing activity:      
Notes payable for acquisitions - related party $ 36,033 $ 0 $ 0
v3.20.4
Nature of Operations and Basis of Presentation
12 Months Ended
Dec. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Nature of Operations and Basis of Presentation Nature of Operations and Basis of Presentation
Amneal Pharmaceuticals, Inc., formerly known as Atlas Holdings, Inc. (the "Company"), was formed along with its wholly owned subsidiary, K2Merger 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").
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 has operations in the United States, India, and Ireland.  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 listed on the New York Stock Exchange, 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 direct 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% and became its managing member.
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 of the non-controlling interest holders upon the consummation of the Combination, PIPE Investment and Closing Date Redemption was approximately 57%.  As of December 31, 2020, the overall interest percentage of the non-controlling interest holders was approximately 51%.
On July 5, 2018, Holdings distributed to its members (collectively, the "Amneal Group") all Amneal Common Units and shares of Class B Common Stock held by Holdings. As a result, as of December 31, 2020 and 2019, Holdings did not hold any equity interest in Amneal or the Company.
The Company is a holding company, whose principal assets are Amneal Common Units.
During the year ended December 31, 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).
v3.20.4
Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2020
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies Summary of Significant Accounting Policies
Accounting Principles
The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). All intercompany accounts and transactions have been eliminated.
Principles of Consolidation
Although the Company has a minority economic interest in Amneal, it is Amneal’s sole managing member, having the sole voting power to make all of Amneal’s business decisions and control its management. Therefore, the Company consolidates the financial statements of Amneal and its subsidiaries. The Company’s consolidated financial statements are a continuation of Amneal’s financial statements, with adjustments to equity to reflect the Combination, the PIPE Investment and non-controlling interests for the portion of Amneal’s economic interests that is not held by the Company. Prior to the closing of the Combination and PIPE Investment, the Company did not conduct any activities other than those incidental to the formation of it and Merger Sub and the matters contemplated by the BCA and had no operations and no material assets or liabilities. Results for the year ended December 31, 2018 include the impact of the Combination from May 4, 2018 to December 31, 2018.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP 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, valuation of intangible and other assets acquired in business combinations, allowances for accounts receivable, accrued liabilities, stock-based compensation, valuation of inventory balances, the determination of useful lives for product rights 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.
Revenue Recognition
On January 1, 2018, the Company adopted Accounting Standards Update ("ASU") 2014-9, Revenue from Contracts with Customers and associated ASUs (collectively "Topic 606"), which sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific sections of revenue recognition guidance that have historically existed.
When assessing its revenue recognition, the Company performs the following five steps in accordance with Topic 606: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies the performance obligation. The Company recognizes revenue when it transfers control of its products to customers, in an amount that reflects the consideration to which the Company expects to be entitled to receive in exchange for those products. For further details on the Company’s revenue recognition policies under Topic 606, refer to Note 4. Revenue Recognition.
Stock-Based Compensation
The Company’s stock-based compensation consists of stock options, restricted stock units ("RSUs") and market performance-based restricted stock units (“MPRSUs”) awarded to employees and non-employee directors. Stock options are measured at their fair value on the grant date or date of modification, as applicable. RSUs, including MPRSUs, are measured at the stock price on the grant date or date of modification, as applicable. The Company recognizes compensation expense on a straight-line basis over the requisite service and/or performance period, as applicable. Forfeitures of awards are accounted for as a reduction in stock-based compensation expense in the period such awards are forfeited. The Company's policy is to issue new shares upon option exercises and the vesting of RSUs and MPRSUs.
Foreign Currencies
The Company has operations in the U.S., India, Ireland, and other international jurisdictions.  The results of its non-U.S. dollar based operations are translated to U.S. Dollars at the average exchange rates during the period. Assets and liabilities are translated at the rate of exchange prevailing on the balance sheet date. Investment accounts are translated at historical exchange rates. Translation adjustments are accumulated in a separate component of stockholders’/members’ deficit in the consolidated balance sheet and are included in the determination of comprehensive income. Transaction gains and losses are included in the determination of net income (loss) in the Company consolidated statements of operations as a component of foreign exchange gains and losses. Such foreign currency transaction gains and losses include fluctuations related to long term intercompany loans that are payable in the foreseeable future.
Business Combinations
Business combinations are accounted for using the acquisition method of accounting. Under the acquisition method, the acquiring entity in a business combination records the assets acquired and liabilities assumed at the date of acquisition at their fair values. Any excess of the purchase price over the fair value of net assets and other identifiable intangible assets acquired is recorded as goodwill. Acquisition-related costs, primarily professional fees, are expensed as incurred.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on deposit and highly liquid investments with original maturities of three months or less. A portion of the Company’s cash flows are derived outside the U.S. As a result, the Company is subject to market risk associated with changes in foreign exchange rates. The Company maintains cash balances at both U.S.-based and foreign-based commercial banks. At various times during the year, cash balances in the U.S. may exceed amounts that are insured by the Federal Deposit Insurance Corporation.
Restricted Cash
At December 31, 2020 and 2019, respectively, the Company had restricted cash balances of $6 million and $2 million in its bank accounts primarily related to the purchase of certain land and equipment.
Accounts Receivable and Allowance for Doubtful Accounts
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company limits its credit risk with respect to accounts receivable by performing credit evaluations when deemed necessary. The Company does not require collateral to secure amounts owed to it by its customers.
Trade accounts receivable are stated at their net realizable value. The allowance for doubtful accounts reflects the best estimate of expected credit losses of the accounts receivable portfolio determined on the basis of historical experience, current information, and forecasts of future economic conditions. The Company determines its allowance methodology by pooling receivable balances at the customer level. We consider various factors, including the Company’s previous loss history, individual credit risk associated to each customer, and the current and future condition of the general economy. These credit risk factors are monitored on a quarterly basis and updated as necessary. To the extent that any individual debtor is identified whose credit quality has deteriorated, the Company establishes allowances based on the individual risk characteristics of such customer. The Company makes concerted efforts to collect all outstanding balances due from customers; however, account balances are charged off against the allowance when management believes it is probable the receivable will not be recovered. The Company does not have any off-balance-sheet credit exposure related to customers.
Chargebacks Received from Manufacturers
When a sale occurs on a contracted item, the difference between the cost the Company pays to the manufacturer of that item and the contract price that the end customer has with the manufacturer is rebated to the Company by the manufacturer as a chargeback. Chargebacks are recorded as a reduction to cost of sales and either a reduction in the amount due to the manufacturer (if there is a right of offset) or as a receivable from the manufacturer.
Inventories
Inventories consist of finished goods held for sale, raw materials, and work in process. Inventories are stated at net realizable value, with cost determined using the first-in, first-out method. Adjustments for excess and obsolete inventories are established based upon historical experience and management’s assessment of current product demand. These assessments include inventory obsolescence based on its expiration date, damaged or rejected product, and slow-moving products.
Property, Plant, and Equipment
Property, plant, and equipment are stated at historical cost less accumulated depreciation. Depreciation expense is computed primarily using the straight-line method over the estimated useful lives of the assets, which are as follows:
Asset Classification Estimated Useful Life
Buildings 30 years
Computer equipment 5 years
Furniture and fixtures 7 years
Leasehold improvements Shorter of asset's useful life or remaining life of lease
Machinery and equipment 
5 - 10 years
Vehicles 5 years
Upon retirement or disposal, the cost of the asset disposed and the accumulated depreciation are removed from the accounts, and any gain or loss is reflected as part of operating income (loss) in the period of disposal. Expenditures that significantly increase value or extend useful lives of property, plant, and equipment are capitalized, whereas those for normal maintenance and repairs are expensed. The Company capitalizes interest on borrowings during the construction period of major capital projects as part of the related asset and amortizes the capitalized interest into earnings over the related asset’s remaining useful life.
Leases
All significant lease arrangements are recognized as right-of-use (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 12. Leases.
In-Process Research and Development
The fair value of in-process research and development ("IPR&D") acquired in a business combination is determined based on the present value of each research project’s projected cash flows using an income approach. Revenues are estimated based on
relevant market size and growth factors, expected industry trends, individual project life cycles and the life of each research project’s underlying marketability. In determining the fair value of each research project, expected cash flows are adjusted for certain risks of completion, including technical and regulatory risk.
The value attributable to IPR&D projects at the time of acquisition is capitalized as an indefinite-lived intangible asset and tested for impairment until the project is completed or abandoned. Upon completion of the project, the indefinite-lived intangible asset is then accounted for as a finite-lived intangible asset and amortized over the estimated useful life of the asset based on the pattern in which the economic benefits are expected to be consumed or otherwise used up or, if that pattern is not readily determinable, on a straight-line basis. If the project is abandoned, the indefinite-lived intangible asset is charged to expense.
Intangible assets with indefinite lives, including IPR&D, are tested for impairment if impairment indicators arise and, at a minimum, annually. However, an entity is permitted to first assess qualitative factors to determine if a quantitative impairment test is necessary. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that an indefinite-lived intangible asset’s fair value is less than its carrying amount. Otherwise, no further impairment testing is required. The indefinite-lived intangible asset impairment test consists of a one-step analysis that compares the fair value of the intangible asset with its carrying amount. If the carrying amount of an intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. The Company considers many factors in evaluating whether the value of its intangible assets with indefinite lives may not be recoverable, including, but not limited to, expected growth rates, the cost of equity and debt capital, general economic conditions, the Company's outlook and market performance of the Company's industry and recent and forecasted financial performance.
Goodwill
Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, is carried at cost. Goodwill is not amortized; rather, it is subject to a periodic assessment for impairment by applying a fair value based test. The Company reviews goodwill for possible impairment annually during the fourth quarter, or whenever events or circumstances indicate that the carrying amount may not be recoverable.
In order to test goodwill for impairment, an entity is permitted to first assess qualitative factors to determine whether a quantitative assessment of goodwill is necessary. The qualitative factors considered by the Company may include, but are not limited to, general economic conditions, the Company’s outlook, market performance of the Company’s industry and recent and forecasted financial performance. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that a reporting unit’s fair value is less than its carrying amount. Otherwise, no further impairment testing is required. If a quantitative assessment is required, the Company determines the fair value of its reporting unit using a combination of the income and market approaches.  If the net book value of the reporting unit exceeds its fair value, the Company recognizes a goodwill impairment charge for the reporting unit equal to the lesser of (i) the total goodwill allocated to that reporting unit and (ii) the amount by which that reporting unit’s carrying amount exceeds its fair value. See Note 15. Goodwill and Other Intangible Assets, for further discussion of the Company's quantitative assessment of goodwill.
Assumptions and estimates used in the evaluation of impairment may affect the carrying value of long-lived assets, which could result in impairment charges in future periods. Such assumptions include projections of future cash flows and the current fair value of the asset.
Amortization of Intangible Assets with Finite Lives
Intangible assets, other than indefinite-lived intangible assets, are amortized over the estimated useful life of the asset based on the pattern in which the economic benefits are expected to be consumed or otherwise used up or, if that pattern is not readily determinable, on a straight-line basis. The useful life is the period over which the assets are expected to contribute directly or indirectly to future cash flows. Intangible assets are not written-off in the period of acquisition unless they become impaired during that period.
The Company regularly evaluates the remaining useful life of each intangible asset that is being amortized to determine whether events and circumstances warrant a revision to the remaining period of amortization. If the estimate of the intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset is amortized prospectively over that revised remaining useful life. See Note 15. Goodwill and Other Intangible Assets, for further discussion of the Company's intangible assets.
Impairment of Long-Lived Assets (Including Intangible Assets with Finite Lives)
The Company reviews its long-lived assets, including intangible assets with finite lives, for recoverability whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company evaluates assets for potential impairment by comparing estimated future undiscounted net cash flows to the carrying amount of the asset. If the carrying amount of the assets exceeds the estimated future undiscounted cash flows, impairment is measured based on the difference between the carrying amount of the assets and fair value which is generally an expected present value cash flow technique. Management’s policy in determining whether an impairment indicator exists comprises measurable operating performance criteria as well as other qualitative measures. See Note 15. Goodwill and Other Intangible Assets, for further discussion of the Company's assessment of intangible asset impairment.
Financial Instruments
The Company minimizes its risks from interest fluctuations through its normal operating and financing activities and, when deemed appropriate through the use of derivative financial instruments. Derivative financial instruments are used to manage risk and are not used for trading or other speculative purposes. The Company does not use leveraged derivative financial instruments.  Derivative financial instruments that qualify for hedge accounting must be designated and effective as a hedge of the identified risk exposure at the inception of the contract. Accordingly, changes in fair value of the derivative contract must be highly correlated with changes in fair value of the underlying hedged item at inception of the hedge and over the life of the hedge contract.
All derivatives are recorded on the balance sheet as assets or liabilities and measured at fair value.  For derivatives designated as cash flow hedges, the effective portion of the changes in fair value of the derivatives are recorded in accumulated other comprehensive income (loss), net of income taxes and subsequently amortized as an adjustment to interest expense over the period during which the hedged forecasted transaction affects earnings, which is when the Company recognizes interest expense on the hedged cash flows.  Cash flows of such derivative financial instruments are classified consistent with the underlying hedged item.
Highly effective hedging relationships that use interest rate swaps as the hedging instrument and that meet criteria under ASC 815, Derivatives and Hedging, may qualify for the “short-cut method” of assessing effectiveness.  The short-cut method allows the Company to make the assumption of no ineffectiveness, which means that the change in fair value of the hedged item can be assumed to be equal to the change in fair value of the derivative. Unless critical terms change, no further evaluation of effectiveness is performed for these hedging relationships unless a critical term is changed.
For a hedging relationship that does not qualify for the short-cut method, the Company measures its effectiveness using the “hypothetical derivative method”, in which the change in fair value of the hedged item must be measured separately from the change in fair value of the derivative.  At inception and quarterly thereafter, the Company formally assesses whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the fair value or cash flows of the hedged item.  The Company compares the change in the fair value of the actual interest rate derivative to the change in the fair value of a hypothetical interest rate derivative with critical terms that match the hedged interest rate payments.  After the initial quantitative assessment, this analysis is performed on a qualitative basis and, if it is determined that the hedging relationship was and continues to be highly effective, no further analysis is required.
All components of each derivative financial instrument's gain or loss are included in the assessment of hedge effectiveness. If it is determined that a derivative ceases to be a highly effective hedge, the Company discontinues hedge accounting and any deferred gains or losses related to a discontinued cash flow hedge shall continue to be reported in accumulated other comprehensive income (loss) net of income taxes, unless it is probable that the forecasted transaction will not occur. If it is probable that the forecasted transaction will not occur by the originally specified time period, the Company discontinues hedge accounting, and any deferred gains or losses reported in accumulated other comprehensive income (loss) are classified into earnings immediately.
The Company is subject to credit risk as a result of nonperformance by counterparties to the derivative agreements.  Upon inception and quarterly thereafter, the Company makes judgments on each counterparty’s creditworthiness for nonperformance by counterparties.
Income Taxes
The Company accounts for income taxes in accordance with ASC 740, Accounting for Income Taxes, which requires the recognition of tax benefits or expenses on temporary differences between the financial reporting and tax bases of its assets and
liabilities by applying the enacted tax rates in effect for the year in which the differences are expected to reverse. Such net tax effects on temporary differences are reflected on the Company’s consolidated balance sheets as deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when the Company believes that it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized.
ASC 740-10 prescribes a two-step approach for the recognition and measurement of tax benefits associated with the positions taken or expected to be taken in a tax return that affect amounts reported in the financial statements. The Company has reviewed and will continue to review the conclusions reached regarding uncertain tax positions, which may be subject to review and adjustment at a later date based on ongoing analyses of tax laws, regulations and interpretations thereof. To the extent that the Company’s assessment of the conclusions reached regarding uncertain tax positions changes as a result of the evaluation of new information, such change in estimate will be recorded in the period in which such determination is made. The Company reports income tax-related interest and penalties relating to uncertain tax positions, if applicable, as a component of income tax expense.
Comprehensive Income (Loss)
Comprehensive income (loss) includes net income (loss) and all changes in stockholders’ equity (except those arising from transactions with stockholders) including foreign currency translation adjustments resulting from the consolidation of foreign subsidiaries’ financial statements and unrealized gains on cash flows hedges, net of income taxes.
Research and Development
Research and development ("R&D") activities are expensed as incurred. R&D expenses primarily consist of direct and allocated expenses incurred with the process of formulation, clinical research, and validation associated with new product development. Upfront and milestone payments made to third parties in connection with R&D collaborations are expensed as incurred up to the point of regulatory approval or when there is no alternative future use.
Intellectual Property Legal Development Expenses
The Company expenses external intellectual property legal development expenses as incurred. These costs relate to legal challenges of innovator’s patents for invalidity or non-infringement, which are customary in the generic pharmaceutical industry, and are incurred predominately during development of a product and prior to regulatory approval. Associated costs include, but are not limited to, formulation assessments, patent challenge opinions and strategy, and litigation expenses to defend the intellectual property supporting the Company's regulatory filings.
Shipping Costs
The Company records the costs of shipping product to its customers as a component of selling, general, and administrative expenses as incurred. Shipping costs were $17 million, $15 million and $21 million for the years ended December 31, 2020, 2019 and 2018, respectively.
Recently Adopted Accounting Pronouncements
In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which modified the disclosure requirements on fair value measurement.  The Company adopted ASU 2018-13 effective January 1, 2020, and it did not have a material impact on the Company’s 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 replaced today’s "incurred loss" approach with an "expected loss" model for instruments measured at amortized cost and requires entities to record allowances for available-for-sale debt securities rather than reduce the carrying amount, as they did under the other-than-temporary impairment model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. Entities 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 Company adopted ASU 2016-13 effective January 1, 2020, and it did not have a material impact on the Company’s consolidated financial statements.
Recently Issued Accounting Pronouncements
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform, which provided elective amendments for entities that have contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.  The amendments may be applied to impacted contracts and hedges prospectively through December 31, 2022. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements.
v3.20.4
Acquisitions and Divestitures
12 Months Ended
Dec. 31, 2020
Business Combinations [Abstract]  
Acquisitions and Divestitures
Acquisitions
AvKARE and R&S Purchase Agreement
On December 10, 2019, the Company, through its investment in Rondo Partners, LLC (“Rondo”), entered into equity purchase and operating agreements to acquire approximately a 65.1% controlling financing interest in both AvKARE Inc., a Tennessee corporation, and Dixon-Shane, LLC d/b/a R&S Northeast LLC, a Kentucky limited liability company (“R&S”) (collectively the “Acquisitions”).  Prior to closing, AvKARE, Inc. converted to a limited liability company, AvKARE, LLC. AvKARE, LLC is one of the largest private label providers of generic pharmaceuticals in the U.S. federal agency sector, primarily focused on serving the Department of Defense and the Department of Veterans Affairs. R&S is a national pharmaceutical wholesaler focused primarily on offering 340b-qualified entities products to provide consistency in care and pricing.
On January 31, 2020, the Company completed the Acquisitions. The purchase price of $294 million included cash of $254 million, the issuance of long-term promissory notes to the sellers with an aggregate principal amount of $44 million (estimated fair value of $35 million) (the “Sellers Notes”) and a short-term promissory note (the “Short-Term Seller Note”) with a principal amount of $1 million to the sellers. The cash purchase price was funded by $76 million of cash on hand and debt of $178 million of proceeds from a $180 million term loan.  The remaining $2 million consisted of working capital costs. The Company is not party to or a guarantor of the term loan, the Sellers Notes or the Short-Term Sellers Note. (refer to Note 17. Debt).  For further detail of the purchase price, refer to the table below.
For the year ended December 31, 2020, there were $1 million of transaction costs associated with the Acquisitions recorded in acquisition, transaction-related and integration expenses (none in 2019 and 2018).
The Acquisitions were accounted for under the acquisition method of accounting, with Amneal as the accounting acquirer of AvKARE, LLC and R&S.
The purchase price was calculated as follows (in thousands):
Cash$254,000 
Sellers Notes (1)
35,033 
Settlement of Amneal trade accounts receivable from R&S (2)
6,855 
Short-Term Seller Note (3)
1,000 
Working capital adjustment (4)
(2,640)
Fair value consideration transferred$294,248 
(1)In accordance with ASC 805, Business Combinations, all consideration transferred was measured at its acquisition-date fair value. The Sellers Notes were stated at the fair value estimate of $35 million, which is the $44 million aggregate principal amount less a $9 million discount.  The fair value of the Sellers Notes was estimated using the Monte-Carlo simulation approach under the option pricing framework.
(2)Represents trade accounts receivable from R&S that was effectively settled upon closing of the Acquisitions.
(3)Represents the principal amount due on the Short-Term Seller Note, which approximates fair value.
(4)Represents a working capital adjustment pursuant to the terms of the purchase agreement. The entire amount was received in cash by the Company in September 2020.
The following is a summary of the purchase price allocation for the Acquisitions (in thousands):
Preliminary Fair Values as of
January 31, 2020
Trade accounts receivable, net$46,702 
Inventories71,908 
Prepaid expenses and other current assets11,316 
Related party receivables61 
Property, plant and equipment5,278 
Goodwill103,679 
Intangible assets, net130,800 
Operating lease right-of-use assets - related party5,544 
Total assets acquired375,288 
Accounts payable and accrued expenses62,489 
Related party payables1,532 
Operating lease liabilities - related party5,544 
Total liabilities assumed69,565 
Redeemable non-controlling interests11,475 
Fair value of consideration transferred$294,248 
The acquired intangible assets are being amortized over their estimated useful lives as follows (in thousands):
Final Fair ValuesWeighted-Average
Useful Life
Government licenses$66,700 7 years
Government contracts22,000 4 years
National contracts28,600 5 years
Customer relationships13,000 10 years
Trade name500 6 years
$130,800 
The estimated fair value of the government licenses was determined using the “with-and-without method,” which is a valuation technique that provides an estimate of the fair value of an intangible asset that is equal to the difference between the present value of the prospective revenues and expenses for the business with and without the subject intangible asset in place. The estimated fair values of the government contracts, national contracts, and customer relationships were determined using the “income approach,” which is a valuation technique that provides an estimate of the fair value of an intangible asset based on market participant expectations of the cash flows that an intangible asset would generate over its remaining useful life. The estimated fair value of the trade name was determined using the “relief from royalty method,” which is a valuation technique that provides an estimate of the fair value of an intangible asset equal to the present value of the after-tax royalty savings attributable to owning the intangible asset. The assumptions, including the expected projected cash flows, utilized in the preliminary purchase price allocation and in determining the purchase price were based on management's best estimates as of the closing date of the Acquisitions on January 31, 2020. All elements of the purchase price allocation have been finalized, except for deferred taxes which are based on the determination of the U.S. partnership tax basis.
Some of the more significant assumptions inherent in the development of those asset valuations included the estimated net cash flows for each year for each asset (including net revenues, cost of sales, selling and marketing costs and working capital / contributory asset charges), the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, competitive trends impacting the asset and each cash flow stream, as well as other factors. The underlying assumptions used to prepare the discounted cash flow analysis may change; accordingly, for these and other reasons, actual results may vary significantly from estimated results.
The Sellers Notes and redeemable non-controlling interests were estimated using the Monte-Carlo simulation approach under the option pricing framework. The non-controlling interests are redeemable at the option of either the non-controlling interest holder and Amneal. The fair value of the redeemable non-controlling interests considers these redemption rights.
Of the $104 million of goodwill acquired in connection with the Acquisitions, approximately $70 million was allocated to the Company’s AvKARE segment and approximately $34 million was allocated to the Generics segment (refer to Note 26. Segment Information).  Goodwill was allocated to the Generics segment as net revenue of products manufactured by Amneal and distributed by the Acquisitions is reflected in Generics’ segment results. Goodwill is calculated as the excess of the fair value of the consideration transferred and the fair value of the redeemable non-controlling interests over the fair value of the net assets recognized. Factors that contributed to the recognition of goodwill include Amneal’s intent to diversify its business and open growth opportunities in the large, complex and growing federal healthcare market.
For the year ended December 31, 2020, the Acquisitions contributed total net revenue of approximately $311 million and operating income of $4 million, which included approximately $32 million of amortization expense from intangible assets acquired in the Acquisitions, to the Company’s consolidated results of operations.
Impax Acquisition
On May 4, 2018, the Company completed the Combination, as described in Note 1. Nature of Operations and Basis of Presentation.  For the year ended December 31, 2018, transaction costs associated with the Impax acquisition of $23 million were recorded in acquisition, transaction-related and integration expenses (none for the years ended December 31, 2020 and 2019).
The Impax acquisition was accounted for under the acquisition method of accounting, with Amneal as the accounting acquirer of Impax. Amneal was identified as the accounting acquirer because: (i) Amneal exchanged Amneal Common Units with the Company for the Company’s interest in Impax, (ii) 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, and (iii) a majority of the directors on the Company's board of directors were designated by Holdings. As such, the cost to acquire Impax was allocated to the respective assets acquired and liabilities assumed based on their estimated fair values as of the closing date of the Combination.
The measurement of the consideration transferred by Amneal for its interest in Impax is based on the fair value of the equity interest that Amneal would have had to issue to give the Impax shareholders the same percentage equity interest in the Company, which is equal to approximately 25% of Amneal, on May 4, 2018. However, the fair value of Impax's common stock was used to calculate the consideration for the Combination because Impax's common stock had a quoted market price and the Combination involved only the exchange of equity.
The purchase price, net of cash acquired, is calculated as follows (in thousands, except share amount and price per share):
Fully diluted Impax share number (1)
73,288,792 
Closing quoted market price of an Impax common share on May 4, 2018$18.30 
Equity consideration - subtotal$1,341,185 
Add: Fair value of Impax stock options as of May 4, 2018 (2)
22,610 
Total equity consideration1,363,795 
Add: Extinguishment of certain Impax obligations, including  accrued and unpaid interest320,290 
Less: Cash acquired(37,907)
Purchase price, net of cash acquired$1,646,178 
(1)Represents shares of Impax Common Stock issued and outstanding immediately prior to the Combination.
(2)Represents the fair value of 3.0 million fully vested Impax stock options valued using the Black-Scholes options pricing model.
The following is a summary of the purchase price allocation for the Impax acquisition (in thousands):
 Final Fair Values As of May 4, 2018
Trade accounts receivable, net$210,820 
Inventories183,088 
Prepaid expenses and other current assets91,430 
Property, plant and equipment87,472 
Goodwill398,733 
Intangible assets1,574,929 
Other55,790 
Total assets acquired2,602,262 
Accounts payable47,912 
Accrued expenses and other current liabilities274,979 
Long-term debt599,400 
Other long-term liabilities33,793 
Total liabilities assumed956,084 
Net assets acquired$1,646,178 
Intangible Assets
The acquired intangible assets are being amortized over their estimated useful lives as follows (in thousands):
 Final
Fair Values
Weighted-Average
Useful Life (Years)
Marketed product rights$1,045,617 12.9
In addition to the amortizable intangible assets noted above, $529 million was allocated to IPR&D.
The estimated fair value of the in-process research and development and identifiable intangible assets was determined using the "income approach," which is a valuation technique that provides an estimate of the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. The assumptions, including the expected projected cash flows, utilized in the purchase price allocation and in determining the purchase price were based on management's best estimates as of the closing date of the Combination on May 4, 2018.
Some of the more significant assumptions inherent in the development of those asset valuations included the estimated net cash flows for each year for each asset or product (including net revenues, cost of sales, R&D, selling and marketing costs and working capital / contributory asset charges), the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, the potential regulatory and commercial success risks, competitive trends impacting the asset and each cash flow stream, as well as other factors. The underlying assumptions used to prepare the discounted cash flow analysis may change; accordingly, for these and other reasons, actual results may vary significantly from estimated results.
Goodwill
Of the total goodwill acquired in connection with the Impax acquisition, approximately $360 million was allocated to the Company’s Specialty segment and approximately $39 million was allocated to the Generics segment. Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the expected revenue and cost synergies of the combined company. Factors that contributed to the Company’s recognition of goodwill include the Company’s intent to expand its generic and specialty product portfolios and to acquire certain benefits from the Impax product pipelines, in addition to the anticipated synergies that the Company expects to generate from the acquisition.
Gemini Laboratories, LLC Acquisition
On May 7, 2018, the Company acquired 98.0% of the outstanding equity interests in Gemini Laboratories, LLC ("Gemini") for total consideration of $120 million, net of $4 million cash acquired. At closing, the acquisition was funded by a $43 million up-front cash payment (including $3 million related to a preliminary working capital adjustment) from cash on hand and a $77 million unsecured promissory note. The note payable bears interest at 3% annually. The note payable and related accrued interest was paid on November 7, 2018, its maturity date. Additionally, the Company made a payment of $3 million in July 2018 related to the final working capital adjustment. In connection with the acquisition of Gemini, the Company recorded an amount representing the non-controlling interest of Gemini of $3 million. During September 2020, the Company paid $3 million to Gemini’s non-controlling interest holders, of which $2 million was to acquire their remaining 2.0% equity interests and $1 million to distribute earnings. Refer to Note 22. Stockholders’ Equity, for further details.
Gemini is a pharmaceutical company with a portfolio that includes licensed and owned, niche and mature branded products. Gemini was a related party of the Company; refer to Note 24. Related Party Transactions, for further details.
For the year ended December 31, 2018, transaction costs associated with the Gemini acquisition of $0.4 million were recorded in acquisition, transaction-related and integration expenses (none for the years ended December 31, 2020 and 2019). The Gemini acquisition was accounted for under the acquisition method of accounting.
The following is a summary of the purchase price allocation for the Gemini acquisition (in thousands):
 Final Fair Values As of May 7, 2018
Trade accounts receivable, net$8,158 
Inventories1,851 
Prepaid expenses and other current assets3,795 
Property, plant and equipment, net11 
Goodwill1,500 
Intangible assets142,740 
Other324 
Total assets acquired158,379 
Accounts payable1,764 
Accrued expenses and other current liabilities14,644 
License liability20,000 
Total liabilities assumed36,408 
Net assets acquired$121,971 
The acquired intangible assets are being amortized over their estimated useful lives as follows (in thousands):
 Final
Fair Values
Weighted-Average
Useful Life
Product rights for licensed / developed technology$110,350 10 years
Product rights for developed technologies5,500 9 years
Product rights for out-licensed generics royalty agreement390 2 years
 $116,240 
In addition to the amortizable intangibles noted above, $27 million was allocated to IPR&D.
The goodwill recognized of $2 million is allocated to the Company's Specialty segment.
The Company's consolidated statements of operations for the year ended December 31, 2018 include the results of operations of Impax and Gemini subsequent to May 4, 2018 and May 7, 2018, respectively. For the periods from their respective acquisition
dates to December 31, 2018, Impax contributed net revenue of $399 million and an estimated pre-tax loss of $104 million and Gemini contributed net revenue of $32 million and estimated pre-tax income of $10 million.
Unaudited Pro Forma Information
The unaudited pro forma combined results of operations for the years ended December 31, 2020 (assuming the closing of the Acquisitions occurred on January 1, 2019) are as follows (in thousands):
 Year Ended December 31,
 20202019
Net revenue$2,023,231 $1,933,042 
Net income (loss)$68,588 $(594,040)
Net income (loss) attributable to Amneal Pharmaceuticals, Inc.$91,062 $(359,140)
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 Acquisitions taken place on January 1, 2019. Furthermore, the pro forma results do not purport to project the future results of operations of the Company.
Adjustments to arrive at the unaudited pro forma information primarily related to increases in selling, general and administrative expenses for amortization of acquired intangible assets, net of the applicable tax impact.
Divestitures
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 gain (loss) on sale of international business for the year ended December 31, 2019. For the year ended December 31, 2020 the Company made a $0.5 million payment to AI Sirona, and recognized a $0.1 million gain on sale of international business for final settlement of the divestiture. 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 gain (loss) on sale of international business for the year ended December 31, 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.
Spain/Nordics Divestitures

On September 30, 2017, Amneal sold 100% of the equity and certain marketing authorizations, including associated dossiers, of its Amneal Nordic ApS and Amneal Pharma Spain S.L. subsidiaries to Aristo Pharma GmbH (“Aristo”) for cash consideration of $8 million. Amneal received $7 million in October 2017 with the remainder was to be paid within 60 days of closing of the disposition based on the actual closing date net working capital of the entities sold. The carrying value of the net assets sold was $13 million, including intangible assets of $1 million and goodwill of $2 million. As a result of the sale, Amneal recognized a loss of $5 million, inclusive of a release of foreign currency translation adjustment loss of $0.5 million, within the loss on sale of certain international businesses for the year ended December 31, 2017.
Aristo was also required to make an additional payment within 12 months of the closing date of the disposition based on the actual inventory, transferred as part of the transaction, that the buyer sold over this period. All terms of the sale were settled in 2018.
v3.20.4
Revenue Recognition
12 Months Ended
Dec. 31, 2020
Revenue from Contract with Customer [Abstract]  
Revenue Recognition 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, institutions 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 shipment or 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, distribution fees, 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 83%, 81% and 83% of total gross sales of products for the years ended December 31, 2020, 2019 and 2018, respectively.
Disaggregated Revenue
The Company's significant therapeutic classes for each of its reportable segments, as determined based on net revenue for each of the years ended December 31, 2020, 2019 and 2018 are set forth below (in thousands):
 Year ended December 31,
 202020192018
Generics
Anti-Infective$40,381 $36,320 $37,988 
Hormonal/Allergy355,581 364,658 246,765 
Antiviral25,724 27,488 44,334 
Central Nervous System (1)
422,405 423,416 476,046 
Cardiovascular System114,226 117,065 182,990 
Gastroenterology78,165 42,783 52,878 
Oncology61,113 62,721 40,347 
Metabolic Disease/Endocrine45,004 55,786 68,448 
Respiratory37,389 34,920 49,651 
Dermatology58,168 60,186 40,010 
Other therapeutic classes102,721 60,041 139,580 
International and other2,333 23,459 59,994 
Total Generics net revenue1,343,210 1,308,843 1,439,031 
Specialty
Hormonal/Allergy54,631 45,547 29,048 
Central Nervous System (1)
285,737 235,846 146,812 
Gastroenterology1,597 4,223 1,141 
Metabolic Disease/Endocrine646 894 1,306 
Other therapeutic classes12,956 31,020 45,653 
Total Specialty net revenue355,567 317,530 223,960 
AvKARE
Distribution161,673 — — 
Government Label104,054 — — 
Institutional18,546 — — 
Other9,473 — — 
Total AvKARE net revenue293,746 — — 
Total net revenue$1,992,523 $1,626,373 $1,662,991 
(1)During the three months ended September 30, 2019, operating results for Oxymorphone were reclassified from Generics to Specialty, where it is sold as a non-promoted product.  Prior period results have not been restated to reflect the reclassification.
A rollforward of the major categories of sales-related deductions for the years ended December 31, 2020, 2019 and 2018 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 January 1, 2018$453,703 $20,408 $45,175 $12,911 
Liabilities assumed from acquisitions222,970 11,781 102,502 51,618 
Provision related to sales recorded in the period3,463,983 117,010 85,996 104,664 
Credits/payments issued during the period(3,311,060)(113,042)(79,170)(94,991)
Balance at December 31, 2018829,596 36,157 154,503 74,202 
Provision related to sales recorded in the period4,628,084 136,005 104,664 202,635 
Credits/payments issued during the period(4,627,873)(137,854)(108,806)(161,877)
Balance at December 31, 2019829,807 34,308 150,361 114,960 
Impact from the Acquisitions12,444 944 11,606 10 
Provision relat