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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                        to                       
Commission file number 001-38485
Amneal Pharmaceuticals, Inc.
(Exact name of registrant as specified in its charter)
Delaware32-0546926
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
Amneal Pharmaceuticals, Inc.
400 Crossing Boulevard, Bridgewater, NJ
08807
(Address of principal executive offices)(Zip Code)
(908) 947-3120
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.01 per shareAMRXNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No
As of April 25, 2022, there were 150,807,252 shares of Class A common stock outstanding and 152,116,890 shares of Class B common stock outstanding, both with a par value of $0.01.



Amneal Pharmaceuticals, Inc.
Table of Contents
1


Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q and Amneal Pharmaceuticals, Inc.’s other publicly available documents contain “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Management and representatives of Amneal Pharmaceuticals, Inc. and its subsidiaries (the “Company”, “we”, “us”, or “our”) also may from time to time make forward-looking statements. Forward-looking statements do not relate strictly to historical or current facts and reflect management’s assumptions, views, plans, objectives and projections about the future. Forward-looking statements may be identified by the use of words such as “plans,” “expects,” “will,” “anticipates,” “estimates” and other words of similar meaning in conjunction with, among other things: discussions of future operations; expected operating results and financial performance; impact of planned acquisitions and dispositions; our strategy for growth; product development; regulatory approvals; market position and expenditures.

Because forward-looking statements are based on current beliefs, expectations and assumptions regarding future events, they are subject to uncertainties, risks and changes that are difficult to predict and many of which are outside of our control. Investors should realize that if underlying assumptions prove inaccurate, known or unknown risks or uncertainties materialize, or other factors or circumstances change, our actual results and financial condition could vary materially from expectations and projections expressed or implied in our forward-looking statements. Investors are therefore cautioned not to rely on these forward-looking statements.


Summary of Material Risks

Risks and uncertainties that make an investment in the Company speculative or risky or that could cause our actual results to differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to:

our ability to successfully develop, license, acquire and commercialize new products on a timely basis;
the competition we face in the pharmaceutical industry from brand and generic drug product companies, and the impact of that competition on our ability to set prices;
our ability to obtain exclusive marketing rights for our products;
our ability to manage our growth through acquisitions and otherwise;
our dependence on the sales of a limited number of products for a substantial portion of our total revenues;
the continuing trend of consolidation of certain customer groups;
our dependence on third-party suppliers and distributors for raw materials for our products and certain finished goods and any associated supply chain disruptions;
legal, regulatory and legislative efforts by our brand competitors to deter competition from our generic alternatives;
the impact of severe weather;
the impact of the ongoing COVID-19 pandemic;
risks related to federal regulation of arrangements between manufacturers of branded and generic products;
our reliance on certain licenses to proprietary technologies from time to time;
the significant amount of resources we expend on research and development;
the risk of product liability and other claims against us by consumers and other third parties;
risks related to changes in the regulatory environment, including U.S. federal and state laws related to healthcare fraud abuse and health information privacy and security and changes in such laws;
changes to Food and Drug Administration product approval requirements;
the impact of healthcare reform and changes in coverage and reimbursement levels by governmental authorities and other third-party payers;
our dependence on third-party agreements for a portion of our product offerings;
the impact of global economic conditions, including any economic effects stemming from adverse geopolitical events, an economic downturn and inflation rates;
our ability to identify, make and integrate acquisitions or investments in complementary businesses and products on advantageous terms;
our substantial amount of indebtedness and our ability to generate sufficient cash to service our indebtedness in the future, and the impact of interest rate fluctuations on such indebtedness;
our obligations under a tax receivable agreement may be significant;
the high concentration of ownership of our Class A common stock and the fact that we are controlled by a group of stockholders, together with their affiliates and certain assignees, who owned Amneal Pharmaceuticals, LLC when it was a private company; and
2


such other factors as may be set forth elsewhere in the Company's Annual Report on Form 10-K for the year ended December 31, 2021, particularly in the section 1A. Risk Factors and our public filings with the SEC.

Investors should carefully read our Annual Report on Form 10-K for the year ended December 31, 2021, including the section 1A. Risk Factors, for a description of certain risks that could, among other things, cause our actual results to differ materially from those expressed in our forward-looking statements. Investors should understand that it is not possible to predict or identify all such factors and should not consider the risks described herein and in our Annual Report to be a complete statement of all potential risks and uncertainties. The Company does not undertake to publicly update any forward-looking statement that may be made from time to time, whether as a result of new information or future events or developments.
3


PART I - FINANCIAL INFORMATION
Item 1.    Financial Statements (Unaudited)
Amneal Pharmaceuticals, Inc.
Consolidated Statements of Operations
(unaudited; in thousands, except per share amounts)


Three Months Ended March 31,
20222021
Net revenue$497,633 $493,105 
Cost of goods sold323,062 301,543 
Gross profit174,571 191,562 
Selling, general and administrative98,665 90,726 
Research and development52,798 48,182 
Intellectual property legal development expenses764 3,582 
Acquisition, transaction-related and integration expenses434 2,802 
Credit related to legal matters, net(2,326) 
Restructuring and other charges731 363 
Change in fair value of contingent consideration200  
Operating income23,305 45,907 
Other (expense) income:
Interest expense, net(33,335)(33,885)
Foreign exchange (loss) gain, net(2,013)2,088 
Other income, net2,122 794 
Total other expense, net(33,226)(31,003)
(Loss) income before income taxes(9,921)14,904 
(Benefit from) provision for income taxes(3,461)359 
Net (loss) income(6,460)14,545 
Less: Net loss (income) attributable to non-controlling interests4,742 (7,839)
Net (loss) income attributable to Amneal Pharmaceuticals, Inc. before accretion of redeemable non-controlling interest (1,718)6,706 
Accretion of redeemable non-controlling interest(438) 
Net (loss) income attributable to Amneal Pharmaceuticals, Inc.$(2,156)$6,706 
Net (loss) income per share attributable to Amneal Pharmaceuticals, Inc.'s class A common stockholders:
   Basic$(0.01)$0.05 
   Diluted$(0.01)$0.04 
Weighted-average common shares outstanding:
   Basic149,892 148,013 
   Diluted149,892 151,220 



The accompanying notes are an integral part of these consolidated financial statements.
4


Amneal Pharmaceuticals, Inc.
Consolidated Statements of Comprehensive Income
(unaudited; in thousands)



Three Months Ended March 31,
20222021
Net (loss) income$(6,460)$14,545 
Less: Net loss (income) attributable to non-controlling interests4,742 (7,839)
Net (loss) income attributable to Amneal Pharmaceuticals, Inc. before accretion of redeemable non-controlling interest(1,718)6,706 
Accretion of redeemable non-controlling interest(438) 
Net (loss) income attributable to Amneal Pharmaceuticals, Inc. (2,156)6,706 
Other comprehensive (loss) income:
Foreign currency translation adjustments arising during the period(4,079)(6,366)
Unrealized gain on cash flow hedge, net of tax53,624 20,772 
Less: Other comprehensive income attributable to non-controlling interests(24,955)(7,302)
Other comprehensive income attributable to Amneal Pharmaceuticals, Inc.24,590 7,104 
Comprehensive income attributable to Amneal Pharmaceuticals, Inc.$22,434 $13,810 

















The accompanying notes are an integral part of these consolidated financial statements.
5


Amneal Pharmaceuticals, Inc.
Consolidated Balance Sheets
(unaudited; in thousands, except per share amounts)
March 31, 2022December 31, 2021
Assets
Current assets:
Cash and cash equivalents$210,477 $247,790 
Restricted cash6,068 8,949 
Trade accounts receivable, net538,309 662,583 
Inventories512,241 489,389 
Prepaid expenses and other current assets121,408 110,218 
Related party receivables1,175 1,179 
Total current assets1,389,678 1,520,108 
Property, plant and equipment, net500,911 514,158 
Goodwill602,893 593,017 
Intangible assets, net1,209,818 1,166,922 
Operating lease right-of-use assets37,675 39,899 
Operating lease right-of-use assets - related party19,846 20,471 
Financing lease right-of-use assets64,204 64,475 
Other assets63,943 20,614 
Total assets$3,888,968 $3,939,664 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses$539,734 $583,345 
Current portion of long-term debt, net30,523 30,614 
Current portion of operating lease liabilities9,901 9,686 
Current portion of operating and financing lease liabilities - related party2,692 2,636 
Current portion of financing lease liabilities3,233 3,101 
Related party payables - short term15,960 47,861 
Total current liabilities602,043 677,243 
Long-term debt, net2,672,661 2,680,053 
Note payable - related party38,443 38,038 
Operating lease liabilities30,378 32,894 
Operating lease liabilities - related party18,093 18,783 
Financing lease liabilities60,286 60,251 
Related party payables - long term10,371 9,619 
Other long-term liabilities32,866 38,903 
Total long-term liabilities2,863,098 2,878,541 
Commitments and contingencies (Notes 5 and 13)
Redeemable non-controlling interests16,420 16,907 
Stockholders' Equity
Preferred stock, $0.01 par value, 2,000 shares authorized, none issued at both March 31, 2022 and December 31, 2021
  
Class A common stock, $0.01 par value, 900,000 shares authorized at both March 31, 2022 and December 31, 2021; 150,775 and 149,413 shares issued at March 31, 2022 and December 31, 2021, respectively
1,506 1,492 
Class B common stock, $0.01 par value, 300,000 shares authorized at March 31, 2022 and December 31, 2021; 152,117 shares issued at both March 31, 2022 and December 31, 2021
1,522 1,522 
Additional paid-in capital666,799 658,350 
Stockholders' accumulated deficit(278,353)(276,197)
Accumulated other comprehensive loss(349)(24,827)
Total Amneal Pharmaceuticals, Inc. stockholders' equity391,125 360,340 
Non-controlling interests16,282 6,633 
Total stockholders' equity407,407 366,973 
Total liabilities and stockholders' equity$3,888,968 $3,939,664 
The accompanying notes are an integral part of these consolidated financial statements.
6


Amneal Pharmaceuticals, Inc.
Consolidated Statements of Cash Flows
(unaudited; in thousands)
Three Months Ended March 31,
20222021
Cash flows from operating activities:
Net (loss) income$(6,460)$14,545 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization57,815 55,549 
Unrealized foreign currency loss (gain)3,140 (1,970)
Amortization of debt issuance costs and discount2,195 2,183 
Stock-based compensation8,065 5,330 
Inventory provision3,578 16,021 
Change in fair value of contingent consideration200  
Other operating charges and credits, net1,155 1,431 
Changes in assets and liabilities:
Trade accounts receivable, net124,268 108,385 
Inventories(25,549)(20,283)
Prepaid expenses, other current assets and other assets(4,423)602 
Related party receivables4 301 
Accounts payable, accrued expenses and other liabilities(48,777)(37,226)
Related party payables5,132 3,260 
Net cash provided by operating activities120,343 148,128 
Cash flows from investing activities:
Purchases of property, plant and equipment(10,793)(11,776)
Deposits for future acquisition of property, plant, and equipment(1,888)(917)
Acquisition of business(84,714) 
Net cash used in investing activities(97,395)(12,693)
Cash flows from financing activities:
Payments of principal on debt, financing leases and other(9,796)(23,630)
Proceeds from exercise of stock options111 676 
Employee payroll tax withholding on restricted stock unit vesting(3,001)(2,102)
Tax distributions to non-controlling interests(3,164) 
Acquisition of redeemable non-controlling interest(1,722) 
Payments of deferred consideration for acquisitions - related party(43,998) 
Payments of principal on financing lease - related party (93)
Repayment of related party note (1,000)
Net cash used in financing activities(61,570)(26,149)
Effect of foreign exchange rate on cash(1,572)(593)
Net (decrease) increase in cash, cash equivalents, and restricted cash(40,194)108,693 
Cash, cash equivalents, and restricted cash - beginning of period256,739 347,121 
Cash, cash equivalents, and restricted cash - end of period$216,545 $455,814 
Cash and cash equivalents - end of period$210,477 $452,097 
Restricted cash - end of period6,068 3,717 
Cash, cash equivalents, and restricted cash - end of period$216,545 $455,814 
Supplemental disclosure of cash flow information:
Cash paid for interest$27,289 $29,917 
Cash paid for income taxes, net$4,387 $733 
Supplemental disclosure of non-cash investing and financing activity:
Tax distributions to non-controlling interests$3,284 $9,757 
Contingent consideration for acquisition$8,796 $ 

The accompanying notes are an integral part of these consolidated financial statements.
7


Amneal Pharmaceuticals, Inc.
Consolidated Statements of Changes in Stockholders' Equity
(unaudited; in thousands)



Class A Common
Stock
Class B Common
Stock
Additional
Paid-in Capital
Stockholders'
Accumulated Deficit
Accumulated
Other
Comprehensive Loss
Non-
Controlling Interests
Total EquityRedeemable Non-Controlling Interests
SharesAmountSharesAmount
Balance at January 1, 2022149,413 $1,492 152,117 $1,522 $658,350 $(276,197)$(24,827)$6,633 $366,973 $16,907 
Net (loss) income— — — — — (1,718)— (7,099)(8,817)2,357 
Foreign currency translation adjustments— — — — — — (2,024)(2,055)(4,079)— 
Stock-based compensation— — — — 8,065 — — — 8,065 — 
Exercise of stock options7 — — — 65 — — 46 111 — 
Restricted stock unit vesting, net of shares withheld to cover payroll taxes1,355 14 — — 319 — (112)(3,365)(3,144)— 
Unrealized gain on cash flow hedge, net of tax — — — — — — 26,614 27,010 53,624 — 
Tax distributions, net— — — — — — — (4,443)(4,443)(2,005)
Reclassification of redeemable non-controlling interest— — — — — (438)— (445)(883)883 
Acquisition of redeemable non-controlling interest— — — — — — — — — (1,722)
Balance at March 31, 2022150,775 $1,506 152,117 $1,522 $666,799 $(278,353)$(349)$16,282 $407,407 $16,420 





Class A Common
Stock
Class B Common
Stock
Additional
Paid-in Capital
Stockholders'
Accumulated Deficit
Accumulated
Other
Comprehensive Loss
Non-
Controlling Interests
Total EquityRedeemable Non-Controlling Interests
SharesAmountSharesAmount
Balance at January 1, 2021147,674 $1,475 152,117 $1,522 $628,413 $(286,821)$(41,318)$41,661 $344,932 $11,804 
Net income— — — — — 6,706 — 6,043 12,749 1,796 
Foreign currency translation adjustments— — — — — — (3,139)(3,227)(6,366)— 
Stock-based compensation— — — — 5,330 — — — 5,330 — 
Exercise of stock options244 2 — — 677 — (34)31 676 — 
Restricted stock unit vesting, net of shares withheld to cover payroll taxes797 8 — — 64 — (113)(2,108)(2,149)— 
Unrealized gain on cash flow hedge, net of tax— — — — — — 10,243 10,529 20,772 — 
Tax distributions— — — — — — — (9,236)(9,236)(521)
Balance at March 31, 2021148,715 $1,485 152,117 $1,522 $634,484 $(280,115)$(34,361)$43,693 $366,708 $13,079 











8


Amneal Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
(unaudited)
1. Nature of Operations
Amneal Pharmaceuticals, Inc. (the “Company”) is a pharmaceutical company specializing in developing, manufacturing, marketing and distributing high-value generic and branded specialty pharmaceutical products across a broad array of dosage forms and therapeutic areas. The Company operates principally in the United States, India, and Ireland, and sells to wholesalers, distributors, hospitals, chain pharmacies and individual pharmacies, either directly or indirectly. The Company is a holding company, whose principal assets are common units (“Amneal Common Units”) of Amneal Pharmaceuticals, LLC (“Amneal”).
In 2018, Amneal completed the acquisition of Impax Laboratories, Inc. (“Impax”), a generic and specialty pharmaceutical company. In 2020, Amneal acquired a 65.1% controlling interest in both AvKARE Inc., a Tennessee corporation now a limited liability company (“AvKARE, LLC”), and Dixon-Shane, LLC d/b/a R&S Northeast LLC, a Kentucky limited liability company (“R&S”) (collectively, the “Rondo Acquisitions”). 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.
The group of investors, together with their affiliates and certain assignees, who owned Amneal when it was a private company (the “Members”) held 50.2% of Amneal Common Units and the Company held the remaining 49.8% as of March 31, 2022.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements, which are prepared in accordance with generally accepted accounting principles in the United States of America, should be read in conjunction with Amneal’s annual audited financial statements for the year ended December 31, 2021 included in the Company’s 2021 Annual Report on Form 10-K. Certain information and footnote disclosures normally included in annual financial statements have been omitted from the accompanying unaudited consolidated financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the Company's financial position as of March 31, 2022, cash flows for the three months ended March 31, 2022 and 2021 and the results of its operations, its comprehensive income and its changes in stockholders’ equity for the three months ended March 31, 2022 and 2021. The consolidated balance sheet data at December 31, 2021 was derived from the Company’s audited annual financial statements, but does not include all disclosures required by generally accepted accounting principles in the United States of America.
Except for the updates included in this Note, the accounting policies of the Company are set forth in Note 2. Summary of Significant Accounting Policies contained in the Company’s 2021 Annual Report on Form 10-K.
Use of Estimates
The preparation of financial statements requires the Company's management to make estimates and assumptions that affect the reported financial position at the date of the financial statements and the reported results of operations during the reporting period. Such estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities in the consolidated financial statements and accompanying notes. The following are some, but not all, of such estimates: the determination of chargebacks, sales returns, rebates, billbacks, valuation of intangible and other assets acquired in business combinations, allowances for accounts receivable, accrued liabilities, initial and subsequent valuation of contingent consideration recognized in business combinations, 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.
Recently Issued Accounting Pronouncements
In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides elective amendments for entities that have contracts, hedging relationships and other transactions that reference
9


LIBOR or another reference rate expected to be discontinued because of reference rate reform.  These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), to expand and clarify the scope of Topic 848 to include derivative instruments on discounting transactions. The amendments in this ASU are effective in the same timeframe as ASU 2020-04. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements.
Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. The update will generally result in an entity recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value. The new standard is effective on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements.
Government Assistance (Topic 832): Disclosures by Business Entities About Government Assistance

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832), Disclosures by Business Entities About Government Assistance, which requires entities to provide disclosures on material government assistance transactions for annual reporting periods. The disclosures include information around the nature of the assistance, the related accounting policies used to account for government assistance, the effect of government assistance on the entity’s financial statements, and any significant terms and conditions of the agreements, including commitments and contingencies. The new standard is effective for the Company on January 1, 2022 and only impacts annual financial statement footnote disclosures. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements.
3. Acquisitions
Saol Baclofen Franchise Acquisition
On December 30, 2021, the Company entered into an asset purchase agreement with certain entities affiliated with Saol International Limited (collectively, “Saol”), a private specialty pharmaceutical company, pursuant to which it agreed to acquire Saol’s baclofen franchise, including Lioresal®, LYVISPAH™, and a pipeline product under development (the “Saol Acquisition”). The Saol Acquisition expands the Company’s commercial institutional and specialty portfolio in neurology while adding commercial infrastructure in advance of its entry into the biosimilar institutional market. The transaction closed on February 9, 2022.
Consideration for the Saol Acquisition included $84.7 million, paid at closing with cash on hand, and contingent royalty payments based on annual net sales for certain acquired assets, beginning in 2023. Cash paid at closing included $1.1 million for inventory acquired in excess of the normalized level, as defined in the asset purchase agreement (working capital adjustment).
For the three months ended March 31, 2022, the Company incurred $0.1 million in transaction costs associated with the Saol Acquisition, which was recorded in acquisition, transaction-related and integration expenses.
The Saol Acquisition was accounted for under the acquisition method of accounting, with Amneal as the accounting acquirer. The preliminary purchase price was calculated as follows (in thousands):
Cash$84,714 
Contingent consideration (royalties) (1)
8,796 
Fair value of consideration transferred$93,510 
(1)The estimated fair value of contingent consideration on the acquisition date was $8.8 million and was based on significant Level 3 inputs that were not observable in the market. Key assumptions included the discount rate, projected year of payments and expected net product sales. Refer to Note 10. Fair Value Measurements, for additional information on the methodology and determination of this liability.

10


The following is a summary of the preliminary purchase price allocation for the Saol Acquisition (in thousands):
Preliminary Fair Values as of
February 9, 2022
Inventory$2,162 
Prepaid expenses and other current assets98 
Goodwill7,553 
Intangible assets83,815 
Total assets acquired93,628 
Accounts payable and accrued expenses118 
Fair value of consideration transferred$93,510 
The acquired intangible assets are being amortized over their estimated useful lives as follows (in thousands):

Fair Value
Weighted-Average
Useful Life (in years)
Marketed product rights$83,815 11.6
The estimated fair value of the 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 Saol Acquisition on February 9, 2022.
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, 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 is calculated as the excess of the consideration transferred over the net assets recognized. Of the total goodwill acquired in connection with the Saol Acquisition, $5.2 million was allocated to the Company’s Generics segment and $2.4 million was allocated to the Specialty segment.
From the acquisition date of February 9, 2022 to March 31, 2022, the Saol Acquisition contributed net revenues and an operating loss of $2.9 million and $0.1 million, respectively.
Puniska Healthcare Pvt. Ltd.
On November 2, 2021, the Company entered into a definitive agreement to acquire Puniska Healthcare Pvt. Ltd. (“Puniska”), a privately held manufacturer of parenteral and injectable drugs in India, and land in a transaction valued at $93.0 million (the “Puniska Acquisition”). Upon execution of the agreement, the Company paid $72.9 million with cash on hand for approximately 74% of the equity interests of Puniska. Upon approval of the transaction by the government of India in March 2022, the Company paid, with cash on hand, an additional $1.7 million for the remaining 26% of the equity interests of Puniska (included in redeemable non-controlling interests in the Company’s consolidated balance sheet as of December 31, 2021) and $14.2 million for the satisfaction of a preexisting payable to the sellers (included in related party payables-short term in the Company’s consolidated balance sheet as of December 31, 2021). During December 2021, the Company paid $4.3 million with cash on hand for land associated with the Puniska Acquisition.
There were no transaction costs associated with the Puniska Acquisition for the three months ended March 31, 2022 or 2021.
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The Puniska Acquisition, excluding the land acquired in December 2021, was accounted for under the acquisition method of accounting, with Amneal as the accounting acquirer. The preliminary purchase price was calculated as follows (in thousands):
Cash (1)
$72,880 
Payable to sellers (2)
14,162 
Fair value of consideration transferred$87,042 
(1)     Cash includes the payment made upon execution of the agreement.
(2)     Due to the short-term nature of that payable to the sellers, the principal amount approximates fair value.
The following is a summary of the preliminary purchase price allocation for the Puniska Acquisition (in thousands):
Fair Values as of
November 2, 2021
Cash$165 
Trade accounts receivable, net 232 
Inventories1,092 
Prepaid expenses and other current assets4,473 
Property, plant and equipment 53,423 
Goodwill30,091 
Operating lease-right-of-use assets 234 
Other assets 1,303 
Total assets acquired91,013 
Accounts payable and accrued expenses1,732 
Operating lease liabilities234 
Other long-term liabilities263 
Total liabilities assumed2,229 
Redeemable non-controlling interests 1,742 
Fair value of consideration transferred$87,042 
Goodwill is calculated as the excess of the consideration transferred and fair value of the redeemable non-controlling interests over the net assets recognized. All of the goodwill acquired in connection with the Puniska Acquisition was allocated to the Company’s Generics segment.
Kashiv Specialty Pharmaceuticals, LLC Acquisition
On January 11, 2021, the Company and Kashiv Biosciences, LLC (a related party, see Note 15. Related Party Transactions) (“Kashiv”) entered into a definitive agreement for Amneal to acquire a 98% interest in Kashiv Specialty Pharmaceuticals, LLC (“KSP”), a subsidiary of Kashiv focused on the development of innovative drug delivery platforms, novel 505(b)(2) drugs and complex generics (the “KSP Acquisition”).
On April 2, 2021, the Company completed the KSP Acquisition.  Under the terms of the transaction, the cash portion of the consideration was $104.5 million, comprised of a purchase price of $100.1 million (including initial and deferred consideration) and a working capital adjustment of $4.4 million.  The initial cash purchase price was funded by cash on hand. For further detail of the purchase price, refer to the table below.
Transaction costs associated with the KSP Acquisition were $1.2 million for the three months ended March 31, 2021 (none for the three months ended March 31, 2022).
The KSP Acquisition was accounted for under the acquisition method of accounting, with Amneal as the accounting acquirer.


12


The purchase price was calculated as follows (in thousands):
Cash, including working capital payments$74,440 
Deferred consideration (1)
30,099 
Contingent consideration (regulatory milestones) (2)
500 
Contingent consideration (royalties) (2)
5,200 
Settlement of Amneal trade accounts payable due to KSP (3)
(7,117)
Fair value consideration transferred$103,122 

(1)The deferred consideration was stated at the fair value estimate of $30.1 million, which is the $30.5 million contractually stated amount less a $0.4 million discount. The deferred consideration consisted of $30.0 million, which the Company paid in January 2022 and $0.5 million, which the Company expects to pay during the three months ending June 30, 2022. As the deferred consideration is non-interest bearing, the Company, using guideline companies and market borrowings with comparable risk profiles, discounted the deferred consideration at 1.7% over the period from April 2, 2021 to the maturity dates, for a fair value of $30.1 million on the date of acquisition. This discount was amortized to interest expense over the life of the deferred consideration utilizing the effective interest rate method.

(2)    Kashiv is eligible to receive up to an additional $8.0 million in contingent payments upon the achievement of certain regulatory milestones and potential royalty payments from high single-digits to mid double-digits, depending on the amount of aggregate annual net sales for certain future pharmaceutical products. The estimated fair value of contingent consideration on the acquisition date was $5.7 million and was based on significant Level 3 inputs that were not observable in the market. Key assumptions included the discount rate, probability of achievement of milestones, projected year of payments and expected net product sales. Refer to Note 10. Fair Value Measurements, for additional information on the methodology and determination of this liability.

(3)    Represented trade accounts payable due to KSP that were effectively settled upon closing of the KSP Acquisition.
The following is a summary of the purchase price allocation for the KSP Acquisition (in thousands):
Final Fair Values as of
April 2, 2021
Cash$112 
Restricted cash500 
Prepaid expenses and other current assets381 
Property, plant and equipment5,375 
Goodwill43,530 
Intangible assets56,400 
Operating lease right-of-use assets9,367 
Total assets acquired115,665 
Accounts payable and accrued expenses1,239 
Operating lease liability9,177 
Related party payable127 
Total liabilities assumed10,543 
Non-controlling interests2,000 
Fair value of consideration transferred$103,122 
Total acquired intangible assets of $56.4 million were comprised of marketed product rights of $29.4 million and in-process research and development (“IPR&D”) of $27.0 million.
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The acquired intangible assets are being amortized over their estimated useful lives as follows (in thousands):

Fair Value
Weighted-Average
Useful Life (in years)
Marketed product rights$29,400 5.9
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 KSP Acquisition on April 2, 2021.
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 is calculated as the excess of the consideration transferred and fair value of the non-controlling interests over the net assets recognized. Of the total goodwill acquired in connection with the KSP Acquisition, $40.8 million was allocated to the Company’s Generics segment and $2.7 million was allocated to the Specialty segment.
4. Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is recognized when the Company transfers control of its products to the customer, which typically occurs at a point-in-time, either 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.
Concentration of Revenue
The following table summarizes revenues from each of our customers which individually accounted for 10% or more of our total net revenues:
Three Months Ended March 31,
20222021
Customer A19 %20 %
Customer B18 %19 %
Customer C23 %26 %
Disaggregated Revenue
The Company's significant therapeutic classes for its Generics and Specialty segments and sales channels for its AvKARE segment, as determined based on net revenue for the three months ended March 31, 2022 and 2021 are set forth below (in thousands):
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Three Months Ended March 31,
20222021
Generics
Anti-Infective$6,245 $5,913 
Hormonal/ Allergy96,368 106,703 
Antiviral (1)
10,571 (7,941)
Central Nervous System81,125 96,291 
Cardiovascular System23,453 35,311 
Gastroenterology16,620 19,458 
Oncology17,208 19,030 
Metabolic Disease/Endocrine11,233 6,557 
Respiratory5,665 8,178 
Dermatology13,477 12,878 
Other therapeutic classes35,360 9,731 
International and other422 399 
Total Generics net revenue317,747 312,508 
Specialty
Hormonal/ Allergy19,419 16,796 
Central Nervous System58,168 67,711 
Gastroenterology70  
Other therapeutic classes7,429 11,424 
Total Specialty net revenue85,086 95,931 
AvKARE
Distribution60,263 45,499 
Government Label24,459 31,072 
Institutional6,315 5,179 
Other3,763 2,916 
Total AvKARE net revenue94,800 84,666 
Total net revenue$497,633 $493,105 
(1) Antiviral net revenue for the three months ended March 31, 2021 reflected lower demand and increased returns activity for Oseltamivir (generic Tamiflu®) above historical levels due to decreased influenza activity during the COVID-19 pandemic.

A rollforward of the major categories of sales-related deductions for the three months ended March 31, 2022 is as follows (in thousands):
Contract
Charge - Backs
and Sales
Volume
Allowances
Cash Discount
Allowances
Accrued
Returns
Allowance
Accrued
Medicaid and
Commercial
Rebates
Balance at December 31, 2021$503,902 $23,642 $161,978 $85,737 
Provision related to sales recorded in the period728,830 24,852 19,207 18,452 
Credits/payments issued during the period(861,717)(25,920)(25,629)(35,313)
Balance at March 31, 2022$371,015 $22,574 $155,556 $68,876 
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5. Alliance and Collaboration
The Company has entered into several alliance, collaboration, license, distribution and similar agreements with respect to certain of its products and services with third-party pharmaceutical companies. The consolidated statements of operations include revenue recognized under agreements the Company has entered into to develop marketing and/or distribution relationships with its partners to fully leverage the technology platform and revenue recognized under development agreements which generally obligate the Company to provide research and development services over multiple periods. The Company's significant arrangements are discussed below.
Biosimilar Licensing and Supply Agreement
On May 7, 2018, the Company entered into a licensing and supply agreement with Mabxience S.L. for its biosimilar candidate for Avastin® (bevacizumab). The supply agreement was subsequently amended on March 2, 2021 and the licensing agreement was amended on March 4, 2021. The Company will be the exclusive partner in the U.S. market. The Company will pay development and regulatory milestone payments as well as commercial milestone payments on reaching pre-agreed sales targets in the market to Mabxience, up to $78.0 million. For the three months ended March 31, 2021, the Company expensed a milestone of $2.0 million to research and development expense under this agreement (none for the three months ended March 31, 2022).
On April 13, 2022, the Food and Drug Administration (“FDA”) approved the Company’s biologics license application for bevacizumab-maly, a biosimilar referencing Avastin®. In connection with this regulatory approval, the Company incurred a milestone payment of $10 million in the second quarter of 2022.
Agreements with Kashiv Biosciences, LLC
For detail on the Company’s related party agreements with Kashiv Biosciences, LLC, refer to Note 15. Related Party Transactions in this Form 10-Q and the Company’s 2021 Annual Report on Form 10-K
6. (Loss) Earnings per Share
Basic (loss) earnings per share of the Company’s class A common stock is computed by dividing net (loss) income attributable to Amneal Pharmaceuticals, Inc. by the weighted-average number of shares of class A common stock outstanding during the period. Diluted (loss) earnings per share of class A common stock is computed by dividing net (loss) income attributable to Amneal Pharmaceuticals, Inc. by the weighted-average number of shares of class A common stock outstanding, adjusted to give effect to potentially dilutive securities.
The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted (loss) earnings per share of class A common stock (in thousands, except per share amounts):
Three Months Ended
March 31,
20222021
Numerator:
Net (loss) income attributable to Amneal Pharmaceuticals, Inc.$(2,156)$6,706 
Denominator:
Weighted-average shares outstanding - basic149,892 148,013 
Effect of dilutive securities:
Stock options 792 
Restricted stock units 2,415 
Weighted-average shares outstanding - diluted
149,892 151,220 
Net (loss) earnings per share attributable to Amneal Pharmaceuticals, Inc.'s class A common stockholders:
Basic$(0.01)$0.05 
Diluted$(0.01)$0.04 
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Shares of the Company's class B common stock do not share in the earnings or losses of the Company and, therefore, are not participating securities. As such, separate presentation of basic and diluted (loss) earnings per share of class B common stock under the two-class method has not been presented.
The following table presents potentially dilutive securities excluded from the computations of diluted (loss) earnings per share of class A common stock (in thousands):
Three Months Ended
March 31,
20222021
Stock options
3,035 
(1)
347 
(3)
Restricted stock units
11,430 
(1)
 

Performance stock units
7,947 
(1)
5,124 
(4)
Shares of class B common stock152,117 
(2)
152,117 
(2)
(1)Excluded from the computation of diluted loss per share of class A common stock because the effect of their inclusion would have been anti-dilutive since there was a net loss attributable to the Company for the three months ended March 31, 2022.
(2)Shares of class B common stock are considered potentially dilutive shares of class A common stock. Shares of class B common stock have been excluded from the computations of diluted (loss) earnings per share because the effect of their inclusion would have been anti-dilutive under the if-converted method.   
(3)Excluded from the computation of diluted earnings per share of class A common stock because the exercise price of the stock options exceeded the average market price of the class A common stock during the periods (out-of-the-money.
(4)Excluded from the computation of diluted earnings per share of class A common stock because the performance vesting conditions were not met.

7. Income Taxes
For the three months ended March 31, 2022, the Company’s (benefit from) provision for income taxes and effective tax rates were $(3.5) million and 34.9%, respectively, compared to $0.4 million and 2.4%, respectively, for the three months ended March 31, 2021. The period-over-period change in the (benefit from) provision for income taxes was primarily related to an Internal Revenue Service examination and Joint Committee review of the 2012-2018 federal income tax returns, which enabled the Company to recognize previously unrecognized tax benefits.
As of September 30, 2019, the Company established a valuation allowance based upon all available objective and verifiable evidence both positive and negative, including historical levels of pre-tax income (loss) both on a consolidated basis and tax reporting entity basis, legislative developments, expectations and risks associated with estimates of future pre-tax income, and prudent and feasible tax planning strategies. The Company estimated that as of September 30, 2019, it had generated a cumulative consolidated three-year pre-tax loss, which continued as of December 31, 2021.  As a result of the initial September 30, 2019 and December 31, 2021 analyses, the Company determined that it remained more likely than not that it would not realize the benefits of its gross deferred tax assets (“DTAs”) and, therefore, maintained its valuation allowance. As of December 31, 2021, this valuation allowance was $416.6 million, and it reduced the carrying value of these gross DTAs, net of the impact of the reversal of taxable temporary differences, to zero. As of March 31, 2022, based on its evaluation of available positive and negative evidence, the Company maintained its position with respect to the valuation allowance.
The Company entered into a tax receivable agreement (“TRA”) for which it is generally required to pay the other holders of Amneal Common Units 85% of the applicable tax savings, if any, in U.S. federal and state income tax that it is deemed to realize as a result of certain tax attributes of their Amneal Common Units sold to the Company (or exchanged in a taxable sale) and that are created as a result of (i) the sales of their Amneal Common Units for shares of class A common stock and (ii) tax benefits attributable to payments made under the TRA.  In conjunction with the valuation allowance recorded on the DTAs at September 30, 2019, the Company reversed the TRA liability.
The projection of future taxable income involves significant judgment. Actual taxable income may differ from the Company’s estimates, which could significantly impact the timing of the recognition of the contingent liability under the TRA. As noted
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above, the Company has determined it is more-likely-than-not it will be unable to utilize all of its DTAs subject to the TRA; therefore, as of March 31, 2022, the Company has not recognized the contingent liability under the TRA related to the tax savings it may realize from common units sold or exchanged. If utilization of these DTAs becomes more likely than not in the future, at such time, Amneal will recognize a liability under the TRA as a result of basis adjustments under Internal Revenue Code Section 754. As of March 31, 2022, the contingent liability associated with the TRA was approximately $206.3 million.
The timing and amount of any payments under the TRA may vary depending upon a number of factors, including the timing and number of Amneal Common Units sold or exchanged for the Company's class A common stock, the price of the Company's class A common stock on the date of sale or exchange, the timing and amount of the Company's taxable income, and the tax rate in effect at the time of realization of the Company's taxable income (the TRA liability is determined based on a percentage of the corporate tax savings from the use of the TRA's attributes). Further sales or exchanges occurring subsequent to March 31, 2022 could result in future Amneal tax deductions and obligations to pay 85% of such benefits to the holders of Amneal Common Units. These obligations could be incremental to and substantially larger than the approximate $206.3 million contingent liability as of March 31, 2022 described above. Under certain conditions, such as a change of control or other early termination event, the Company could be obligated to make TRA payments in advance of tax benefits being realized. Payments could also be in excess of the tax savings that the Company may ultimately realize.

Any future recognition of these TRA liabilities will be recorded through charges in the Company’s consolidated statements of operations.  However, if the tax attributes are not utilized in future years, it is reasonably possible no amounts would be paid under the TRA.  Should the Company determine that a DTA with a valuation allowance is realizable in a subsequent period, the related valuation allowance will be reversed and if a resulting TRA payment is determined to be probable, a corresponding TRA liability will be recorded.
8. Trade Accounts Receivable, Net
Trade accounts receivable, net was comprised of the following (in thousands):
March 31,
2022
December 31,
2021
Gross accounts receivable$933,577 $1,191,792 
Allowance for credit losses(1,679)(1,665)
Contract charge-backs and sales volume allowances(371,015)(