UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


~~(Mark one)~~
x			QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2023~~March 31, 2024


o			TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number 001-31812

ANI PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)


Delaware			58-2301143
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification Number)

210 Main Street West

Baudette, Minnesota 56623

(Address of principal executive offices)

(218) 634-3500

(Registrant’s telephone number including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

Trading Symbol(s)

Name of each exchange on which registered:

Common Stock

ANIP

Nasdaq Global Market

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 x No o

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 x No o

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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filero	x	Accelerated filer	xo

Non-accelerated filer	o	Smaller reporting company	o

	Emerging growth company	o

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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of ~~August 2, 2023~~May 3, 2024 there were ~~20,280,798~~20,961,649 shares of common stock and 10,864 shares of class C special stock of the registrant outstanding.

Table of Contents

ANI PHARMACEUTICALS, INC.

FORM 10-Q — Quarterly Report

For the Quarterly Period Ended ~~June 30, 2023~~March 31, 2024

TABLE OF CONTENTS


		Page
PART I —FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (unaudited)	5
	Condensed Consolidated Balance Sheets — As of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023	65
	Condensed Consolidated Statements of Operations — For the Three ~~and Six~~ Months Ended March 31, 2024 and 2023	6
	Condensed Consolidated Statements of Comprehensive Income ~~June 30~~, — For the Three Months Ended March 31, 2024 and 2023 ~~and 2022~~	7
	~~Condensed Consolidated Statements of Comprehensive Income (Loss) — For the Three~~ ~~and Six~~ ~~Months Ended~~ ~~June 30, 2023 and 2022~~	8
	Condensed Consolidated Statements of Changes in Mezzanine Equity and Stockholders’ Equity — For the Three ~~and Six~~ Months Ended ~~June 30~~,March 31, 2024 and 2023 ~~and 2022~~	98
	Condensed Consolidated Statements of Cash Flows — For the ~~Six~~Three Months Ended March 31, 2024 and 202 ~~June 30, 2023 and 2022~~3	119
	Notes to Condensed Consolidated Financial Statements	1310
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3834
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4943
Item 4.	Controls and Procedures	5043
PART II —OTHER INFORMATION
Item 1.	Legal Proceedings	5043
Item 1A.	Risk Factors	5044
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5244
Item 3.	Defaults upon Senior Securities	5244
Item 4.	Mine Safety Disclosures	5244
Item 5.	Other Information	5244
Item 6.	Exhibits	5244
Signatures		5446

Table of Contents

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q and certain information incorporated herein by reference contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such statements include, but are not limited to, statements about future operations, strategies and growth potential, the revenue potential (licensing, royalty and sales) of products we sell, development timelines, expected timeframe for submission of new drug applications, abbreviated new drug applications, or supplemental new drug applications to the U.S. Food and Drug Administration (the “FDA”), pipeline or potential markets for our products, selling and marketing strategies and associated costs to support the sales of Purified Cortrophin® Gel (Repository Corticotropin Injection USP) (“Cortrophin Gel”), impact of accounting principles, litigation expenses, liquidity and capital resources, the impact of ~~the novel coronavirus (“COVID-19”)~~ global ~~pandemic~~pandemics on our business, and other statements that are not historical in nature, particularly those that utilize terminology such as “anticipates,” “will,” “expects,” “plans,” “potential,” “future,” “believes,” “intends,” “continue,” other words of similar meaning, derivations of such words, and the use of future dates. Such forward-looking statements are based on the reasonable beliefs of our management as well as assumptions made by and information currently available to our management. Readers should not put undue reliance on these forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified; therefore, our actual results may differ materially from those described in any forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in our periodic reports filed with the U.S. Securities and Exchange Commission (the “SEC”), including those discussed in the “Risk Factors” section in Part I, Item 1A. of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2022~~2023 and the following factors:

•~~risks~~Cortrophin Gel is our first rare disease pharmaceutical product. To the extent we are not able to continue to achieve commercial success with this product, including expanding the market and gaining market share, our business, financial condition, and results of operations will be negatively impacted;

•our approved products, including Cortrophin Gel, may not achieve commercialization at levels of market acceptance that ~~we may face with respect~~will continue to ~~importing raw materials~~allow us to achieve profitability;

•acquisitions and investments could disrupt our business and harm our financial position and operating results;

•the limited number of suppliers for our active pharmaceutical ingredients (“API”) could result in lengthy delays in ~~delivery of raw materials and other ingredients and supplies necessary for the manufacture of our products from both domestic and overseas sources due~~production if we need to ~~supply chain disruptions or for any other reason;~~change suppliers;

•delays or failure in obtaining and maintaining approvals by the FDA of the products we sell;

•changes in policy or actions that may be taken by the FDA and other regulatory agencies, including drug recalls;

•~~the ability of our manufacturing partners to meet our product demands and timelines;~~

•~~our dependence on single source suppliers of ingredients due to the time and cost to validate a second source of supply;~~

•acceptance of our products at levels that will allow us to achieve profitability;

•our ability to develop, license or acquire, and commercialize new products;

•the level of competition we face and the legal, regulatory and/or legislative strategies employed by our competitors to prevent or delay competition from generic alternatives to branded products;

•our ability to protect our intellectual property rights;

•the impact of legislative or regulatory reform on the pricing for pharmaceutical products;

•the impact of any litigation to which we are, or may become, a party;

•our ability, and that of our suppliers, development partners, and manufacturing partners, to comply with laws, regulations and standards that govern or affect the pharmaceutical and biotechnology industries;

•our ability to maintain the services of our key executives and other personnel;

•whether we experience disruptions to our operations resulting from the closure of our Oakville, Ontario manufacturing plant, including the transition of certain products manufactured there to our other facilities which has been completed, or have difficulties finding a buyer for the plant and property; and

•general business and economic conditions, such as inflationary pressures, geopolitical conditions including, but not limited to, the conflict between Russia and the Ukraine, the conflict between Israel and Gaza, conflicts related to the attacks on cargo ships in the Red Sea, and the effects and duration of outbreaks of public health ~~emergencies, such as COVID-19.~~emergencies.

~~Table of~~ ~~Contents~~

These factors should not be construed as exhaustive and should be read in conjunction with our other disclosures, including but not limited to our Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, including the factors described in “Item 1A. Risk Factors.” Other risks may be described from time to time in our filings made under the securities laws, including our quarterly reports on Form 10-Q and our current reports on Form 8-K. New risks emerge from time to time. It is not possible for our management to predict all risks. The forward-looking statements contained in this document are made only as of the date of this document. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Table of Contents

The Company may use its investor relations website as a distribution channel of material company information. Financial and other important information regarding the Company is routinely posted on and accessible through the Company’s investor relations website. We encourage investors and others interested in our Company to review the information we post on our investor relations website in addition to filings with the SEC, press releases, public conference calls and webcasts. Information contained on the Company’s website is not included as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

~~NOTE REGARDING TRADEMARKS~~

~~Apexicon®, Cortenema®, Purified Cortrophin® Gel, Inderal® LA, Inderal® XL, InnoPran XL®, Lithobid®, Reglan®, Vancocin®, and Veregen®are registered trademarks subject to trademark protection and are owned by ANI Pharmaceuticals, Inc. and its consolidated subsidiaries. Cortrophin-Zinc~~TM is a trademark owned by ANI Pharmaceuticals, Inc. and its consolidated subsidiaries pending registration. Atacand® and Atacand HCT® are the property of AstraZeneca AB and are licensed to ANI Pharmaceuticals, Inc. for U.S. sales of those products. Arimidex® and Casodex® are the property of AstraZeneca UK Limited and are licensed to ANI Pharmaceuticals, Inc. for U.S. sales of those products. Oxistat® is the property of Fougera Pharmaceuticals Inc. and licensed to ANI Pharmaceuticals, Inc. for U.S. sales of Oxistat® Lotion. Pandel® is property of Taisho Pharmaceutical Co, Ltd. and licensed to ANI Pharmaceuticals for U.S. sales of Pandel® creme.

Table of Contents

Part I — FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (unaudited)

ANI PHARMACEUTICALS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(unaudited)


		June 30, 2023		December 31, 2022
	March 31, 2024						March 31, 2024	December 31, 2023
Assets	Assets

Current Assets
Current Assets
Current Assets	Current Assets
Cash and cash equivalents	Cash and cash equivalents	$	161,707	$	48,228
Current restricted cash		—		5,006
Accounts receivable, net of $89,427 and $161,052 of adjustments for chargebacks and other allowances at June 30, 2023 and December 31, 2022, respectively		172,925		165,438
Cash and cash equivalents
Cash and cash equivalents
Accounts receivable, net of $91,825 and $97,262 of adjustments for chargebacks and other allowances at March 31, 2024 and December 31, 2023, respectively
Inventories	Inventories	104,323		105,355
Prepaid income taxes		4,088		3,827
Assets held for sale	Assets held for sale	8,020		8,020
Prepaid expenses and other current assets	Prepaid expenses and other current assets	8,248		8,387
Investment in equity securities
Total Current Assets	Total Current Assets	459,311		344,261
Non-current Assets	Non-current Assets
Property and equipment, net
Property and equipment, net
Property and equipment, net	Property and equipment, net	44,371		43,246
Deferred tax assets, net of deferred tax liabilities and valuation allowance	Deferred tax assets, net of deferred tax liabilities and valuation allowance	81,500		81,363
Intangible assets, net	Intangible assets, net	230,299		251,635
Goodwill	Goodwill	28,221		28,221
Derivatives and other non-current assets	Derivatives and other non-current assets	15,639		11,361
Total Assets	Total Assets	$	859,341	$	760,087

Liabilities, Mezzanine Equity, and Stockholders’ Equity	Liabilities, Mezzanine Equity, and Stockholders’ Equity
Current Liabilities	Current Liabilities
Current Liabilities
Current Liabilities
Current debt, net of deferred financing costs
Current debt, net of deferred financing costs
Current debt, net of deferred financing costs	Current debt, net of deferred financing costs	$	850	$	850
Accounts payable	Accounts payable	28,505		29,305
Accrued royalties	Accrued royalties	9,885		9,307
Accrued compensation and related expenses	Accrued compensation and related expenses	11,493		10,312
Accrued government rebates	Accrued government rebates	11,971		10,872
Income taxes payable
Returned goods reserve	Returned goods reserve	29,798		33,399
Current contingent consideration	Current contingent consideration	25,025		—
Accrued expenses and other	Accrued expenses and other	5,338		5,394
Total Current Liabilities	Total Current Liabilities	122,865		99,439

Non-current Liabilities	Non-current Liabilities
Non-current debt, net of deferred financing costs and current component
Non-current debt, net of deferred financing costs and current component
Non-current debt, net of deferred financing costs and current component	Non-current debt, net of deferred financing costs and current component	285,244		285,669
Non-current contingent consideration	Non-current contingent consideration	12,029		35,058
Other non-current liabilities	Other non-current liabilities	4,731		1,381
Total Liabilities	Total Liabilities	$	424,869	$	421,547

Commitments and Contingencies (Note 12)	Commitments and Contingencies (Note 12)					Commitments and Contingencies (Note 12)

Mezzanine Equity	Mezzanine Equity
Convertible Preferred Stock, Series A, $0.0001 par value, 1,666,667 shares authorized; 25,000 shares issued and outstanding at June 30, 2023 and December 31, 2022		24,850		24,850

Convertible Preferred Stock, Series A, $0.0001 par value, 1,666,667 shares authorized; 25,000 shares issued and outstanding at March 31, 2024 and December 31, 2023
Convertible Preferred Stock, Series A, $0.0001 par value, 1,666,667 shares authorized; 25,000 shares issued and outstanding at March 31, 2024 and December 31, 2023
Convertible Preferred Stock, Series A, $0.0001 par value, 1,666,667 shares authorized; 25,000 shares issued and outstanding at March 31, 2024 and December 31, 2023
Stockholders’ Equity	Stockholders’ Equity
Common Stock, $0.0001 par value, 33,333,334 shares authorized; 20,535,782 shares issued and 20,287,425 outstanding at June 30, 2023; 17,643,497 shares issued and 17,494,466 shares outstanding at December 31, 2022		2		1
Class C Special Stock, $0.0001 par value, 781,281 shares authorized; 10,864 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively		—		—
Preferred Stock, $0.0001 par value, 1,666,667 shares authorized; 0 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively		—		—
Treasury stock, 248,357 shares of common stock, at cost, at June 30, 2023 and 149,031 shares of common stock, at cost, at December 31, 2022		(9,180)		(5,094)
Common Stock, $0.0001 par value, 33,333,334 shares authorized; 21,373,266 shares issued and 20,980,307 outstanding at March 31, 2024; 20,730,896 shares issued and 20,466,953 shares outstanding at December 31, 2023
Common Stock, $0.0001 par value, 33,333,334 shares authorized; 21,373,266 shares issued and 20,980,307 outstanding at March 31, 2024; 20,730,896 shares issued and 20,466,953 shares outstanding at December 31, 2023
Common Stock, $0.0001 par value, 33,333,334 shares authorized; 21,373,266 shares issued and 20,980,307 outstanding at March 31, 2024; 20,730,896 shares issued and 20,466,953 shares outstanding at December 31, 2023
Class C Special Stock, $0.0001 par value, 781,281 shares authorized; 10,864 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively
Preferred Stock, $0.0001 par value, 1,666,667 shares authorized; 0 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively
Treasury stock, 392,959 shares of common stock, at cost, at March 31, 2024 and 263,943 shares of common stock, at cost, at December 31, 2023
Additional paid-in capital	Additional paid-in capital	495,488		403,901
Accumulated deficit	Accumulated deficit	(90,414)		(97,286)
Accumulated other comprehensive income, net of tax	Accumulated other comprehensive income, net of tax	13,726		12,168
Total Stockholders’ Equity	Total Stockholders’ Equity	409,622		313,690

Total Liabilities, Mezzanine Equity, and Stockholders’ Equity	Total Liabilities, Mezzanine Equity, and Stockholders’ Equity	$	859,341	$	760,087

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

ANI PHARMACEUTICALS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)


	Three Months Ended March 31,
	2024		2023
Net Revenues	$	137,430	$	106,786

Operating Expenses
Cost of sales (excluding depreciation and amortization)	49,157		37,708
Research and development	10,511		5,924
Selling, general, and administrative	48,021		36,468
Depreciation and amortization	14,686		14,700
Contingent consideration fair value adjustment	90		961
Restructuring activities	—		1,130
Gain on sale of building	(5,347)		—

Total Operating Expenses, net	117,118		96,891

Operating Income	20,312		9,895

Other Income (Expense), net
Unrealized gain on investment in equity securities	9,655		—
Interest expense, net	(4,600)		(7,696)
Other expense, net	(32)		(34)

Income Before Income Tax Expense	25,335		2,165

Income tax expense	7,128		726

Net Income	$	18,207	$	1,439

Dividends on Series A Convertible Preferred Stock	(406)		(406)

Net Income Available to Common Shareholders	$	17,801	$	1,033

Basic and Diluted Income Per Share:
Basic Income Per Share	$	0.84	$	0.06
Diluted Income Per Share	$	0.82	$	0.06

Basic Weighted-Average Shares Outstanding	19,099		16,392
Diluted Weighted-Average Shares Outstanding	19,422		16,531

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

ANI PHARMACEUTICALS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of ~~Operations~~Comprehensive Income

(in ~~thousands, except per share amounts)~~thousands)

(unaudited)

Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Net Revenues $ 116,547 $ 73,855 $ 223,333 $ 138,332
Operating Expenses
Cost of sales (excluding depreciation and amortization) 42,284 35,294 79,992 69,565
Research and development 7,374 4,165 13,298 9,439
Selling, general, and administrative 38,760 31,958 75,228 60,775
Depreciation and amortization 14,690 13,764 29,390 28,321
Contingent consideration fair value adjustment 1,035 (1,095) 1,996 (342)
Restructuring activities 2 2,570 1,132 2,570
Intangible asset impairment charge — 112 — 112
Total Operating Expenses 104,145 86,768 201,036 170,440
Operating Income (Loss) 12,402 (12,913) 22,297 (32,108)
Other Expense, net
Interest expense, net (7,100) (6,669) (14,796) (13,282)
Other (expense) income, net (53) 764 (87) 675
Income (Loss) Before Income Tax Benefit 5,249 (18,818) 7,414 (44,715)
Income tax benefit 996 3,895 270 9,662
Net Income (Loss) $ 6,245 $ (14,923) $ 7,684 $ (35,053)
Dividends on Series A Convertible Preferred Stock (407) (407) (813) (812)
Net Income (Loss) Available to Common Shareholders $ 5,838 $ (15,330) $ 6,871 $ (35,865)
Basic and Diluted Income (Loss) Per Share:
Basic Income (Loss) Per Share $ 0.30 $ (0.94) $ 0.36 $ (2.21)
Diluted Income (Loss) Per Share $ 0.29 $ (0.94) $ 0.36 $ (2.21)
Basic Weighted-Average Shares Outstanding 17,688 16,272 17,044 16,205
Diluted Weighted-Average Shares Outstanding 17,855 16,272 17,177 16,205


	Three Months Ended March 31,
	2024		2023
Net Income	$	18,207	$	1,439

Other comprehensive income, net of tax:
Foreign currency translation adjustment	(97)		107
Gain (loss) on interest rate swap	646		(1,143)
Total other comprehensive income, net of tax	549		(1,036)
Total comprehensive income, net of tax	$	18,756	$	403

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

ANI PHARMACEUTICALS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of ~~Comprehensive Income (Loss)~~Changes in Mezzanine Equity and Stockholders’ Equity

For the Three Months Ended March 31, 2024 and 2023

(in thousands)

(unaudited)

Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Net Income (Loss) $ 6,245 $ (14,923) $ 7,684 $ (35,053)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment (17) — 90 —
Gain on interest rate swap 2,612 2,718 1,469 8,485
Total other comprehensive income, net of tax 2,595 2,718 1,559 8,485
Total comprehensive income (loss), net of tax $ 8,840 $ (12,205) $ 9,243 $ (26,568)


	Mezzanine Equity Series A Convertible Preferred Stock		Mezzanine Equity Series A Convertible Preferred Stock Shares	Common Stock Par Value		Common Stock Shares	Class C Special Stock		Additional Paid-in Capital		Treasury Stock Shares	Treasury Stock		Accumulated Other Comprehensive Income, Net of Tax		Accumulated Deficit		Total Mezzanine Equity and Stockholders' Equity
Balance, December 31, 2022	$	24,850	25	$	1	17,644	$	—	$	403,900	149	$	(5,094)	$	12,167	$	(97,285)	$	338,539
Stock-based Compensation Expense	—		—	—		—	—		4,338		—	—		—		—		4,338
Treasury Stock Purchases for Restricted Stock Vests	—		—	—		—	—		—		85	(3,549)		—		—		(3,549)
Issuance of Common Shares upon Stock Option and ESPP Exercise	—		—	—		5	—		157		—	—		—		—		157
Issuance of Restricted Stock Awards	—		—	—		520	—		—		—	—		—		—		—
Issuance of Performance Stock Units	—		—	—		85	—		—		—	—		—		—		—
Restricted Stock Awards Forfeitures	—		—	—		(28)	—		—		—	—		—		—		—
Dividends on Series A Convertible Preferred Stock	—		—	—		—	—		—		—	—		—		(406)		(406)
Other Comprehensive Income	—		—	—		—	—		—		—	—		(1,036)		—		(1,036)
Net Income	—		—	—		—	—		—		—	—		—		1,439		1,439
Balance, March 31, 2023	$	24,850	25	$	1	18,226	$	—	$	408,395	234	$	(8,643)	$	11,131	$	(96,252)	$	339,482

Balance, December 31, 2023	$	24,850	25	$	2	20,731	$	—	$	514,103	264	$	(10,081)	$	8,857	$	(80,132)	$	457,599
Stock-based Compensation Expense	—		—	—		—	—		6,934		—	—		—		—		6,934
Treasury Stock Purchases for Restricted Stock Vests	—		—	—		—	—		—		129	(8,661)		—		—		(8,661)
Issuance of Common Shares upon Stock Option and ESPP Exercise	—		—	—		31	—		2,591		—	—		—		—		2,591
Issuance of Restricted Stock Awards	—		—	—		542	—		—		—	—		—		—		—
Issuance of Performance Stock Units	—		—	—		74	—		—		—	—		—		—		—
Restricted Stock Awards Forfeitures	—		—	—		(5)	—		—		—	—		—		—		—
Dividends on Series A Convertible Preferred Stock	—		—	—		—	—		—		—	—		—		(406)		(406)
Other Comprehensive Income	—		—	—		—	—		—		—	—		549		—		549
Net Income	—		—	—		—	—		—		—	—		—		18,207		18,207
Balance, March 31, 2024	$	24,850	25	$	2	21,373	$	—	$	523,628	393	$	(18,742)	$	9,406	$	(62,331)	$	476,813

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

ANI PHARMACEUTICALS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of ~~Changes in Mezzanine Equity and Stockholders’ Equity~~

~~For the Three Months Ended June 30, 2023 and 2022~~Cash Flows

(in thousands)

(unaudited)

Mezzanine Equity
Series A Convertible
Preferred
Stock Mezzanine Equity
Series A Convertible
Preferred Stock
Shares Common
Stock
Par Value Common
Stock
Shares Class C
Special
Stock Additional
Paid-in
Capital Treasury
Stock
Shares Treasury
Stock Accumulated Other
Comprehensive Gain,
Net of Tax Accumulated
Deficit Total Mezzanine
Equity and
Stockholders'
Equity
Balance, March 31, 2022 $ 24,850 25 $ 1 17,374 $ — $ 391,084 123 $ (4,253) $ 2,712 $ (68,300) $ 346,094
Stock-based Compensation Expense — — — — — 3,756 — — — — 3,756
Treasury Stock Purchases for Restricted Stock Vests — — — — — — 16 (483) — — (483)
Issuance of Common Shares upon Stock Option and ESPP Exercise — — — 8 — 203 — — — — 203
Issuance of Restricted Stock Awards — — — 208 — — — — — — —
Restricted Stock Awards Forfeitures — — — (24) — — — — — — —
Dividends on Series A Convertible Preferred Stock — — — — — — — — — (407) (407)
Other Comprehensive Income — — — — — — — — 2,718 — 2,718
Net Loss — — — — — — — — — (14,923) (14,923)
Balance, June 30, 2022 $ 24,850 25 $ 1 17,566 $ — $ 395,043 139 $ (4,736) $ 5,430 $ (83,630) $ 336,958
Balance, March 31, 2023 $ 24,850 25 $ 1 18,226 $ — $ 408,395 234 $ (8,643) $ 11,131 $ (96,252) $ 339,482
Stock-based Compensation Expense — — — — — 5,249 — — — — 5,249
Treasury Stock Purchases for Restricted Stock Vests — — — — — — 14 (537) — — (537)
Issuance of Common Shares upon Stock Option and ESPP Exercise — — — 40 — 1,289 — — — — 1,289
Issuance of Restricted Stock Awards — — — 104 — — — — — — —
Restricted Stock Awards Forfeitures — — — (18) — — — — — — —
Issuance of Common Stock in Public Offering — — 1 2,184 — 80,555 — — — — 80,556
Dividends on Series A Convertible Preferred Stock — — — — — — — — — (407) (407)
Other Comprehensive Income — — — — — — — — 2,595 — 2,595
Net Income — — — — — — — — — 6,245 6,245
Balance, June 30, 2023 $ 24,850 25 $ 2 20,536 $ — $ 495,488 248 $ (9,180) $ 13,726 $ (90,414) $ 434,472

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

~~ANI PHARMACEUTICALS, INC. AND SUBSIDIARIES~~

~~Condensed Consolidated Statements of Changes in Mezzanine Equity and Stockholders’ Equity~~

~~For the Six Months Ended June 30, 2023 and 2022~~

~~(in thousands)~~

~~(unaudited)~~

Mezzanine Equity
Series A Convertible
Preferred
Stock Mezzanine Equity
Series A Convertible
Preferred Stock
Shares Common
Stock
Par Value Common
Stock
Shares Class C
Special
Stock Additional
Paid-in
Capital Treasury
Stock
Shares Treasury
Stock Accumulated Other
Comprehensive
(Loss) Gain,
Net of Tax Accumulated
Deficit Total Mezzanine
Equity and
Stockholders'
Equity
Balance, December 31, 2021 $ 24,850 25 $ 1 16,913 $ — $ 387,844 83 $ (3,135) $ (3,055) $ (47,765) $ 358,740
Stock-based Compensation Expense — — — — — 6,993 — — — — 6,993
Treasury Stock Purchases for Restricted Stock Vests — — — — — — 56 (1,601) — — (1,601)
Issuance of Common Shares upon Stock Option and ESPP Exercise — — — 8 — 206 — — — — 206
Issuance of Restricted Stock Awards — — — 669 — — — — — — —
Restricted Stock Awards Forfeitures — — — (24) — — — — — — —
Dividends on Series A Convertible Preferred Stock — — — — — — — — — (812) (812)
Other Comprehensive Income — — — — — — — — 8,485 — 8,485
Net Loss — — — — — — — — — (35,053) (35,053)
Balance, June 30, 2022 $ 24,850 25 $ 1 17,566 $ — $ 395,043 139 $ (4,736) $ 5,430 $ (83,630) $ 336,958
Balance, December 31, 2022 $ 24,850 25 $ 1 17,644 $ — $ 403,900 149 $ (5,094) $ 12,167 $ (97,285) $ 338,539
Stock-based Compensation Expense — — — — — 9,587 — — — — 9,587
Treasury Stock Purchases for Restricted Stock Vests — — — — — — 99 (4,086) — — (4,086)
Issuance of Common Shares upon Stock Option and ESPP Exercise — — — 45 — 1,446 — — — — 1,446
Issuance of Restricted Stock Awards — — — 624 — — — — — — —
Issuance of Performance Stock Units — — — 67 — — — — — — —
Restricted Stock Awards Forfeitures — — — (28) — — — — — — —
Issuance of Common Stock in Public Offering — — 1 2,184 — 80,555 — — — — 80,556
Dividends on Series A Convertible Preferred Stock — — — — — — — — — (813) (813)
Other Comprehensive Income — — — — — — — — 1,559 — 1,559
Net Income — — — — — — — — — 7,684 7,684
Balance, June 30, 2023 $ 24,850 25 $ 2 20,536 $ — $ 495,488 248 $ (9,180) $ 13,726 $ (90,414) $ 434,472


	Three Months Ended March 31,
	2024		2023
Cash Flows From Operating Activities
Net income	$	18,207	$	1,439
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
Stock-based compensation	6,934		4,338
Deferred taxes	3,104		773
Depreciation and amortization	14,686		14,700
Unrealized gain on investment in equity securities	(9,655)		—
Non-cash operating lease expense	373		—
Non-cash interest	102		987
Contingent consideration fair value adjustment	90		961
Gain on sale of building	(5,347)		—
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable, net	(10,339)		(9,275)
Inventories	(2,641)		1,701
Prepaid expenses and other current assets	1,353		1,513
Accounts payable	11,526		3,105
Accrued royalties	(801)		(350)
Current income taxes payable	3,238		92
Accrued government rebates	(2,658)		(2,265)
Returned goods reserve	3,174		713
Accrued expenses, accrued compensation, and other	(13,077)		2,992
Net Cash and Cash Equivalents Provided by Operating Activities	18,269		21,424

Cash Flows From Investing Activities
Acquisition of product rights, intangible assets, and other related assets	—		(4)
Acquisition of property and equipment, net	(4,581)		(2,349)
Proceeds from the sale of building	13,514		—
Net Cash and Cash Equivalents Provided by (Used in) Investing Activities	8,933		(2,353)

Cash Flows From Financing Activities
Payments on borrowings under credit agreements	(750)		(750)
Series A convertible preferred stock dividends paid	(406)		(406)
Proceeds from stock option exercises and ESPP purchases	2,591		157
Treasury stock purchases for restricted stock vests	(8,661)		(3,549)
Payments on contingent consideration	(12,500)		—
Net Cash and Cash Equivalents Used in Financing Activities	(19,726)		(4,548)

Net Change in Cash, Cash Equivalents, and Restricted Cash	7,476		14,523
Cash, cash equivalents, and restricted cash, beginning of period	221,121		53,234
Cash and cash equivalents, end of period	$	228,597	$	67,757
Reconciliation of cash, cash equivalents, and restricted cash, beginning of period
Cash and cash equivalents	$	221,121	$	48,228
Restricted cash	—		5,006
Cash, cash equivalents, and restricted cash, beginning of period	$	221,121	$	53,234

Supplemental disclosure for cash flow information:
Cash paid for interest, net of amounts capitalized	$	7,946	$	4,293
Cash paid for income taxes	$	852	$	2,741
Supplemental non-cash investing and financing activities:
Property and equipment purchased and included in accounts payable	$	1,222	$	729

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

109

~~ANI PHARMACEUTICALS, INC. AND SUBSIDIARIES~~

~~Condensed Consolidated Statements of Cash Flows~~

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular Dollars in ~~thousands)~~

~~(unaudited~~
Six Months Ended June 30,
2023 2022
Cash Flows From Operating Activities
Net income (loss) $ 7,684 $ (35,053)
Adjustments to reconcile net income (loss) to net cash and cash equivalents (used in) provided by operating activities:
Stock-based compensation 9,587 6,993
Deferred taxes (137) (11,378)
Depreciation and amortization 29,390 28,731
Non-cash operating lease expense 61 —
Non-cash interest 1,973 1,969
Contingent consideration fair value adjustment 1,996 (342)
Asset impairment charges — 575
Gain on sale of ANDAs — (750)
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable, net (7,486) (21,884)
Inventories 1,032 (10,852)
Prepaid expenses and other current assets 1,449 1,563
Accounts payable (800) 4,047
Accrued royalties (577) 70
Current income taxes payable, net (261) 1,654
Accrued government rebates (1,099) 3,948
Returned goods reserve (3,601) (903)
Accrued expenses, accrued compensation, and other 2,839 1,186
Net Cash and Cash Equivalents Provided by (Used in) Operating Activities 42,050 (30,426)
Cash Flows From Investing Activities
Acquisition of Novitium Pharma LLC, net of cash acquired — (33)
Acquisition of product rights, IPR&D, and other related assets (4,329) (229)
Acquisition of property and equipment, net (4,850) (3,270)
Proceeds from the sale of long-lived assets — 750
Net Cash and Cash Equivalents Used in Investing Activities (9,179) (2,782)
Cash Flows From Financing Activities
Payments on borrowings under credit agreements (1,500) (1,500)
Series A convertible preferred stock dividends paid (813) (812)
Proceeds from stock option exercises and ESPP purchases 1,446 206
Proceeds from public offering 80,555 —
Treasury stock purchases for restricted stock vests (4,086) (1,601)
Net Cash and Cash Equivalents Provided by (Used in) Financing Activities 75,602 (3,707)
Net Change in Cash, Cash Equivalents, and Restricted Cash 108,473 (36,915)
Cash, cash equivalents, and restricted cash, beginning of period 53,234 105,301
Cash, cash equivalents, and restricted cash, end of period $ 161,707 $ 68,386
Reconciliation of cash, cash equivalents, and restricted cash, beginning of period
Cash and cash equivalents $ 48,228 $ 100,300
Restricted cash 5,006 5,001
Cash, cash equivalents, and restricted cash, beginning of period $ 53,234 $ 105,301
Reconciliation of cash, cash equivalents, and restricted cash, end of period
Cash and cash equivalents $ 161,707 $ 63,385
Restricted cash — 5,001
Cash, cash equivalents, and restricted cash, end of period $ 161,707 $ 68,386

Thousands, Except Share and per Share Data)

Supplemental disclosure for cash flow information:
Cash paid for interest, net of amounts capitalized $ 15,456 $ 11,400
Cash paid for income taxes $ 141 $ 124
Right-of-use assets obtained in exchange for lease obligations $ 4,499 $ —
Supplemental non-cash investing and financing activities:
Property and equipment purchased and included in accounts payable $ 539 $ 779

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

(Unaudited)

1. BUSINESS, PRESENTATION, AND RECENT ACCOUNTING PRONOUNCEMENTS

Overview

ANI Pharmaceuticals, Inc. and its consolidated subsidiaries (together, “ANI,” the “Company,” “we,” “us,” or “our”) is a diversified bio-pharmaceutical company serving patients in need by developing, manufacturing, and marketing ~~high quality~~ branded and generic prescription pharmaceuticals, including for diseases with high unmet medical need. ~~Our team~~The Company is focused on delivering growth by scaling up ~~our~~the Rare Disease business through the ~~successful~~ launch of ~~our~~its lead asset, Cortrophin Gel, strengthening ~~our~~its generics business with enhanced development capability, innovation in established brands and leveraging ~~our~~its U.S. based manufacturing capabilities. ~~Our~~The Company's three pharmaceutical manufacturing facilities, of which two are located in Baudette, Minnesota, and one is located in East Windsor, New Jersey, are together capable of producing oral solid dose products, as well as semi-solids, liquids and topicals, controlled substances, and potent products that must be manufactured in a fully-contained environment. ~~On June 2, 2022, we announced that we intended to cease~~The Company has ceased operations at our subsidiary in Oakville, Ontario, Canada ~~manufacturing plant by the end~~as of ~~the first quarter~~March 31, 2023. This action was part of ongoing initiatives to capture operational synergies following our acquisition of Novitium Pharma LLC (“Novitium”) in November 2021. ~~We previously~~The Company has fully completed the transition of the products manufactured or packaged in Oakville to one of ~~our~~the three ~~U.S.-based~~U.S. based manufacturing sites. ~~We are seeking to find potential buyers~~In February 2024, the Company entered into an agreement for the sale of the Oakville ~~site.~~site, for a price of $19.2 million Canadian Dollars, or approximately $14.2 million, based on the current exchange rate. The sale closed on March 28, 2024 (see Note 3).

~~Our~~The Company's operations are subject to certain risks and uncertainties including, among others, current and potential competitors with greater resources, dependence on significant customers, and possible fluctuations in financial results. The accompanying unaudited interim condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the ordinary course of business. The propriety of using the going-concern basis is dependent upon, among other things, the achievement of future profitable operations, the ability to generate sufficient cash from operations, and potential other funding sources, including cash on hand, to meet our obligations as they become due. We believe the going-concern basis is appropriate for the accompanying unaudited interim condensed consolidated financial statements based on our current operating plan and business strategy for the 12 months following the issuance of this report.

In May 2023, through a public offering, wethe Company completed the issuance and sale of 2,183,545 shares of ANI common stock, resulting in net proceeds after issuance costs of $80.6 million.

On November 19, 2021, the Company, as borrower, entered into a credit agreement (the “Credit Agreement”) with Truist Bank and other lenders, which provides for credit facilities consisting of (i) a senior secured term loan facility in an aggregate principal amount of $300.0 million (the “Term Facility”) and (ii) a senior secured revolving credit facility in an aggregate commitment amount of $40.0 million, which may be used for revolving credit loans, swingline loans and letters of credit (the “Revolving Facility,” and together with the Term Facility, the “Credit Facility”).

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). for interim financial information. In ~~our~~the opinion of management, the accompanying unaudited interim condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly ~~our~~the Company's financial position, results of operations, comprehensive income, ~~(loss),~~ and cash flows. The consolidated balance sheet at December 31, ~~2022~~2023 has been derived from audited financial statements as of that date. The unaudited interim condensed consolidated statements of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the U.S. Securities and Exchange Commission (the “SEC”). ~~We believe that the disclosures provided herein are adequate to make the information presented not misleading when~~Therefore, these unaudited interim condensed consolidated financial statements ~~are~~should be read in conjunction with the Company's audited financial statements and notes thereto previously distributed in ~~our~~the Company's Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 (the ~~“2022~~“2023 Form 10-K”).

, as filed with the SEC.

Principles of Consolidation

The unaudited interim condensed consolidated financial statements include the accounts of ANI Pharmaceuticals, Inc. and its subsidiaries. All intercompany accounts and transactions are eliminated in consolidation.

Foreign Currency

~~We have~~The Company has ceased operations at our subsidiary in Oakville, Ontario, Canada as of March 31, 2023. WeThe Company currently ~~have~~has a subsidiary located in India. The Canada-based subsidiary conducted its transactions in U.S. dollars and Canadian dollars, but its functional currency was the U.S. dollar. The ~~Indian-based~~India-based subsidiary generally conducts its transactions in Indian rupees, which is also its functional currency. The results of any non-U.S. dollar transactions and balances are remeasured in U.S. dollars at the applicable exchange rates during the period and resulting foreign currency transaction gains and losses are included in the determination of net income. ~~Our~~The gain or loss on transactions denominated in foreign currencies and the translation impact of local currencies to U.S. dollars was immaterial for the three ~~and six~~ months ended ~~June 30, 2023~~March 31, 2024 and ~~2022.~~2023. Unless otherwise noted, all references to “$” or “dollar” refer to the U.S. dollar. The Company’s asset and liability accounts are translated using the current exchange rate as of the balance sheet ~~date. Shareholders’~~date, except for shareholders’ equity accounts, which are translated using historical ~~rates at the balance sheet date.~~rates. Net revenues and expense accounts are translated using ~~a weighted~~an average exchange rate over the period ended on the balance sheet date. Adjustments resulting from the translation of the financial statements of the Company’s foreign subsidiaries into U.S. dollars are accumulated as a separate component of shareholders’ equity within accumulated other comprehensive income, net of tax.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. In the condensed consolidated financial statements, estimates are used for, but not limited to, variable consideration determined based on accruals for chargebacks, administrative fees and rebates, government rebates, returns and other allowances, income tax provision or benefit, deferred taxes and valuation allowance, stock-based compensation, revenue recognition, allowance for inventory obsolescence, valuation of financial instruments and intangible assets, accruals for contingent liabilities, including contingent consideration in acquisitions, fair value of long-lived assets, determination of right-of-use assets and lease liabilities, allowance for credit losses, and the depreciable lives of long-lived assets. Because of the uncertainties inherent in such estimates, actual results may differ from those estimates. Management periodically evaluates estimates used in the preparation of the financial statements for reasonableness.

Restructuring Activities

~~We define~~The Company defines restructuring activities to include costs directly associated with exit or disposal activities. Such costs include cash employee contractual severance and other termination benefits, one-time employee termination severance and benefits, contract termination charges, impairment and acceleration of depreciation associated with long-lived assets, and other exit or disposal costs. In general, ~~we record~~the Company records involuntary ~~employee- related~~employee-related exit and disposal costs when there is a substantive plan for employee severance and related payments are probable and estimable. For one-time termination benefits, including those with a service requirement, expense is recorded when the employees are entitled to receive such benefits and the amount can be reasonably estimated. Expense related to one-time termination benefits with a service requirement is recorded over time, as the service is completed. Contract termination fees and penalties, and other exit and disposal costs are generally recorded as incurred. Restructuring activities are recognized as an operating expense in ~~our~~the condensed consolidated statements of operations.

Investment in Equity Securities

The Company accounts for its investment in equity securities with a readily determinable fair value in accordance with the guidance in ASC 321, Investments – Equity Securities. The Company presents unrealized gains and losses related to the equity securities, within Unrealized gain on investment in equity securities in its unaudited condensed consolidated statements of operations. Fair values are obtained from quoted prices on the NASDAQ Stock Market, Inc. (“NASDAQ”).

Assets Held-for-Sale

The Company classifies assets held-for-sale if all held-for-sale criteria is met pursuant to ASC 360-10, Property, Plant and Equipment. Criteria include management commitment to sell the disposal group in its present condition and the sale being deemed probable of being completed within one year. Assets classified as held-for-sale are not depreciated and are measured at the lower of their carrying amount or fair value less cost to sell. The Company assesses the fair value of a disposal group, less any costs to sell, each reporting period it remains classified as held-for-sale and reports any subsequent changes as an adjustment to the carrying value of the disposal group, as long as the new carrying value does not exceed the initial carrying value of the disposal group. The Company determined that the Oakville, Ontario, Canada property met the held-for-sale criteria. As of December 31, 2023, approximately $8.0 million of assets held for sale were recorded on the consolidated balance sheets. The Oakville, Ontario property was sold on March 28, 2024, and therefore no longer exists as of March 31, 2024. See Note 3 to the condensed consolidated financial statements for additional information.

Recent Accounting Pronouncements

Recent Accounting Pronouncements Not Yet Adopted

~~In December 2022,~~From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ~~issued ASU 2022-06, which extended~~(“FASB”) or other standard setting bodies and are adopted by the ~~sunset date~~Company as of the ~~reference rate reform~~specified effective date. The Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

In November 2023, the FASB issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure requirements, primarily through enhanced disclosures related to significant segment expenses. The guidance in this ASU ~~848 from~~is effective for all public entities for fiscal years beginning after December ~~31, 2022~~15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The guidance is applied retrospectively to ~~December 31, 2024. We have not adopted~~all periods presented in the ~~guidance and are~~financial statements, unless it is impracticable. The Company is currently evaluating the ~~impact, if any,~~effect the adoption of this ASU may have on its disclosures in the notes to the consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes guidance to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. These amendments are effective for all public entities for fiscal periods beginning after December 15, 2024, with early adoption permitted. These amendments apply on a prospective basis, but entities have an option to apply it retrospectively for all periods presented. The Company does not expect that the adoption of this guidance will have a material impact on the consolidated financial statements.

Recent Securities and Exchange Commission Final Rules Issued but Not Yet Effective

On March 6, 2024, the SEC adopted new rules that will require registrants to disclose certain climate-related information in their annual reports. The final rule requires disclosure of, among other things: material climate-related risks and their material impacts; activities to mitigate or adapt to such risks; information about a registrant's board of directors' oversight of climate-related risks and management's role in managing material climate-related risks; and information on any climate-related targets or goals that are material to the registrant's business, results of operations, or financial condition. In addition, certain disclosures related to severe weather events and other natural conditions will be required in a registrant's audited financial statements. The required information about climate-related risks will also include disclosure of a registrant's greenhouse gas emissions. The Company will be subject to the applicable requirements of the final rule in our annual reports for fiscal years beginning on January 1, 2025. In April 2024, the SEC voluntarily stayed the rules pending judicial review. The Company is currently evaluating the potential impact of these rules on our consolidated financial ~~statements.~~statements and related disclosures.

1412

We have evaluated all other issued and unadopted Accounting Standards Updates and believe the adoption of these standards will not have a material impact on our condensed consolidated statements of operations, comprehensive income, balance sheets, or cash flows.

2. REVENUE RECOGNITION AND RELATED ALLOWANCES

Revenue Recognition

~~We recognize~~The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is recognized using the following steps:

•Identification of the contract, or contracts, with a customer;

•Identification of the performance obligations in the contract;

•Determination of the transaction price, including the identification and estimation of variable consideration;

•Allocation of the transaction price to the performance obligations in the contract; and

•Recognition of revenue when we satisfy a performance obligation.

~~We derive our revenues~~Revenues are primarily derived from sales of generic, rare disease, and established brand pharmaceutical products, royalties, and other pharmaceutical services. Revenue is recognized when ~~our~~ obligations under the terms of ~~our~~ contracts with customers are satisfied, which generally occurs when control of the products ~~we sell is~~sold are transferred to the customer. ~~We estimate variable~~Variable consideration is estimated after ~~considering~~the consideration of applicable information that is reasonably available. WeThe Company generally dodoes not have incremental costs to obtain contracts that would otherwise not have been incurred. ~~We do~~The Company does not adjust revenue for the promised amount of consideration for the effects of a significant financing component because our customers generally pay us within 100 days.

All revenue recognized in the accompanying unaudited interim condensed consolidated statements of operations is considered to be revenue from contracts with customers. The following table depicts the disaggregation of revenue:


			Three Months Ended						Six Months Ended
		Three Months Ended																Three Months Ended
Products and Services	Products and Services		June 30, 2023				June 30, 2022		June 30, 2023		June 30, 2022		Products and Services			March 31, 2024	March 31, 2023
(in thousands)	(in thousands)
Sales of generic pharmaceutical products
Sales of generic pharmaceutical products
Sales of generic pharmaceutical products	Sales of generic pharmaceutical products				$	63,317			$	49,863	$	127,030		$	98,970
Sales of established brand pharmaceutical products, royalties, and other pharmaceutical services	Sales of established brand pharmaceutical products, royalties, and other pharmaceutical services		28,926				13,790		55,669		27,868
Sales of rare disease pharmaceutical products	Sales of rare disease pharmaceutical products		24,304				10,202		40,634		11,494
Total net revenues	Total net revenues		$	116,547			$	73,855	$	223,333	$	138,332

Three Months Ended Six Months Ended
Timing of Revenue Recognition June 30,
2023 June 30,
2022 June 30,
2023 June 30,
2022
(in thousands)
Performance obligations transferred at a point in time $ 116,547 $ 73,324 $ 222,958 $ 137,235
Performance obligations transferred over time — 531 375 1,097
Total $ 116,547 $ 73,855 $ 223,333 $ 138,332


	Three Months Ended
Timing of Revenue Recognition	March 31, 2024		March 31, 2023
(in thousands)
Performance obligations transferred at a point in time	$	137,430	$	106,411
Performance obligations transferred over time	—		375
Total	$	137,430	$	106,786

In the three ~~and six~~ months ended ~~June 30,~~March 31, 2024 and 2023, ~~and 2022, we~~the Company did not incur, and therefore did not defer, any material incremental costs to obtain or fulfill contracts. ~~We recognized an increase~~The Company recognized a decrease of ~~$5.0~~$0.1 million to net revenue from performance obligations satisfied in prior periods during the ~~six~~three months ended ~~June 30,~~March 31, 2024, consisting primarily ofrevised estimates for variable consideration, including chargebacks, rebates, returns, and other allowances, related to prior period sales. We recognized an increase of $5.1 million to net revenue from performance obligations satisfied in prior periods during the three months ended March 31, 2023, consisting primarily of revised estimates for variable consideration, including chargebacks, rebates, returns, and other allowances, related to prior period sales.~~We recognized a decrease of $3.7 million to net revenue from performance obligations satisfied in prior periods during the six months ended June 30, 2022,~~ ~~consisting primarily of~~ ~~revised estimates for variable consideration, including chargebacks, rebates, returns, and other allowances, related to prior period sales.~~ AsAdditionally, as of ~~June 30, 2023~~March 31, 2024, and December 31, ~~2022, we did not have any contract assets related to revenue recognized based on percentage of completion but not yet billed. Our~~2023, there was no deferred revenue ~~balance as of June 30, 2023, December 31, 2022, and December 31, 2021 was immaterial. For~~recorded on the ~~three and six months ended June 30, 2023, we did not recognize deferred revenue.~~ ~~For the three and six months ended June 30, 2022, we recognized less than $0.1 million of revenue that was included in deferred revenue as of December 31, 2021.~~ ~~Deferred revenue is included in accrued expenses and other in the unaudited interim~~ condensed consolidated balance ~~sheets.~~sheet.

As of ~~June 30, 2023,~~March 31, 2024, the aggregate amount of the transaction price allocated to the remaining performance obligations for all open contract manufacturing customer contracts was ~~$4.1~~$3.0 million, which consists of firm orders for contract manufactured products. ~~We will recognize~~The Company recognizes revenue for these performance obligations as they are satisfied, which is anticipated within six ~~months.~~months.

Variable consideration

Sales of ~~our~~ pharmaceutical products are subject to variable consideration due to chargebacks, government rebates, returns, administrative and other rebates, and cash discounts. Estimates for these elements of variable consideration require significant judgment.

The following table summarizes activity in the condensed consolidated balance sheets for accruals and allowances for the ~~six~~three months ended ~~June 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively:


		Accruals for Chargebacks, Returns, and Other Allowances
	Accruals for Chargebacks, Returns, and Other Allowances																Accruals for Chargebacks, Returns, and Other Allowances
(in thousands)	(in thousands)	Chargebacks		Government Rebates		Returns		Administrative Fees and Other Rebates		Prompt Payment Discounts		(in thousands)	Chargebacks	Government Rebates	Returns	Administrative Fees and Other Rebates		Prompt Payment Discounts
Balance at December 31, 2021		$	94,066	$	5,492	$	35,831	$	13,100	$	4,642
Accruals/Adjustments		320,191		9,356		15,057		20,701		10,494
Credits Taken Against Reserve		(274,714)		(5,408)		(15,989)		(19,283)		(8,938)
Balance at June 30, 2022 (1)		$	139,543	$	9,440	$	34,899	$	14,518	$	6,198

Balance at December 31, 2022	Balance at December 31, 2022	$	148,562	$	10,872	$	33,399	$	9,442	$	6,488
Accruals/Adjustments	Accruals/Adjustments	290,826		11,100		5,995		25,606		11,028
Credits Taken Against Reserve	Credits Taken Against Reserve	(362,253)		(10,001)		(9,596)		(25,177)		(12,653)
Balance at June 30, 2023 (1)		$	77,135	$	11,971	$	29,798	$	9,871	$	4,863
Balance at March 31, 2023 (1)

Balance at December 31, 2023
Balance at December 31, 2023
Balance at December 31, 2023
Accruals/Adjustments
Credits Taken Against Reserve
Balance at March 31, 2024 (1)

(1)Chargebacks and Prompt Payment Discounts are included as an offset to accounts receivable in the unaudited interim condensed consolidated balance sheets. Administrative Fees and Other Rebates are included as an offset to accounts receivable or as accrued expenses and other in the unaudited interim condensed consolidated balance sheets. Returns are included in returned goods reserve in the unaudited interim condensed consolidated balance sheets. Government Rebates are included in accrued government rebates in the unaudited interim condensed consolidated balance sheets.

Credit Concentration

~~Our~~ANI's customers are primarily wholesale distributors, chain drug stores, group purchasing organizations, and pharmaceutical companies.

During the three months ended ~~June 30, 2023, we had~~March 31, 2024, there were four customers that accounted for 10% or more of net revenues. During ~~the~~ ~~six months ended June 30, 2023 and~~ the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023, ~~we had~~there were three customers that accounted for 10% or more of net revenues. As of ~~June 30, 2023,~~March 31, 2024, accounts receivable from these customers ~~totaled~~ tot~~84%~~aled 81% of ~~accounts~~Accounts receivable, net.

The ~~three~~four customers represent the total percentage of net revenues as follows:


		Three Months Ended				Six Months Ended
		June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
	Three Months Ended														Three Months Ended
	March 31, 2024												March 31, 2024			March 31, 2023
Customer 1	Customer 1	32	%	23	%	32	%	27	%	Customer 1	34	%		33	%
Customer 2	Customer 2	14	%	19	%	14	%	19	%	Customer 2	13	%		15	%
Customer 3	Customer 3	13	%	15	%	13	%	14	%	Customer 3	10	%		14	%
Customer 4	Customer 4	10	%	6	%	9	%	4	%	Customer 4	13	%		7	%

3. RESTRUCTURING

On ~~June 2, 2022, we announced that we intended to cease~~March 31, 2023 the Company ceased operations at ~~our~~the Oakville, Ontario, Canada manufacturing ~~plant by the first quarter of 2023.~~plant. This action was part of ongoing initiatives to capture operational synergies following ~~our~~the acquisition of Novitium in November 2021. ~~We have~~ANI has fully completed the transition of the products manufactured or packaged in Oakville to one of ~~our~~the Company's three ~~U.S.-based~~U.S. based manufacturing sites. ~~We are seeking to find potential buyers for~~

There were no restructuring activities recorded in the ~~Oakville site, though~~three months ended March 31, 2024 and as of March 31, 2024, there ~~can be~~was no ~~assurance as to when~~severance or ~~if that will occur or~~other employee benefits accrued on the ~~amount of any net proceeds that may be received.~~unaudited interim condensed consolidated balance sheet.

For the ~~six~~three months ended ~~June 30,~~March 31, 2023, restructuring activities resulted in expenses oof ~~f $1.1~~ $1.1 million. This iincluded ~~ncl~~$0.2~~uded $0.2~~ million of severance and other employee benefit costs and ~~$0.7~~$0.7 million of accelerated depreciation costs and ~~$0.2~~$0.2 million for other miscellaneous ~~costs, respectively. The restructuring activities recognized in the three months ended June 30, 2023 was immaterial. As of June 30, 2023,~~ ~~$0.1 million~~ of the severance and other employee benefits are unpaid and accrued. These costs are recorded as restructuring activities, an operating item, in the accompanying unaudited interim condensed consolidated statements of operations and are part of the Generics, Established Brands, and Other segment. Certain of the severance and other employee benefit costs contain a service requirement, and as such, were accrued over time as they were earned.costs.

In conjunction with the exit of ~~our~~the Canadian facility, ~~we have~~the Company has determined that the land and building at ~~our~~the Oakville, Ontario, Canada plant (the "Property") will be sold together and ~~meet~~met the criteria to be classified as held for sale as of ~~June 30,~~March 31, 2023. The land and building ~~have~~had a net carrying value of approximately $8.0 million, which iswas presented as assets held for sale on the accompanying ~~unaudited interim~~ condensed consolidated balance ~~sheets.~~sheet at December 31, 2023. These assets are part of the Generics, Established Brands, and Other segment. As of March 31, 2024 these assets were no longer classified as held for sale.

On February 15, 2024, ANI Pharmaceuticals Canada Inc., a wholly owned subsidiary of the Company, entered into an agreement (the "Agreement") with 1540700 Ontario Limited ("Buyer") for the sale of the Property for a total purchase price of $19.2 million Canadian Dollars, or approximately $14.2 million, based on the current exchange rate, subject to certain market adjustments. The purchase of the Property is being made on an “as is” basis and the Agreement provides for customary closing conditions and indemnification obligations, as well as limited representations and warranties.

During February 2024, and in accordance with the Agreement, the Buyer deposited a total of approximately $1.9 million Canadian Dollars, or approximately $1.4 million in refundable deposits in escrow as part of the total purchase price. On March 28, 2024 the Company completed the sale of the Property. After payment of commissions, real estate taxes, and other related costs of approximately $0.7 million, the Company received a net proceeds of approximately $13.5 million at closing. The gain on the sale of the Property was approximately $5.3 million, recorded in the unaudited interim condensed consolidated statements of operations.

4. INDEBTEDNESS

Credit Facility

On November 19, 2021, the Company completed its acquisition (the “Acquisition”) of Novitium pursuant to the terms of the Agreement and Plan of Merger, dated as of March 8, 2021 (the “Merger Agreement”), by and among the Company, Novitium, Nile Merger Sub LLC, a Delaware limited liability company, and certain other parties, with Novitium becoming a wholly owned subsidiary of ANI.

The Term Facility proceeds were used to finance the cash portion of the consideration under the Merger Agreement, repay ~~our~~the existing credit facility, and pay fees, costs and expenses incurred in connection with the merger.

The Term Facility matures in November 2027 and the Revolving Facility in November 2026. ~~Each~~The Credit Facility has a subjective acceleration clause in case of a material adverse effect.

In July 2023, the Company amended its Credit Agreement to transition from London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Finaning Rate (“SOFR”) due to the cessation of LIBOR pursuant to the terms of Amendment No.1 to the Credit Agreement (“Amendment No. 1”). SOFR will be applied to the Credit Facility for the interest period (as defined in the Credit Agreement) beginning on August 1, 2023 and will replace all LIBOR terms.

The Credit Facility permits both base rate borrowings (“ABR Loans”) and Eurodollar rate borrowings (“Eurodollar Loans”), plus a spread ~~of (a) 5.00% above the base rate in the case of ABR Loans under the Term Facility and 6.00% above the LIBOR Rate (as~~as defined in the Credit Agreement) in the case of LIBOR loans under the Term Facility and (b) 3.75% above the base rate in the case of ABR Loans under the Revolving Facility and 4.75% above the LIBOR Rate (as defined in the Credit Agreement) in the case of loans under the Revolving Facility. The interest rate under the Term Facility was 11.15% at June 30, 2023. The Credit Facility has a subjective acceleration clause in case of a material adverse effect. The Term Facility includes a repayment schedule, pursuant to which $750 thousand of the loan will be paid in quarterly installments during the twelve months ended June 30, 2024. As of ~~June 30, 2023, $3.0 million of the loan is recorded as current borrowings in the unaudited interim condensed consolidated balance sheets. As of June 30, 2023,~~March 31, 2024, we had not drawn on the Revolving Facility and ~~$40.0~~$40.0 million remained available for borrowing subject to certain conditions.

The interest rate under the Term Facility was 11.44% at March 31, 2024.

~~In July 2023, the Company’s debt instruments that referenced LIBOR were amended to replace the benchmark rate with the Secured Overnight Financing Rate (~~The Company incur“~~SOFR”) in anticipation of the termination of published LIBOR rates.~~

~~We incurred~~red $14.0 million in deferred debt issuance costs associated with the Credit Facility. Costs allocated to the Term Facility are classified as a direct reduction to the current and non-current portion of the borrowings, depending on their nature. Costs allocated to the Revolving Facility are classified as other current and other non-current assets, depending on their nature. ~~We incur a~~A commitment fee of 0.5% per annum is assessed on any unused portion of the Revolving Facility.

The Credit Facility is secured by a lien on substantially all of ANI Pharmaceuticals, Inc.’s and its principal domestic subsidiary’s assets and any future domestic subsidiary guarantors’ assets. The Credit Facility is subject to customary financial and nonfinancial covenants.

The carrying value of the current and non-current components of the Term Facility as of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 are:

Current

(in thousands)

June 30,
2023

December 31,
2022

(in thousands)

March 31,
2024

December 31,
2023

Current borrowing on debt

3,000

Deferred financing costs

(2,150)

Current debt, net of deferred financing costs

850

Non-Current

(in thousands)

June 30,
2023

December 31,
2022

(in thousands)

March 31,
2024

December 31,
2023

Non-current borrowing on debt

292,500

294,000

Deferred financing costs

(7,256)

(8,331)

Non-current debt, net of deferred financing costs and current component

285,244

285,669

As of ~~June 30, 2023, we had a~~ ~~$295.5~~March 31, 2024, outstanding principal was $293.3 million ~~balance~~ on the Term ~~Facility.~~Facility. Of the ~~$0.7~~$0.6 million of unamortized deferred debt issuance costs allocated to the Revolving Facility, ~~$0.5~~$0.3 million is included in other non-current assets in the unaudited interim condensed consolidated balance sheets, and $0.3 million is ~~$0.2 million~~ is included in prepaid expenses and other current assets in the unaudited interim condensed consolidated balance sheets.

The contractual maturity of ~~our~~the Term Facility is as follows for the period ending:


(in thousands)	(in thousands)	Term Facility		(in thousands)	Term Facility
2023 (remainder of the year)		$	1,500
2024		3,000
2024 (remainder of the year)
2025	2025	3,000
2026	2026	3,000
2027	2027	285,000
Total	Total	$	295,500

1816

The following table sets forth the components of total interest expense related to the Term Facility during the three ~~and six~~ months ended ~~June 30,~~March 31, 2024 and 2023, ~~and 2022,~~ as recognized in the accompanying unaudited interim condensed consolidated statements of operations for the three ~~and six~~ months ended ~~June 30, 2023~~March 31, 2024 and ~~2022:~~2023:


		Three Months Ended				Six Months Ended
	Three Months Ended												Three Months Ended
(in thousands)	(in thousands)	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022		(in thousands)	March 31, 2024	March 31, 2023
Contractual coupon	Contractual coupon	$	7,620	$	6,122	$	14,970	$	12,180
Amortization of finance fees	Amortization of finance fees	591		590		1,182		1,181
Capitalized interest	Capitalized interest	(277)		(19)		(298)		(49)
		$	7,934	$	6,693	$	15,854	$	13,312
	$

5. DERIVATIVE FINANCIAL INSTRUMENT AND HEDGING ACTIVITY

At times we use derivative financial instruments to hedge our exposure to interest rate risks. All derivative financial instruments are recognized as either assets or liabilities at fair value on the consolidated balance sheet and are classified as current or non-current based on the scheduled maturity of the instrument.

When we enter into a hedge arrangement and intend to apply hedge accounting, we formally document the hedge relationship and designate the instrument for financial reporting purposes as a fair value hedge, a cash flow hedge, or a net investment hedge. When we determine that a derivative financial instrument qualifies as a cash flow hedge and is effective, the changes in fair value of the instrument are recorded in accumulated other comprehensive loss, net of tax in our consolidated balance sheets and will be reclassified to earnings when the hedged item affects earnings.

In April 2020, wethe Company entered into an interest rate swap with Citizens Bank, N.A. to manage ~~our~~its exposure to changes in LIBOR-based interest rates underlying total borrowings under term facilities related to ~~our~~the Prior Credit ~~Agreement. The~~Agreement, and the interest rate swap matures in December 2026. Concurrent with the termination of the Prior Credit Agreement and entry into the Credit Agreement with Truist Bank, the interest rate swap with a notional value of $168.6 million at origin on November 21, 2021 was novated and Truist Bank is the new counterparty.

As described further below, the Company amended its Credit Agreement to transition from LIBOR to SOFR due to the cessation of LIBOR, and accordingly, the interest rate swap transitioned from LIBOR to SOFR. The swap is used to manage changes in ~~LIBOR-based~~SOFR-based interest rates underlying a portion of the borrowing under the Term Facility.

The interest rate swap provides an effective fixed interest rate of 2.26% and has been designated as an effective cash flow hedge and therefore qualifies for hedge accounting. As of ~~June 30, 2023,~~March 31, 2024, the notional amount of the interest rate swap was ~~$143.5~~$139.4 million and ~~decreases~~decreased quarterly by approximately $4.0 million until December 2023, after which it remains static until maturity in December 2026. As of ~~June 30, 2023,~~March 31, 2024, the fair value of the interest rate swap asset recorded in other non-current assets in the unaudited interim condensed consolidated balance sheets was ~~$9.2 million.~~$7.7 million. As of ~~June 30, 2023, $13.8~~March 31, 2024, $9.6 million was recorded in accumulated other comprehensive income, net of tax in the unaudited interim condensed consolidated balance sheets.

During the three months ended ~~June 30, 2023 ,~~March 31, 2024, the ~~change in~~gain on the fair value of the interest rate swaps, ~~was a gain~~net of $2.0 million. During the six months ended June 30, 2023, the change in fair value of the interest rate swaps was a loss of $0.2 million. During the three and six months ended June 30, 2023, gains on the interest rate swap of $2.6 million and $1.5 million weretax recorded in accumulated other comprehensive ~~(loss)~~ income ~~net of tax~~ in ~~our~~the unaudited interim condensed consolidated statements of comprehensive ~~(loss)~~ income ~~respectively.~~was approximately $0.6 million. Differences between the hedged ~~LIBOR~~SOFR rate and the fixed rate are recorded as interest expense in the same period that the related interest is recorded for the Term Facility based on the ~~LIBOR~~SOFR rate. In the three ~~and six~~ months ended ~~June 30,~~ March 31, 2024 and 2023, ~~$0.6~~ $1.6 million of interest income and ~~$1.1~~$0.5 million of interest expense was recognized in relation to the interest rate ~~swaps, respectively.~~swaps. Included in this amount for the three months ended ~~June 30,~~March 31, 2024 and 2023 ~~and 2022~~ are reclassifications out of accumulated other comprehensive income ~~(loss)~~ of ~~$0.7~~$0.2 million of interest income and $0.7 million, ~~and during the six months ended June 30, 2023 and 2022 are $0.7 million and $1.4 million in expense,~~ respectively, related to terminated and de-designated cash flow hedges.

In conjunction with the amendment of the Credit Agreement (see note 4), the Company’s derivative positions automatically transitioned to SOFR, the designated fallback terms, as determined by the International Swaps and Derivatives Association on August 1, 2023. Concurrently, the Company updated its hedge documentation to reflect the change of the benchmark index, which changed solely as a result of reference rate reform. Under ASC 848, Reference Rate Reform, hedge accounting may continue without de-designation if certain criteria are met. For cash flow hedges in which the designated hedged risk is LIBOR (or another rate that is expected to be discontinued), the guidance allows an entity to assert that it remains probable that the hedged forecasted transaction will occur. The Company applied the optional expedient within ASC 848 to conclude the updates to the hedge relationship due to reference rate reform did not have a material impact on the Company's consolidated financial statements.

6. EARNINGS ~~(LOSS)~~ PER SHARE

Basic earnings ~~(loss)~~ per share is computed by dividing net income ~~(loss)~~ available to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

For periods of net income, and when the effects are not anti-dilutive, ~~we calculate~~ diluted earnings ~~(loss)~~ per share is calculated by dividing net income available to common stockholders by the weighted-average number of shares outstanding plus the impact of all potential dilutive common shares, consisting primarily of common stock options, shares to be purchased under our Employee Stock Purchase Plan (“ESPP”), and performance stock units, using the more dilutive of the treasury stock or the two-class method. For periods of net loss, diluted loss per share is calculated similarly to basic loss per share.

~~Our unvested~~Unvested restricted shares and Series A convertible preferred stock shares contain non-forfeitable rights to dividends, and therefore are considered to be participating securities; in periods of net income, the calculation of basic and diluted earnings (loss) per share excludes from the numerator net income (but not net loss) attributable to the unvested restricted shares and the common shares assumed converted from the preferred shares and excludes the impact of those shares from the denominator.

Earnings ~~(loss)~~ per share for the three ~~and six~~ months ended ~~June 30,~~March 31, 2024 and 2023 ~~and 2022~~ are calculated for basic and diluted earnings ~~(loss)~~ per share as follows:


		Basic				Diluted				Basic				Diluted
	Basic																					Basic						Diluted
(in thousands, except per share amounts)	(in thousands, except per share amounts)	Three Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,				Six Months Ended June 30,				(in thousands, except per share amounts)	Three Months Ended March 31,					Three Months Ended March 31,
		2023		2022		2023		2022		2023		2022		2023		2022
Net income (loss) available to common shareholders		$	5,838	$	(15,330)	$	5,838	$	(15,330)	$	6,871	$	(35,865)	$	6,871	$	(35,865)
	2024																			2024			2023			2024				2023
Net income available to common shareholders
Earnings allocated to participating securities	Earnings allocated to participating securities	(589)		—		(589)		—		(716)		—		(716)		—
Net income (loss) available to common shareholders		$	5,249	$	(15,330)	$	5,249	$	(15,330)	$	6,155	$	(35,865)	$	6,155	$	(35,865)
Net income available to common shareholders
Basic Weighted-Average Shares Outstanding	Basic Weighted-Average Shares Outstanding	17,688		16,272		17,688		16,272		17,044		16,205		17,044		16,205		Basic Weighted-Average Shares Outstanding	19,099		16,392				19,099				16,392
Dilutive effect of common stock options, ESPP, and performance stock units	Dilutive effect of common stock options, ESPP, and performance stock units					167		—						133		—		Dilutive effect of common stock options, ESPP, and performance stock units									323				139
Diluted Weighted-Average Shares Outstanding	Diluted Weighted-Average Shares Outstanding					17,855		16,272						17,177		16,205		Diluted Weighted-Average Shares Outstanding									19,422				16,531

Income (loss) per share		$	0.30	$	(0.94)	$	0.29	$	(0.94)	$	0.36	$	(2.21)	$	0.36	$	(2.21)
Earnings per share
Earnings per share
Earnings per share

The number of anti-dilutive shares, which have been excluded from the computation of diluted earnings ~~(loss)~~ per share, was ~~2.5~~2.3 million for the three ~~and six~~ months ended ~~June 30, 2023. For the three and six months ended June 30, 2022, all potentially dilutive~~March 31, 2024. The number of anti-dilutive shares, ~~were anti-dilutive and~~which have been excluded from the ~~calculation~~computation of diluted ~~loss~~earnings per share, ~~because we recognized a net loss.~~was 2.6 million for the three months ended March 31, 2023.

7. INVENTORIES

Inventories consist of the following as of:


(in thousands)	(in thousands)	June 30, 2023		December 31, 2022		(in thousands)	March 31, 2024	December 31, 2023
Raw materials	Raw materials	$	67,019	$	67,726
Packaging materials	Packaging materials	8,079		7,720
Work-in-progress	Work-in-progress	3,258		1,889
Finished goods	Finished goods	25,967		28,020
Inventories	Inventories	$	104,323	$	105,355

2018

Vendor Concentration

~~We source the raw~~Raw materials are sourced for ~~our~~ products, including active pharmaceutical ingredients (“API”), from both domestic and international suppliers. Generally, only a single source of API is qualified for use in each product due to the cost and time required to validate a second source of supply. As a result, wethe Company is ~~are~~ dependent upon our current vendors to reliably supply the API required for on-going product ~~manufacturing.~~manufacturing. During the three ~~and six~~ months ended ~~June 30,~~March 31, 2024, we purchased approximately 25% of our raw material inventory from one supplier. During the three months ended March 31, 2023, no single vendor represented more than 10% of our raw material inventory purchases. ~~During the three and six months ended June 30, 2022, one vendor represented 18% and 17% of inventory purchases, respectively.~~

8. GOODWILL AND INTANGIBLE ASSETS

Goodwill

As a result of ~~our~~the 2013 merger with BioSante Pharmaceuticals, Inc. (“BioSante”), wethe Company recorded goodwill of $1.8 million. As a result of ~~our~~the acquisition of WellSpring Pharma Services Inc.~~, we~~ in 2018, the Company recorded ~~additional~~ goodwill of $1.7 ~~million in 2018.~~million. From ~~our~~the acquisition of Novitium in ~~2021, we~~2022, the Company recorded goodwill of $24.6 million. ~~We have~~As of March 31, 2024, the Company has two operating segments, which ~~are~~were also deemed the ~~same as our~~Company's two reporting units, Generics, Established Brands, and Other reporting unit and the Rare Disease reporting unit. All of the goodwill is recorded in ~~our~~the Generics, Established Brands, and Other reporting unit.

~~We assess the recoverability of the carrying value of goodwill and other indefinite-lived intangible assets as of~~Goodwill is reviewed for impairment at least annually, at October 31,st ~~of each year, and whenever events occur~~ or ~~circumstances change that would,~~more frequently if a triggering event occurs between impairment testing dates. The Company’s impairment assessment begins with a qualitative assessment to determine whether it is more likely than not ~~reduce~~that the fair value of the reporting unit is less than its carrying value. Qualitative factors may include, macroeconomic conditions, industry and market considerations, cost factors, and other relevant entity and Company specific events. If, based on the qualitative test, the Company determines that it is “more likely than not” that the fair value of a reporting unit is less than its carrying value, then we evaluate goodwill for impairment by comparing the fair value of our reporting unit ~~below~~to its respective carrying value, including its goodwill. If it is determined that it is “not likely” that the fair value of the reporting unit is less than its carrying ~~value.~~value, then no further testing is required. There have been no events or changes in circumstances that would have reduced the fair value of ~~our~~the Generics, Established Brands, and Other reporting unit below its carrying value during the three ~~and six~~ months ended ~~June 30, 2023. No~~March 31, 2024 and 2023, no impairment ~~losses were recognized during the three and six months ended June 30, 2023 and 2022.~~charges have been recognized.

Intangible Assets

The components of definite-lived intangible assets and indefinite-lived intangible assets, other than goodwill, are as follows:


		June 30, 2023				December 31, 2022				Remaining Weighted Average Amortization Period(1)
	March 31, 2024																	March 31, 2024										December 31, 2023				Remaining Weighted Average Amortization Period(1)
(in thousands)	(in thousands)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization			Remaining Weighted Average Amortization Period(1)		(in thousands)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount				Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount
Definite-Lived Intangible Assets:	Definite-Lived Intangible Assets:
Acquired ANDAs intangible assets	Acquired ANDAs intangible assets	$	200,191	$	(87,653)	$	195,862	$	(75,606)	5.5 years
Acquired ANDAs intangible assets
Acquired ANDAs intangible assets												$	209,780	$	(106,701)	$	103,079				$	209,780	$	(100,660)		$	109,120		5.0 years
NDAs and product rights	NDAs and product rights	242,372		(173,524)		242,372		(162,188)		3.4 years	NDAs and product rights	244,871		(190,656)	(190,656)	54,215	54,215			244,871		244,871		(184,861)	(184,861)		60,010	60,010		3.0 years	3.0 years
Marketing and distribution rights	Marketing and distribution rights	17,157		(13,790)		17,157		(13,309)		3.5 years	Marketing and distribution rights	17,157		(14,512)	(14,512)	2,645	2,645			17,157		17,157		(14,271)	(14,271)		2,886	2,886		2.8 years	2.8 years
Non-compete agreement		624		(624)		624		(602)		— years
Customer relationships	Customer relationships	24,900		(5,929)		24,900		(4,150)		5.3 years	Customer relationships	24,900		(8,595)	(8,595)	16,305	16,305			24,900		24,900		(7,707)	(7,707)		17,193	17,193		4.6 years	4.6 years
Total Definite-Lived Intangible Assets	Total Definite-Lived Intangible Assets	485,244		(281,520)		480,915		(255,855)		4.7 years	Total Definite-Lived Intangible Assets	496,708		(320,464)	(320,464)	176,244	176,244			496,708		496,708		(307,499)	(307,499)		189,209	189,209		4.3 years	4.3 years
Indefinite-Lived Intangible Assets:	Indefinite-Lived Intangible Assets:
In process research and development	In process research and development	26,575		—		26,575		—		Indefinite
In process research and development
In process research and development												19,800		—		19,800					19,800		—			19,800			Indefinite
Total Intangible Assets, net	Total Intangible Assets, net	$	511,819	$	(281,520)	$	507,490	$	(255,855)

(1)Weighted average amortization period as of ~~June 30, 2023.~~March 31, 2024.

~~The definite-lived~~

Definite-lived intangible assets arising from business combinations and other asset acquisitions include intangibles such as Abbreviated New Drug Applications (“ANDAs”), New Drug Applications (“NDAs”) and product rights, marketing and distribution rights, customer relationships, and non-compete ~~agreement~~agreements. Definite-lived intangible assets are amortized over the estimated period during which the asset is expected to contribute directly or indirectly to future cash flows. Definite-lived intangible assets are stated at cost, net of amortization, and generally amortized over their remaining estimated useful lives, ranging from seven to 10ten years, based on the straight-line amortization method. In the case of certain NDAs and product rights assets, ~~we use~~ an accelerated amortization method is used to better match the anticipated economic benefits expected to be provided. ~~Our indefinite-lived~~Definite-lived intangible assets are tested for impairment when events or changes in circumstances indicate that these asset might be impaired.

Amortization expense for definite-lived intangibles was $13.0 million and $12.8 million for the three months ended March 31, 2024 and 2023, respectively.

No impairment losses were recognized in the three months ended March 31, 2024 and 2023.

Indefinite-lived intangible assets other than goodwill include ~~in-process research and development (“~~primarily IPR~~&D”)~~&D projects. IPR&D intangible assets represent the fair value of technology acquired in a business combination or asset acquisition for which the technology projects are incomplete but have ~~substance.~~substance or alternative future use. When an IPR&D project is completed (generally upon receipt of regulatory approval), then the ~~asset is then~~IPR&D will be accounted for as a definite-lived intangible asset.

~~Amortization expense was~~ ~~$12.8 million~~Indefinite-lived intangible assets are not amortized, and ~~$11.9 million for~~ the ~~three months ended June 30, 2023 and 2022, respectively. Amortization expense was~~ ~~$25.7~~ ~~million and $24.4 million for the six months ended June 30, 2023 and 2022, respectively.~~

~~We test~~Company tests for impairment of ~~definite-lived~~indefinite-lived intangible assets when events or circumstances indicate that the carrying value of the assets may not be ~~recoverable.~~recoverable, and the Company performs an asset impairment analysis annually, as of October 31. No ~~such triggering events~~impairment losses were ~~identified in the three and six months ended June 30, 2023. No such triggering events were identified during the three and six months ended June 30, 2023 therefore no impairment loss was~~ recognized in the three ~~and six~~ months ended ~~June 30, 2023. During three~~March 31, 2024 and ~~six months ended~~ ~~June 30, 2022 we recognized an impairment of $0.1 million in relation to ANDA asset.~~ 2023, respectively.

Expected future amortization expense for definite-lived intangible assets is as follows:


(in thousands)	(in thousands)
2023 (remainder of the year)		$	25,952
2024		48,950
2024 (remainder of the year)
2024 (remainder of the year)
2024 (remainder of the year)
2025	2025	45,715
2026	2026	32,396
2027	2027	23,485
2028 and thereafter		27,226
2028
2029 and thereafter
Total	Total	$	203,724

9. MEZZANINE AND STOCKHOLDERS’ EQUITY

Stockholders’ Equity

Authorized shares

~~We are~~The Company is authorized to issue up to 33.3 million shares of common stock with a par value of $0.0001 per share, 0.8 million shares of class C special stock with a par value of $0.0001 per share, and 1.7 million shares of undesignated preferred stock with a par value of $0.0001 per share at ~~June 30, 2023.~~March 31, 2024.

There were ~~20.5~~21.4 million and ~~20.3~~21.0 million shares of common stock issued and outstanding as of ~~June 30, 2023,~~March 31, 2024, respectively, and ~~17.6~~20.7 million and ~~17.5~~20.5 million shares of common stock issued and outstanding as of December 31, ~~2022,~~2023, respectively.

Class C Special Stock

There were 11 thousand shares of class C special stock issued and outstanding as of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023. Each share of class C special stock entitles its holder to one vote per share. Each share of class C special stock is exchangeable, at the option of the holder, for one share of ~~our~~ common stock, at an exchange price of $90.00 per share, subject to adjustment upon certain capitalization events. Holders of class C special stock are not entitled to receive dividends or to participate in the distribution of our assets ~~if we were to liquidate, dissolve,~~upon liquidation, dissolution, or ~~wind-up~~winding-up the Company.

The holders of class C special stock have no cumulative voting, preemptive, subscription, redemption, or sinking fund rights.

Mezzanine Equity

PIPE Shares

Concurrently with the execution of the Merger Agreement, and as financing for a portion of the acquisition, on March 8, 2021, wethe Company entered into an Equity Commitment and Investment Agreement with Ampersand 2020 Limited Partnership (the “PIPE Investor”), pursuant to which ~~we agreed to issue and sell to~~ the PIPE Investor ~~and the PIPE Investor agreed to purchase,~~purchased 25,000 shares of ~~our~~ Series A Convertible Preferred Stock (the “PIPE Shares”), for a purchase price of $1,000 per share and an aggregate purchase price of ~~$25.0 million. This agreement closed and the 25,000 PIPE Shares were sold and issued for~~ $25.0 million on November 19, 2021. The PIPE Shares are classified as mezzanine equity because the shares are mandatorily redeemable for cash upon a change in control, an event that is not solely ~~in our~~within the Company's control.

The PIPE Shares accrue dividends at 6.50% per year on a cumulative basis, payable in cash or in-kind, and will also participate, on a pro-rata basis, in any dividends that may be declared with respect to our common stock. The PIPE Shares are convertible into ~~our~~ common shares at the conversion price of $41.47 (i) beginning two years after their issuance date, at the election of ANI (in which case the PIPE Investor must convert all of the PIPE Shares), if the volume-weighted average price of ~~our~~the common stock for any 20 trading days out of 30 consecutive trading days exceeds 170% of the conversion price, and (ii) at any time after issuance, at the election of the PIPE Investor. As of ~~June 30, 2023,~~March 31, 2024, the PIPE shares are currently convertible into a maximum of 602,901 shares of ~~our~~ common stock.

In case of a liquidation event, the holder of the PIPE Shares will be entitled to receive, in preference to holders of ~~our~~the Company's common stock, the greater of (i) the PIPE Shares’ purchase price plus any accrued and unpaid dividends thereon and (ii) the amount the holder of the PIPE Shares would have received in the liquidation event if it had converted its PIPE Shares into ~~our~~ common stock. The PIPE Shares will have voting rights, voting as one series with ~~our~~the holders of common stock, on as-converted basis, and will have separate voting rights on any (i) amendment to the Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock (the “Certificate”) that adversely amends and relates solely to the terms of the PIPE Shares and (ii) issuance of additional Series A convertible preferred stock. In case of a change of control, ~~of ANI,~~ the PIPE Shares will be redeemed at the greater of (i) the PIPE Shares’ purchase price plus any accrued and unpaid dividends thereon and (ii) the change of control transaction consideration that the ~~holder of the~~ PIPE ~~Shares~~Investor would have received if it had converted into ~~our~~shares of common stock.

There were 25,000 shares of Series A convertible preferred stock outstanding as of ~~June 30, 2023.~~March 31, 2024.

10. STOCK-BASED COMPENSATION

Employee Stock Purchase Plan

In July 2016, we commenced administration of the ANI Pharmaceuticals, Inc. 2016 Employee Stock Purchase Plan. As of ~~June 30, 2023,~~March 31, 2024, we had 0.1 million shares of common stock available under the ESPP. Under the ESPP, participants can purchase common shares of ~~our~~the Company's stock at a 15% ~~discount.~~discount on the lowest share price on the first day of the purchase period or the last day of the purchase period.

The following table summarizes ESPP expense incurred under the 2016 Employee Stock Purchase Plan and included in our accompanying unaudited interim condensed consolidated statements of operations:


(in thousands)	(in thousands)	Three Months Ended June 30,				Six Months Ended June 30,				(in thousands)	Three Months Ended March 31,
		2023		2022		2023		2022
	2024											2024	2023
Selling, general, and administrative
Cost of sales	Cost of sales	$	18	$	19	$	30	$	29
Research and development	Research and development	12		15		19		22
Selling, general, and administrative		70		39		143		60
		$	100	$	73	$	192	$	111
Total

Stock Incentive Plan

Equity-based service awards are granted under the ANI Pharmaceuticals, Inc. Amended and Restated 2022 Stock Incentive Plan (the “2022 Plan”), which was approved by ~~our~~its stockholders at the 2022 Annual Meeting of Stockholders (the “Annual Meeting”) held on April 27, 2022. During ~~our~~the 2023 Annual Meeting of Stockholders held on May 23, 2023, ~~our~~ stockholders approved an amendment of the 2022 Plan (the “2023 Stock Plan Amendment”). The 2023 Stock Plan Amendment increased the shares authorized for issuance under the 2022 Plan by 750,000 additional shares. As of ~~June 30, 2023, 1.1~~March 31, 2024, 0.4 million shares of ~~our~~ common stock were available for issuance under the 2022 Plan.

Stock Options: Outstanding stock options to purchase shares of common stock are granted to employees and consultants generally vest over a period of four years and have 10-year contractual terms. Outstanding stock options granted to non-employee directors generally vest over a period of one to four years and have 10-year contractual terms. ~~Upon exercise of an option, we issue new shares of our common stock or issue shares from treasury stock.~~

From time to time, ~~we may grant~~ stock options are granted to employees through an inducement grant outside of our 2022 Plan to induce prospective employees to accept employment with usthe Company (the “Inducement Grants”). The options are granted at an exercise price equal to the fair market value of a share of ~~our~~ common stock on the respective grant date and are generally exercisable in four equal annual installments beginning on the first anniversary of the respective grant date. The grants are made pursuant to inducement grants outside of our stockholder approved equity plan as permitted under the Nasdaq Stock Market listing rules.

Restricted Stock Awards: Restricted stock awards (“RSAs”) granted to employees generally vest over a period of four ~~years.~~years and RSAs granted to non-officer directors generally vest over a period of one year.

~~Shares of our common stock delivered to employees and directors will be unrestricted upon vesting.~~ During the vesting period, the recipient of the RSAs has full voting rights as a stockholder and would receive dividends, if declared, even though the restricted stock remains subject to transfer restrictions and will generally be forfeited upon termination of the officer prior to vesting. The fair value of each RSA is based on the market value of our stock on the date of grant. Upon vesting, unrestricted shares of common stock are delivered to employees and directors.

Performance-Based Restricted Stock Units:

February 28, 2023 Performance-Based Restricted Stock Units Grant

Awards may also be issued in the form of Performance Stock Units (“PSUs”). PSUs represent the right to receive an amount of cash, a number of shares of ~~our~~ common stock or a combination of both, contingent upon the achievement of specified performance objectives during a specified performance period. PSUs granted to date vest over a three-year performance period. On February 28, 2023, as part of ~~our~~the Company's equity compensation program, we granted PSUs to certain executives. Of these PSUs, 50% were market performance-based restricted stock units (“MPRSUs”), vesting of which is contingent upon the Company meeting certain total shareholder return (“TSR”) levels as compared to a select peer group over the over three years starting January 1, 2023. The MPRSUs are also subject to the recipient’s continued employment or service through December 31, 2025. The MPRSUs cliff vest at the end of the three-year period and have a maximum potential to vest at 200% ~~(85,099 shares)~~(83,942 shares, net of forfeitures) based on TSR performance. The related share-based compensation expense is determined based on the estimated fair value of the underlying shares on the date of grant and is recognized straight-line over the vesting term. The estimated grant date fair value per share of the MPRSUs was $68.65 and was calculated using a Monte Carlo simulation model. These MPRSUs are included at 100% of the estimate number of shares at the end of the three-year performance period and are reflected under “Granted” in the table below.

The other 50% of the PSUs were performance based restricted stock units (“PRSUs”), vesting of which is contingent upon the Company meeting certain adjusted non-GAAP year-on-year EBITDA growth rates over the over three years starting January 1, 2023. The PRSUs are also subject to the recipient’s continued employment or service through December 31, 2025. The PRSUs cliff vest at the end of the three-year period and have a maximum potential to vest at 200% ~~(85,099 shares)~~(83,942 shares, net of forfeitures) based on adjusted non-GAAP year-on-year EBITDA growth rates. The related share-based compensation expense is determined based on the estimated fair value of the underlying shares on the date of grant and is recognized straight-line over the vesting term. WeThe Company analyzed progress on the performance goals to assess the likelihood of achievement. The estimated grant date fair value per share of the PRSUs was $41.84 based on the closing price of the stock on the date of grant. These PRSUs are included at 100% of the estimated number of shares at the end of the three-year performance period and are reflected under “Granted” in the table below.

February 14, 2024 Performance-Based Restricted Stock Units Grant

On February 14, 2024, the Company granted 73,588 PSUs to officers and employees of the Company under the 2022 Plan (66,433 to officers of the Company). PSU performance will be measured over a three-year performance period from January 1, 2024 through December 31, 2026 and will cliff-vest contingent upon the achievement of specified performance objectives. Of these PSUs, 50% were MPRSUs, vesting of which is contingent upon the Company meeting certain TSR levels as compared to a select peer group over the over three years starting January 1, 2024, and 50% of the PSUs were PRSUs, vesting of which is contingent upon the Company meeting certain adjusted non-GAAP year-on-year EBITDA growth rates over the over three years starting January 1, 2024. Both the MPRSUs and the PRSUs have a maximum potential to vest at 200%.

The estimated grant date fair value per share of the MPRSUs was $85.65 and was calculated using a Monte Carlo simulation model. These MPRSUs are included at 100% of the estimate number of shares at the end of the three-year performance period and are reflected under “Granted” in the table below.

The estimated grant date fair value per share of the PRSUs was $56.10 based on the closing price of the stock on the date of grant. These PRSUs are included at 100% of the estimated number of shares at the end of the three-year performance period and are reflected under “Granted” in the table below.

The following table summarizes stock-based compensation expense incurred under the 2022 Plan and Inducement Grants included in ~~our~~the accompanying unaudited interim condensed consolidated statements of operations:


(in thousands)	(in thousands)	Three Months Ended June 30,				Six Months Ended June 30,				(in thousands)	Three Months Ended March 31,
		2023		2022		2023		2022
	2024											2024	2023
Selling, general, and administrative
Research and development
Cost of sales	Cost of sales	$	170	$	124	$	309	$	259
Research and development		213		180		413		345
Selling, general, and administrative		4,766		3,379		8,673		6,278
		$	5,149	$	3,683	$	9,395	$	6,882
Total

2423

A summary of stock option (including Inducement Grants), RSA, and PSU activity under the 2022 Plan and Inducement Grants during the ~~six~~three months ended ~~June 30,~~March 31, 2024 and 2023 ~~and 2022~~ is presented below:


(in thousands)	(in thousands)	Options	Inducement Grants	PSUs	RSAs
Outstanding at December 31, 2021		747	241	—	707
Outstanding at December 31, 2022
Outstanding at December 31, 2022
Outstanding at December 31, 2022
Granted	Granted	36	—	—	669
Granted
Granted
Options Exercised/RSAs Vested
Options Exercised/RSAs Vested
Options Exercised/RSAs Vested	Options Exercised/RSAs Vested	(1)	—	—	(209)	(1)	(5)	—	(235)	(1)
Forfeited	Forfeited	(37)	—	—	(24)
Expired	Expired	—	—	—	—
Outstanding at June 30, 2022		745	241	—	1,143
Expired
Expired
Outstanding at March 31, 2023
Outstanding at March 31, 2023
Outstanding at March 31, 2023

Outstanding at December 31, 2022		907	241	—	1,141
Outstanding at December 31, 2023

Outstanding at December 31, 2023

Outstanding at December 31, 2023
Granted	Granted	3	—	85	624
Granted
Granted
Options Exercised/RSAs Vested
Options Exercised/RSAs Vested
Options Exercised/RSAs Vested	Options Exercised/RSAs Vested	(26)	—	—	(338)	(2)	(31)	—	(335)	(2)
Forfeited	Forfeited	(24)	—	—	(46)
Expired	Expired	—	—	—	—
Outstanding at June 30, 2023		860	241	85	1,381
Expired
Expired
Outstanding at March 31, 2024
Outstanding at March 31, 2024
Outstanding at March 31, 2024

(1)Includes 5685 thousand shares purchased from employees to cover employee income taxes related to income earned upon vesting of restricted stock. The shares purchased are held in treasury and the $~~1.6~~3.5 million total purchase price for the shares is included in Treasury stock in our accompanying unaudited interim condensed consolidated balance sheets.

(2)Includes 99129 thousand shares purchased from employees to cover employee income taxes related to income earned upon vesting of restricted stock. The shares purchased are held in treasury and the ~~$4.1~~$8.7 million total purchase price for the shares is included in Treasury stock in our accompanying unaudited ~~interim~~interim condensed consolidated balance sheets.

11. INCOME TAXES

~~We use~~The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted.

The measurement of a deferred tax asset is reduced, if necessary, by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. As of ~~June 30, 2023, we had provided~~March 31, 2024, a valuation allowance was recorded against consolidated net deferred tax assets of $0.4 million, related solely to deferred tax assets for net operating loss carryforwards in certain U.S. state jurisdictions.

~~We use~~The Company uses a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ~~We have~~The Company has not identified any uncertain income tax positions that could have a material impact on the consolidated financial statements. ~~We recognize~~The Company recognizes interest and penalties accrued on any unrecognized tax exposures as a component of income tax expense; wethe Company did not have any such amounts accrued as of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022. We are~~2023. The Company is subject to taxation in various U.S. jurisdictions, Canada, and India and all of ~~our~~its income tax returns remain subject to examination by tax authorities due to the availability of NOL carryforwards.

2524

For interim periods, ~~we recognize~~the Company recognizes an income tax ~~benefit (provision)~~expense (benefit) based on our estimated annual effective tax rate, calculated on a worldwide consolidated basis, expected for the entire year. The interim annual estimated effective tax rate is based on the statutory tax rates then in effect, as adjusted for estimated changes in ~~temporary and~~ estimated permanent differences and excludes certain discrete items whose tax effect, when material, are recognized in the interim period in which they occur. These changes in ~~temporary differences,~~ permanent differences and discrete items result in variances to the effective tax rate from period to period. ~~We also have elected to exclude the impacts from significant pre-tax non-recognized subsequent events from our interim estimated annual effective rate until the period in which they occur. Our~~The Company's estimated annual effective tax rate changes throughout the year as our on-going estimates of pre-tax income, and changes in ~~temporary differences, and~~ permanent differences are revised, and as discrete items occur. Global Intangible Low-Taxed Income (“GILTI”), as defined in the Tax Cuts and Jobs Act of 2017, generated from our Canadian and Indian operations is subject to U.S. taxes, with certain defined exemptions, thresholds and credits. For financial reporting purposes ~~we have~~the Company has elected to treat GILTI inclusions as a period cost.

For the three months ended ~~June 30, 2023~~,March 31, 2024, the Company recognized anan income tax ~~benefit~~ expense of ~~$1.0~~$7.1 million. The Company's effective tax rate was ~~(19.0)% for~~28.1% after discrete items for the three months ended ~~June 30, 2023.~~ March 31, 2024. The effective tax rate differed from the federal statutory rate of 21% primarily due to state taxes, stock based compensation, tax on the ~~recognition~~sale of the ~~U.S. federal research~~Oakville, Ontario manufacturing site, and ~~development credit, permanent differences, and discrete~~recording of a withholding tax ~~benefit primarily related to remeasurement~~liability on the proceeds of ~~its gross deferred assets due to change in state deferred effective tax rate.~~the sale.

For the three months ended ~~June 30, 2022, we~~March 31, 2023, the Company recognized an income tax ~~benefit~~expense of ~~$3.9 million.~~$0.7 million. The income tax ~~benefit~~expense resulted from applying an estimated annual worldwide effective tax ~~benefit~~expense rate of ~~20.7%~~34.9% to pre-tax consolidated ~~loss~~income of ~~$18.8~~$2.2 million reported during the period. There were no material discrete items occurring during the three months ended ~~June 30, 2022.~~March 31, 2023.

~~For the~~ ~~six months ended June 30, 2023, the~~The Company ~~recognized an income tax benefit of $0.3 million. The Company's effective tax rate was (3.7)% for the~~ six months ended June 30, 2023. The effective tax rate differed from the federal statutory rate of 21% primarily due to the recognition of the U.S. federal research and development credit, permanent differences, and discrete tax benefit primarily related to remeasurement of gross deferred assets due to change in state deferred effective tax rate.

For the six months ended June 30, 2022, we recognized an income tax benefit of $9.7 million. The income tax benefit resulted from applying an estimated annual worldwide effective tax rate of 21.6% to pre-tax consolidated loss of $44.7 million reporteddoes not expect that any law changes enacted during the ~~period. There were no material discrete items occurring during the six months ended June 30, 2022.~~

~~We expect that recent tax law changes contained in Inflation Reduction Act and the Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022 (“CHIPS Act”)~~period will ~~not~~ have a material impact on the provision for income taxes.

12. COMMITMENTS AND CONTINGENCIES

Operating Leases

In April 2023, wethe Company entered into an agreement to lease ~~warehousing~~additional warehouse space in East Windsor, New Jersey. The lease has a term of five ~~years. The lease~~years, and was classified as an operating lease. The lease was capitalized and included in other non-current assets on the accompanying unaudited condensed consolidated balance sheets. Additionally, during October 2023, the Company entered into an amendment for the Middleton, Wisconsin location which expanded the Company's square footage and also extended the termination date to December 2028.

Government Regulation

~~Our~~

The Company's products and facilities are subject to regulation by a number of federal and state governmental agencies, such as the Drug Enforcement Administration (“DEA”), the Food and Drug Administration (“FDA”), the Centers for Medicare and Medicaid Services (“CMS”), the Central Drugs Standard Control Organization (“CDSCO”), The Narcotics Control Bureau (“NCB”), and India’s Ministry of Health and Family Welfare (“MoHFW”). The FDA, in particular, maintains oversight of the formulation, manufacture, distribution, packaging, and labeling of all of ~~our~~ANI's products. The DEA ~~Health Canada,~~ and NCB maintain oversight over ~~our~~ products that are considered controlled substances.

Unapproved Products

~~Two of our~~Four products, Esterified ~~Estrogen with~~Estrogens and Methyltestosterone (“EEMT”), Opium Tincture, Thyroid Tablets, and ~~Opium Tincture,~~Hyoscyamine are marketed without approved NDAs or A~~NDAs. I~~fANDAs. If the FDA took enforcement action against ~~such customer,~~ the ~~customer~~Company, the Company may be required to seek FDA approval for the group of products or withdraw them from the market. During the three months ended ~~June 30, 2023 and 2022,~~March 31, 2024, net revenues from commercial sales of these products for these products totaled ~~$3.5~~$4.1 million.

On December 27, 2023, the Company acquired from Alvogen, Inc. the rights to Hyoscyamine for total cash consideration of $2.0 million, which product was launched commercially in February 2024. Contract manufacturing revenues for Hyoscyamine, for three months ended March 31, 2024 and 2023 were $0.1 million and ~~$2.9~~$0.6 million, respectively.

During the ~~six~~three months ended ~~June 30,~~March 31, 2023, unapproved products consisted of only EEMT and ~~2022,~~Opium Tincture, and net revenues ~~for~~from these products totaled ~~$7.2 million and $6.9 million, respectively.~~$3.7 million.

In addition, one group of products that we manufacture on behalf of a contract customer is marketed by that customer without an approved NDA. If the FDA took enforcement action against such customer, the customer may be required to seek FDA approval for the group of products or withdraw them from the market. Our contract manufacturing revenues for the group of unapproved products for the three months ended June 30, 2023 and 2022 were $0.5 million and $0.4 million, respectively. Our contract manufacturing revenues for the group of unapproved products for the six months ended June 30, 2023 and 2022 were $1.1 million.

Legal proceedings

~~We are~~

The Company is involved, and from time to time may become involved, in various disputes, governmental and/or regulatory inquiries, investigations, government reimbursement related actions and litigation. These matters are complex and subject to significant uncertainties. Due to the inherent unpredictability of legal matters, including litigation, governmental and regulatory matters, particularly where the damages sought are substantial or indeterminate or when the proceedings, investigations or inquiries are in the early stages, we cannot accurately predict the outcome, or the effects of the legal proceedings described below. While we believe that we have valid claims and/or defenses in the litigation and other matters described below, litigation is inherently unpredictable, particularly where the damages sought are substantial or indeterminate or when the proceedings, investigations or inquiries are in the early stages, and the outcome of the proceedings could result in losses, including substantial damages, fines, civil or criminal penalties and injunctive or administrative remedies. We intend to vigorously prosecute and/or defend these matters, as appropriate; however, from time to time, we may settle or otherwise resolve these matters on terms and conditions that we believe are in our best interests. Resolution of any or all claims, investigations, and legal proceedings, individually or in the aggregate, could have a material adverse effect on our results of operations and/or cash flows in any given accounting period or on our overall financial condition.

Some of these matters with which we are involved are described below and in our ~~2022~~2023 Form 10-K, and unless otherwise disclosed, we are unable to predict the outcome of the matter or to provide an estimate of the range of reasonably possible material losses. We record accruals for loss contingencies to the extent we conclude it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

From time to time, we are also involved in other pending proceedings for which, in our opinion based upon facts and circumstances known at the time, either the likelihood of loss is remote or any reasonably possible loss associated with the resolution of such proceedings is not expected to be material to our results, and therefore remain undisclosed. If and when any reasonably possible losses associated with the resolution of such other pending proceedings, in our opinion, become material, we will disclose such matters.

Furthermore, like many pharmaceutical manufacturers, we are periodically exposed to product liability claims. The prevalence of these claims could limit our coverage under future insurance policies or cause those policies to become more expensive, which could harm our business, financial condition, and operating results. Recent trends in the product liability and director and officer insurance markets is to exclude matters related to certain classes of drugs. Our policies have been subject to such exclusions which place further potential risk of financial loss on us.

Legal fees for litigation-related matters are expensed as incurred and included in the condensed consolidated statements of operations under the selling, general, and administrative expense line item.

Commercial Litigation

On December 3, 2020, class action complaints were filed against the Company on behalf of putative classes of direct and indirect purchasers of the drug Bystolic. On December 23, 2020, six individual purchasers of Bystolic, CVS, Rite Aid, Walgreen, Kroger, Albertsons, and H-E-B, filed complaints against the Company. On March 15, 2021, the plaintiffs in these actions filed amended complaints. All amended complaints were substantively identical. The plaintiffs in these actions alleged that, beginning in 2012, Forest Laboratories, the manufacturer of Bystolic, entered into anticompetitive agreements when settling patent litigation related to Bystolic with seven potential manufacturers of a generic version of Bystolic: Hetero, Torrent, Alkem/Indchemie, Glenmark, Amerigen, Watson, and various of their corporate parents, successors, subsidiaries, and affiliates. ANI itself was not a party to patent litigation with Forest concerning Bystolic and did not settle patent litigation with Forest. The plaintiffs named the Company as a defendant based on the Company’s January 8, 2020 Asset Purchase Agreement with Amerigen. Under the terms of the 2020 Asset Purchase Agreement, Amerigen agreed to indemnify ANI for certain liabilities relating to Bystolic, including liabilities that arose prior to closing of the asset purchase. The complaints alleged that the 2013 patent litigation settlement agreement between Forest and Amerigen violated federal and state antitrust laws and state consumer protection laws by delaying the market entry of generic versions of Bystolic. Plaintiffs alleged they paid higher prices as a result of delayed generic competition. Plaintiffs sought damages, trebled or otherwise multiplied under applicable law, injunctive relief, litigation costs and attorneys’ fees. The complaints did not specify the amount of damages sought from the Company or other defendants and the Company. ~~at this stage of the litigation cannot reasonably estimate the potential damages that the plaintiffs will seek.~~ The cases were consolidated in the United States District Court for the Southern District of New Yorkas In re Bystolic Antitrust Litigation, Case No. 20-cv-005735 (LJL). On April 23, 2021, theCompany and other defendants filed motions to dismiss the amended complaints. On January 24, 2022, the court dismissed all claims brought by the plaintiffs without prejudice. The court granted the plaintiffs until February 22, 2022 to file amended complaints, which were filed in federal court in the Southern District of New York, on that date. The newly amended complaints contained substantially similar claims. On April 19, 2022, theCompany and other defendants filed motions to dismiss the newly amended complaints. ~~On May 23, 2022, the plaintiffs filed oppositions to the motions to dismiss~~After full briefing and oral argument, on ~~June 24, 2022, the Company and other defendants filed replies to those oppositions. On~~ February 21, 2023, the court granted the Company and the defendants’ ~~motions~~motion to dismiss all actions ~~were granted~~ with prejudice. Plaintiffs ~~have~~ filed ~~notices of~~an appeal in the Second Circuit. ~~On June 12,~~Oral arguments were held on December 6, 2023 ~~plaintiffs-appellants filed their brief in~~and a decision from the ~~Second Circuit and defendants-appellees filed their brief on July 17, 2023.~~court is pending. ANI continues to dispute any liability in this matter.

On March ~~24, 2021, Azurity~~4, 2024, ANI commenced a civil action against CG Oncology, Inc. f/k/a Cold Genesys, Inc. (“CG Oncology”) in the Superior Court of the State of Delaware (“Delaware Action”). ANI’s complaint alleges that, under an Assignment and Technology Transfer Agreement dated as of November 15, 2010 (the “November 2010 Agreement”), CG Oncology is liable to pay ANI a running royalty of 5% of the worldwide net sales of cretostimogene made by CG Oncology or any affiliate or sublicensee thereof; and that in February 2024, CG Oncology wrongfully repudiated its royalty obligation to ANI. On April 2, 2024, CG Oncology filed an answer and counterclaim and concurrently moved for judgment on the pleadings or, in the alternative, for partial summary judgment. CG Oncology seeks judgment declaring that the November 2010 Agreement does not "oblige CGON to pay royalties after expiration of the latest-running assigned patent." CG Oncology also seeks judgment awarding compensatory damages and punitive damages on counterclaims for alleged breach the November 2010 Agreement and for alleged misappropriation of trade secrets under federal and Delaware state law. On April 22 and 25, 2024, ANI filed its reply to CG Oncology's counterclaims, denying any liability to CG Oncology and asserting additional counterclaims against CG Oncology ("Reply Counterclaims") for alleged breach of the November 2010 Agreement and, in the alternative, for unjust enrichment. ANI’s Reply Counterclaims seek judgment (i) declaring that, under Section 3.3 of the November 2010 Agreement, CG Oncology is contractually obligated to pay ANI 5% of the worldwide net sales of cretostimogene made by CG Oncology or any affiliate or sublicensee thereof; (ii) dismissing CG Oncology’s counterclaims with prejudice; (iii) awarding ANI compensatory damages as provided by law, including damages grounded in restitution and unjust enrichment; (iv) in the event of a judgment in ANI’s favor on ANI’s fourth counterclaim for unjust enrichment, ordering CG Oncology to re-transfer to ANI ownership of all assets that ANI sold to CG Oncology under the November 2010 Agreement, including, without limitation, all data and documentation comprising IND 12154; and (v) in the event of a judgment in ANI’s favor on ANI’s fourth counterclaim for unjust enrichment, imposing a constructive trust on all fruits of CG0070-related assets that ANI sold to CG Oncology under the November 2010 Agreement including, without limitation, all data and documentation comprising IND 12154 and any other IND that CG Oncology may have for CG0070. ANI intends to vigorously pursue this matter.

On March 5, 2024, a complaint was filed against ANI by Acella Pharmaceuticals, ~~Inc. (“Azurity”) filed a complaint~~LLC, in the United States District Court ~~for the District~~ of Minnesota, ~~against ANI,~~ asserting, ~~that~~among other things, false advertising under the Lanham Act, and unfair trade practices and false advertising under Minnesota law, relating to ANI’s ~~vancomycin hydrochloride oral solution drug product infringes U.S. Patent No. 10,688,046.~~natural desiccated thyroid tablets USP. The complaint ~~sought~~seeks injunctive relief, actual and consequential damages, ~~including lost~~disgorgement of profits, ~~and/or royalty, treble~~and attorneys' fees and costs. On April 16, 2024, ANI filed an answer to Acella’s complaint, denying all claims, and asserting certain affirmative defenses, and counterclaims against Acella for false advertising of its thyroid product marketed as NP Thyroid® Tablets, under the Lanham Act, common law unfair competition and unfair and deceptive trade practices and false advertising under Minnesota and Georgia law. ANI seeks injunctive relief, compensatory damages, punitive damages and attorneys’ ~~fee~~fees and costs. ANI disputes any liability in this matter and intends to defend this lawsuit vigorously.

Patent Litigation

On ~~February 15, 2022, the Company entered into~~November 21, 2023, a settlement agreement with Azurity to resolve all claims related to this action. Under the terms of the agreement, Azurity granted ANI a non-exclusive, non-transferable, non-sublicensable, royalty-bearing license under its patents to sell ANI productcomplaint was filed against Novitium and certain other defendants in the ~~United States~~case of Harmony Biosciences, LLC, Bioprojet Societe Civile de Recherche and ~~dismissed the action with prejudice. In exchange, ANI paid Azurity $1.9 million of royalties from past sales~~Bioprojet Pharma SAS v. AET Pharma US, Inc., Annora Pharma Private Limited, Novitium Pharma LLC, Zenara Pharma Private Limited and ~~will pay Azurity a royalty equal to 20% of gross margin of sales of the ANI product for a contractually defined term.~~

~~On April 1, 2021, United Therapeutics Corp. and Supernus~~Biophore India Pharmaceuticals ~~Inc. (“UTC/Supernus”) filed a complaint~~Private Limited in the United States District Court for the District of Delaware, ~~against ANI,~~ asserting, among other things, that ~~ANI’s~~Novitium's proposed ~~Treprostinil extended release~~pitolisant hydrochloride drug product, which is subject to ~~ANI’s~~Novitium's Abbreviated New Drug Application No. ~~215667,~~218495, infringes U.S. Patent Nos. ~~7,417,070, 7,544,713, 8,252,839, 8,349,892, 8,410,169, 8,747,897, 9,050,311, 9,278,901, 9,393,203, 9,422,223, 9,593,066~~8,207,197, 8,354,430 and ~~9,604,901 (“the Asserted Patents”).~~8,486,947. The complaint seeks damages, injunctive relief,, attorneys' fee and costs. ANI filed its answer and counterclaims on May 28, 2021, denying UTC/Supernus’ allegations and seeking declaratory judgment that ANI has not infringed any valid and enforceable claim of the Asserted Patents, that the Asserted Patents are invalid, and an award of attorneys’ fees and costs. On ~~May 26,~~January 29, 2024, Novitium filed its answer, denying all allegations and asserting counterclaims of non-infringement and invalidity. On February 16, 2024, plaintiffs filed their answer, denying Novitium’s counterclaims and asserting certain affirmative defenses against Novitium. On April 15, 2024, the court consolidated Novitium’s case and two other cases brought by plaintiffs against Lupin Limited et al, and MSN Pharms. Inc. et al., into one consolidated matter filed in C.A. No. 23-1286-JLH. The court also set a trial date of February 2026. Novitium disputes any liability in this matter.

Ranitidine Related Litigation

Federal Court Multi District Litigation

ANI and Novitium were named as defendants, along with numerous other brand and generic pharmaceutical manufacturers, wholesale distributors, retail pharmacy chains, and repackagers of ranitidine-containing products, in In re: Zantac/Ranitidine NDMA Litigation (MDL No, 2924), filed in the United District Court for the Southern District of Florida (the "MDL Court"). Plaintiffs allege that defendants failed to disclose and/or concealed the alleged inherent presence of N-Nitrosodimethylamine (or "NDMA") in brand-name Zantac or generic ranitidine and the alleged associated risk of cancer. While ANI was initially a defendant, the lead plaintiff attorneys voluntarily dismissed ANI as a defendant in the Master Complaint prior to the MDL Court’s decision on the generic defendants’ motion to dismiss. On July 8, 2021, the MDL Court dismissed all claims by all plaintiffs against the generic drug manufacturers with prejudice , on preemption grounds. The MDL Court also dismissed all claims by all plaintiffs against the brand manufacturers on summary judgment, based on a Daubert ruling disqualifying the plaintiffs’ experts. Plaintiffs appealed the MDL Court's dismissals to the Eleventh Circuit Court of Appeals. On November 7, 2022, the ~~parties’ respective claims and counterclaims~~Eleventh Circuit affirmed the MDL Court's dismissal of cases brought by third-party payors. The Eleventh Circuit raised questions in the appeals of the other cases about the finality of the MDL Court's judgments, which were ~~dismissed pursuant~~resolved in September 2023. Merit briefs are expected to ~~a confidential settlement agreement.~~be filed during the second quarter of 2024.

On October 3, 2022, Azurity filed a complaint in the United States District Court for the District of New Jersey against Novitium, seeking a declaratory judgment that Novitium’s manufacture, use, sale, importation and/or offer to sell Bionpharma Inc.’s (“Bionpharma”) enalapril maleate oral solution drug product (the “Product”) would infringe U.S. Patents Nos. 11,040,023 and 11,141,405 (the “Novitium Action”). The complaint seeks injunctive relief, and an award of Azurity’s costs and expenses. On October 12, 2022, Bionpharma filed a motion in the New Jersey court to intervene on Novitium’s behalf in the litigation and on October 14, 2022, Novitium and Bionpharma jointly moved to transfer venue to the District of Delaware. Transfer was granted on January 20, 2023. On March 27, 2023, the transferred Novitium Action (assigned Delaware Civil Action No. 23-163-MSG) was consolidated with the Delaware Third Wave Suits against Bionpharma (Civil Action Nos. 21-1286-MSG, 21-1455-MSG), which include Azurity’s infringement claims against Bionpharma involving the same patents asserted in the Novitium Action, as well as Bionpharma’s antitrust claims against Azurity. Trial is scheduled for June 17, 2024 and the parties are currently proceeding through fact discovery. Bionpharma has agreed to indemnify Novitium under the terms of its manufacturing and supply agreement for any damages, costs, and expenses relating to actual or alleged infringement of intellectual property rights or sale of the Product by Bionpharma. ANI and Novitium dispute any liability in this matter.

~~Ranitidine Related Litigation~~

~~State of New Mexico Litigation~~. In July 2020, ANI and Novitium were served with a complaint brought in the First Judicial Court, County of Santa Fe, State of New Mexico by the Office of the Attorney General of the State of New Mexico against manufacturers and sellers of ranitidine products. The complaint asserts a public nuisance claim and a negligence claim against the generic ranitidine manufacturer defendants, including ANI and Novitium. The public nuisance claim asserts that the widespread sale of ranitidine products in the state created a public nuisance that requires a state-wide medical monitoring program of New Mexico residents for the development of colorectal cancer, stomach cancer, gastrointestinal disorders and liver disease. As damages, New Mexico asks that the defendants fund this medical monitoring program. The negligence claims assert that the defendants were negligent in selling the product, essentially alleging that it was unreasonable to have the product on the market. With respect to that claim, New Mexico asserts that it paid for ranitidine products through state-funded insurance and health-care programs. On December 15, 2020, the case was removed to federal court and transferred to the ~~In re Zantac~~ multidistrict litigation (“MDL”) pending in the United States District Court for the Southern District of Florida. New Mexico moved for remand to state court. The MDL court granted the remand motion on February 25, 2021. On April 16, 2021, New Mexico filed an amended complaint in the New Mexico First Judicial District Court in Santa Fe County. It did not name ANI in the amended complaint, effectively voluntarily dismissing ANI from the action. Novitium is named as a Defendant in the amended complaint. According to Novitium’s records, Novitium did not ship any ranitidine product to New Mexico, and received no funds from any state funded health care plan or Medicaid. The Defendants filed a motion to dismiss the claims asserted in the New Mexico litigation based primarily on preemption. The motion was denied in August 2021. A motion for reconsideration was denied on September 22, 2022. The case is currently in discovery. ANI and Novitium dispute any liability in this matter.

~~Federal Court Personal Injury Litigation. In June 2020, ANI was served with a personal injury complaint in the case of~~ ~~Koepsel v. Boehringer Ingelheim Pharmaceuticals, et al.~~, MDL No. 20-MD-2924, Case No. 9:20-cv-80882-RLR, filed in the United States District Court for Southern District of Florida, in which the plaintiff alleges that he developed kidney cancer in 2018 as a result of taking over the counter medication containing ranitidine. The ~~Koepsel~~ ~~action was filed within the existing MDL concerning ranitidine-containing drugs pending in the Southern District of Florida,~~ ~~In re Zantac MDL, 20 MDL 2924. A Master Personal Injury Complaint (“MPIC”) in that MDL that was filed on June 22, 2020 also named ANI and Novitium as defendants. ANI was dismissed from the~~ ~~Koepsel~~ case on August 21, 2020 and was dismissed from the MPIC on September 8, 2020. On December 31, 2020, after ANI was dismissed, the district court dismissed the MPIC claims against generic manufacturer defendants partially with prejudice and partially with leave to replead. The failure to warn and design defect claims were dismissed with prejudice on preemption grounds. An Amended MPIC was filed on February 8, 2021, which did not name ANI but did name Novitium. By opinion dated July 8, 2021, the district court dismissed all claims against the generic manufacturer defendants with prejudice on preemption grounds. That decision is on appeal to the Eleventh Circuit Court of Appeals. In addition, by opinion and order dated December 6, 2022, the district court granted the brand manufacturer defendants’ ~~Daubert~~ motion to exclude the plaintiffs’ expert testimony on general causation for the “designated cancers” that the plaintiffs’ leadership team claimed to be caused by ranitidine. The district court also granted the brand manufacturer defendants’ motion for summary judgment because the plaintiffs had failed to produce admissible primary evidence of general causation. The plaintiffs have appealed to the Eleventh Circuit Court of Appeals.

ANI and Novitium were named in other individual personal injury complaints filed in the MDL in which plaintiffs allege that they developed cancer after taking prescription and over the counter medication containing ranitidine. ANI was served with complaints in five of those additional cases: ~~Cooper v. Boehringer Ingelheim Pharmaceuticals, et al., MDL No. 20-MD-2924, Case No. 9:20-cv-81130-RLR (served September 30, 2020),~~ ~~Lineberry v. Amneal Pharmaceuticals, LLC, et al., MDL No. 20-MD-2924, Case No. 9:20-cv-81079-RLR (served August 20, 2020),~~ ~~Lovette v. Amneal Pharmaceuticals, LLC, et al., MDL No. 20-MD-2924, Case No. 9:20-cv-81040-RLR (served August 26, 2020),~~ ~~Hightower v. Pfizer, et al,~~ ~~MDL No. 20-MD-2924, Case No. 9-20-cv-82214-RLR (served December 16, 2020) and~~ ~~Bird v. Boehringer Ingelheim Pharmaceuticals, et al.~~, MDL No. 20-MD-2924, Case No. 9-20-cv-80837-RLR (served December 30, 2020). ANI informed counsel for the plaintiffs that ANI did not sell an over the counter ranitidine product and sold a generic prescription ranitidine product for a limited two-month period of time, from July 2019 to September 2019. ANI’s product was voluntarily recalled in January 2020. Each of the plaintiffs in the five pending cases alleges a cancer diagnosis prior to the time that ANI sold ranitidine, and we have informally sought dismissal from these cases on that basis. ANI was voluntarily dismissed from the ~~Cooper~~, ~~Lineberry~~ ~~and~~ ~~Lovette~~ ~~actions on November 20, 2020, from the~~ ~~Bird~~ ~~action on March 15, 2021, and from the~~ ~~Hightower~~ ~~action on March 29, 2021.~~

Prior to the district court’s July 8, 2021 preemption decision, Novitium had been named in 158 short form complaints filed by claimants in the MDL. Those complaints were effectively dismissed with prejudice with the MPIC on July 8, 2021. Counsel for the plaintiffs have been notified that Novitium did not sell an over the counter ranitidine product and sold a generic prescription ranitidine product for a limited period of time, from December 2018 until September 2019. Novitium’s product was voluntarily recalled in October 2019. Out of the 158 short form complaints, approximately 114 plaintiffs either were diagnosed with cancer before Novitium began manufacturing the product, only took over the counter ranitidine, or took ranitidine before Novitium began manufacturing it. Two of those 114 plaintiffs dismissed Novitium from their short form complaints. In light of the Court’s dismissal of all claims with prejudice, Novitium has not pursued dismissal of the short form complaints against it at this time. Following the district court’s ~~Daubert~~ decision, plaintiffs began filing additional short form complaints in the MDL. Novitium currently is named as a defendant in more than 700 short form complaints. The district court is in the process of entering final judgments on several of the cases in order to achieve a more consolidated appeal.~~The cases that are currently before the Eleventh Circuit are stalled as the court determines if some of the cases should be remanded back to the district court for entry of final judgment.~~

On June 1, 2023, ANI was provided with “courtesy service” of nine short form complaints filed in the Zantac MDL 2924 in the Southern District of Florida, which purport to assert personal injury claims against ANI relating to ranitidine products.The plaintiffs are: (1) David L. Eads, Case No. 3:23-cv-23009-XXXX (alleged to have been diagnosed with cancer in 2016, before ANI began selling generic prescription ranitidine products); (2) Luis E. Acevedo, Case No. 3:23-cv-80534-XXXX (alleged to have been diagnosed with cancer in June 2019, before ANI began selling generic prescription ranitidine products); (3) Shellie Green, Case No. 3:23-cv-23032-XXXX; (4) Patricia Manders, individually and on behalf of the Estate of Jerry Manders, Case No. 3:23-cv-23026-XXXX (alleged to have died in March 2019, before ANI began selling generic prescription ranitidine products); (5) Christine Behrman, individually and on behalf of the Estate of Ralph Behrman, Case No. 3:23-cv-23016-XXXX; (6) Wendy Kelfer, individually and on behalf of the Estate of Sidney Kelfer, Case No. 3:23-cv-23029-XXXX; (7) Helen Romero, individually and on behalf of the Estate of Deborah Kilborn, Case No. 3:23-cv-23008-XXXX; (8) Jeffrey Eugene Guidry, Case No. 3:23-cv-22980-XXXX; and (9) Ruth Copeland, Case No. 3:23-cv-22973-XXXX (alleged to have been diagnosed with cancer in 2015, before ANI began selling generic prescription ranitidine products).~~The service cover letter acknowledges that the Zantac MDL is closed due to the pending appeal and the court is not issuing summonses.~~

~~ANI and Novitium dispute any liability in these matters.~~

State Court Personal Injury Litigation

~~Illinois~~
~~. On February 3, 2022, a complaint was filed~~

ANI and Novitium have also been named as defendants in ~~Cook County, Illinois, naming Novitium as a defendant. The complaint incorrectly identifies Novitium as a “repackager.” The case is styled~~ ~~Ross v. Boehringer Ingelheim Pharmaceuticals, Inc., et. al~~. The complaint asserts claims of strict liability/failure to warn, strict liability/design defect, negligent failure to warn, negligent product design, general negligence, negligent misrepresentation, breach of express and implied warranties, and unjust enrichment. The plaintiff alleges that he was diagnosed with prostate cancer in 2017, before Novitium began selling generic ranitidine products, and that he took over the counter ranitidine that he purchased at Walgreens from 2008 to 2019. At this point, the allegations show that the plaintiff’s alleged cancer injury could not have come from a Novitium product. The generic manufacturer defendants filed a motion to dismiss on preemption grounds. That motion is pending.various state lawsuits.

~~In August 2022, the Keller Postman law firm commenced six multi-plaintiff actions~~California. The pending cases in ~~Illinois~~California state court naming generic ranitidine manufacturers ~~including ANI and/or Novitium, as defendants. Those cases are: (1)~~ ~~Jodee Gillespie v. Walgreen Co., et. al., Circuit Court of the Third Judicial Circuit, Madison County, Illinois, Case No. 2022LA001007 (naming both Novitium and ANI); (2)~~ ~~John Jackson v. Walgreen Co., et. al., Circuit Court of the Third Judicial Circuit, Madison County, Illinois, Case No. 2022LA001012 (naming Novitium); (3)~~ ~~Ayesha Salahuddin v. Walgreen Co., et. al.,~~ ~~Circuit Court of the Twentieth Judicial Circuit, St. Clair County, Illinois, Case No. 22LA0709 (naming Novitium); (4)~~ ~~Lashanda McGruder v. Walgreen Co., et. al.,~~ ~~Circuit Court of the Third Judicial Circuit, Madison County, Illinois, Case No. 22LA0710 (naming both Novitium and ANI); (5)~~ ~~Richard Devriendt v. Walgreen Co., et. al.,~~ ~~Circuit Court of Cook County, Illinois, Case No. 2022L007429 (naming Novitium); (6)~~ ~~Anthony Stigger v. Walgreen Co., et. al.,~~ Circuit Court of Cook County, Illinois, Case No. 2022L007396 (naming both Novitium and ANI). The complaints allege causes of action for failure to warn, design defect, general negligence, loss of consortium and wrongful death. Pursuant to an Order of the Illinois Supreme Court dated October 25, 2022, the pending ranitidine personal injury actions in Illinois have been consolidated in Cook County for coordinated pre-trial proceedings. Those pre-trial proceedings are pending in the Circuit Court of Cook County. On January 12, 2023, the court directed the plaintiffs to dismiss the multi-plaintiff actions and refile each individual plaintiff action under a separate case number. At a status conference held on February 16, 2023, the court required that the plaintiffs re-file within 60 days. The court also authorized use of a master complaint. Plaintiffs filed a master long-form complaint on March 9, 2023 naming Novitium as a defendant. ANI is not named as a defendant. The Keller Postman firm has confirmed that its clients are no longer pursuing claims against ANI. When the court ruled the cases needed to be re-filed as single-plaintiff cases, Novitium was never served.The counts in the master complaint include strict liability for failure to warn/design defects, general negligence, negligent misrepresentation, negligent storage and transport, apparent manufacturer liability, common law fraud, unjust enrichment, civil conspiracy, and breach of express and implied warranties. The complaint further alleges violations of the Illinois Consumer Fraud Act. Pursuant to the court’s standing order, the generic defendants filed a motion to dismiss pursuant to IL 2-615 (failure to state a claim on the face of the complaint) on April 13, 2023, claiming preemption by federal law. In addition, the generic defendants argue that Plaintiffs failed to meet Illinois’ fact pleading standards, as the complaint fails to specifically allege the misconduct of any generic defendant. There has been no ruling on the motion to dismiss. The court has set a number of cases for preferential trial settings, including a case in which Novitium is named, ~~Wodstrchill, which is set for trial in February 2025.~~

~~California.~~In August and September 2022, the Keller Postman law firm commenced seven multi-plaintiff actions in California state court, Alameda County, naming generic ranitidine manufacturers, including ANI and/or Novitium, as defendants. Those cases are: (1) ~~Carlos Ascencio v. ANI Pharmaceuticals, et. al.,~~ ~~Superior Court of California, County of Alameda, Case. No. 22CV016230 (naming both Novitium and ANI); (2)~~ ~~Andre Lebeau v. Actavis Mid Atlantic, LLC et. al.,~~ ~~Superior Court of California, County of Alameda, Case No. 22CV016448 (naming Novitium); (3)~~ ~~Roque Torres v. ANI Pharmaceuticals, Inc., et. al.,~~ ~~Superior Court of California, County of Alameda, Case No. 22CV016338 (naming both Novitium and ANI); (4)~~ ~~Deborah Hinds v. ANI Pharmaceuticals, Inc., et. al.,~~ ~~Superior Court of California, County of Alameda, Case No. 22CV016123 (naming both Novitium and ANI); (5)~~ ~~Mark Cruz v. ANI Pharmaceuticals, Inc., et. al.,~~ ~~Superior Court of California, County of Alameda, Case No. 22CV016338 (naming both Novitium and ANI); (6)~~ ~~Bent Olsen v. ANI Pharmaceuticals, Inc., et. al.,~~ ~~Superior Court of California, County of Alameda, Case No. 22CV016402 (naming both Novitium and ANI); (7)~~ ~~John Norman v. Actavis Mid Atlantic, LLC, et. al.,~~ Superior Court of California, County of Alameda, Case No. 22CV018334 (naming Novitium). The complaints allege causes of action for failure to warn, design defect, general negligence, loss of consortium and wrongful death. By stipulation and order dated December 28, 2022, the cases were transferred to an existing civil case coordination docket for pretrial proceedings (JCCP) ~~pending~~ in Alameda County. ~~By order dated January 19,~~On September 21, 2023, plaintiffs filed a master complaint in the JCCP alleging strict liability (design defect and failure to warn), negligent failure to warn and general negligence, but not naming any generic defendants. In December 2023, the ~~court ordered~~Keller Postman firm filed approximately 200 individual plaintiff short form complaints that counsel for the plaintiffs must dismiss the individual plaintiffs (other than the first-named plaintiff) from each of the multi-plaintiff complaints and that each of the dismissed plaintiffs must re-file their claims in a single plaintiff complaint. As of April 25, 2023, ANI and Novitium had not yet been served with any of these single-plaintiff complaints. As of April 25, 2023, the Company is aware of three single-plaintiff cases in whichname generic defendants. Novitium is named ~~as a defendant:~~ ~~David Duncan v. GSK Holdings, No. T23-507~~; ~~Charmaine Sili v. GSK Holdings, No. T23-355; and~~ ~~Charles Crippen v. Boehringer,~~ ~~No.T23-349. At this time, none~~in 28 of the short form complaints which reference the claims for the master complaint, but has not been served. ANI is not named. On February 1, 2024, the generic defendants ~~have been served~~filed an omnibus demurrer challenging the sufficiency of the Keller Postman complaints, largely on the basis of preemption. On April 23, 2024, the California court granted the demurrer in part, dismissing all design defect claims against the generic defendants with ~~any complaints.~~prejudice on preemption grounds, but the court otherwise granted plaintiffs an opportunity for leave to amend their other claims against the generic defendants.

~~Pennsylvania~~

.Pennsylvania. In September 2022, two ~~single-plaintiff~~ complaints were filed naming Novitium as a defendant in Pennsylvania state court, Philadelphia ~~County, naming Novitium as a defendant: (1)~~ ~~William Titus v. Glaxo SmithKline LLC, et. al., Court of Common Pleas, Philadelphia County, Pennsylvania, Case No. 220902548; and (2)~~ ~~Jodi Woodard v. Ajanta Pharma USA, Inc., et. al., Court of Common Pleas, Philadelphia County, Pennsylvania, Case No. 220902329.~~ ~~These complaints allege causes of action for negligence, failure to warn, negligent storage and transportation, breach of express and implied warranties, negligent misrepresentation, and fraud.~~County. On February 16, 2023, the Pennsylvania plaintiffs filed a consolidated long-form complaint against the generic defendants, Plaintiffs v. Actavis, et. al. Civil Action No. 1364. The long-form complaint names Novitium as a defendant. The long form complaint asserts causes of action for negligence, failure to warn, negligent storage and transportation, breach of express warranties, breach of implied warranties, negligent misrepresentation, fraud, strict products liability, wrongful death and survivor actions, and loss of consortium. The complaint includes a prayer for punitive damages.The generic defendants filed their preliminary objections to Plaintiffs’ consolidated long-form generic complaint on March 20, 2023. The court ~~sustained the generics’ objection that plaintiffs’ failure to warn/design defect~~dismissed all claims ~~were preempted by federal law; therefore, all allegations~~ related to failure to warn/design defects ~~are dismissed.~~on preemption grounds. The court also sustained the generics’ preliminary objections relating to the counts of strict liability-design defect and breach of implied warranty to the extent Pennsylvania substantive law ~~applies. The court noted~~applies, effectively dismissing the ~~substantive law of another state may not conflict with federal law, and, further, strict liability and breach of implied warranty causes of action of another state may apply in individual cases.This is a determination that can only be made after short form complaints are filed.It is the generics’ position that the court’s ruling on the preliminary orders effectively dismissed the generics~~generic defendants from the case unless and until a non-resident plaintiff names a generic in a short form complaint.Out of an abundance of caution, however, the generics, including Novitium, all filed answers to the ~~longform~~long form complaint in June 2023. In January 2024, plaintiffs filed short form complaints naming generic defendants, including Novitium in one complaint.

ANI and Novitium dispute any liability in these matters.

~~Other Industry Related Matters~~

On or about September 20, 2017, the Company and certain of its employees were served with search warrants and/or grand jury subpoenas to produce documents and possibly testify relating to a federal investigation of the generic pharmaceutical industry. We have been cooperating and intend to continue cooperating with the investigation. However, no assurance can be given as to the timing or outcome of the investigation.

13. FAIR VALUE DISCLOSURES

Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework that prioritizes and ranks the level of observability of inputs used in measuring fair value.

The inputs used in measuring the fair value of cash and cash equivalents are considered to be Level 1 in accordance with the three-tier fair value hierarchy. The fair market values are based on period-end statements supplied by the various banks and brokers that held the majority of our funds. The fair value of short-term financial instruments (primarily accounts receivable, prepaid expenses, accounts payable, accrued expenses, and other current liabilities) approximate their carrying values because of their short-term nature. The Term Facility bears an interest rate that fluctuates with the changes in ~~LIBOR~~SOFR and, because the variable interest rates approximate market borrowing rates available to us, we believe the carrying values of these borrowings approximated their fair values at ~~June 30, 2023.~~March 31, 2024.

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

~~Contingent Value Rights~~

~~Our contingent~~Money Market Funds

Money market funds are readily convertible into cash and the net asset value ~~rights (“CVRs”), which were granted coincident with our merger with BioSante and expired in June 2023, were considered contingent consideration and were classified as liabilities. The CVRs expired~~of each fund on ~~June 19, 2023 and there were no payments made pursuant to~~ the ~~terms~~last day of the ~~CVR agreement.~~reporting period is used to determine its fair value. Money market funds are included in Cash and cash equivalents within the Consolidated Balance Sheet, and is classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The Company does not adjust the quoted market price for such financial instruments. The fair value of the money market funds as of March 31, 2024 was approximately $174.3 million.

Interest Rate Swap

The fair value of ~~our~~the interest rate swap is estimated based on the present value of projected future cash flows using the ~~LIBOR~~SOFR forward rate ~~curve.~~curve (see Note 5). The model used to value the interest rate swap includes inputs of readily observable market data, a Level 2 input. As described in detail in Note 5, the fair value of the interest rate swap was a ~~$9.2~~$7.7 million ~~asset~~ as of ~~June 30, 2023.~~March 31, 2024, and was classified as a non-current asset.

CG Oncology Equity Securities

The Company currently holds 219,925 shares of common stock in CG Oncology (Nasdaq: CGON). The Company accounts for its investment in CG Oncology equity securities as an equity investment with a readily determinable fair value, as the securities are publicly traded on the NASDAQ. The fair value of the equity securities is based on its closing price on the NASDAQ and is classified within Level 1 of the fair value hierarchy because the equity securities are valued using quoted market prices. The Company does not adjust the quoted market price for such financial instruments. The fair value of the CG Oncology equity securities as of March 31, 2024 was approximately $9.7 million based on a closing market price of $43.90 on March 28, 2024. This amount is classified on the unaudited condensed consolidated statements of operations as Unrealized gain on investment in equity securities. Between 2013 and 2023, CG Oncology securities held by the Company were valued at zero under U.S. GAAP.

Contingent Consideration

In connection with the acquisition of Novitium, wethe Company may pay up to $46.5 million in additional consideration related to the achievement of certain milestones, ~~including~~such as milestones on gross profit of Novitium portfolio products over a 24-month period, regulatory filings completed during this 24-month period, and a percentage of net profits on certain products that are launched in the future.

The discounted cash flow method used to value this contingent consideration includes inputs ~~of not readily observable market data,~~ which are classified as Level 3 ~~inputs.~~ inputs, as the inputs are not based on readily available market data.

Pursuant to the terms of the Agreement and Plan of Merger, dated as of March 8, 2021, on December 12, 2023, the Company paid $12.5 million of cash consideration to the Company Members, defined as the holders of Novitium ownership interests in the Agreement and Plan of Merger, as the holders of Novitium ownership interests, for the achievement of the "ANDA Filing Earn-Out," as defined in the Agreement (Note 14). Furthermore, on February 22, 2024, the Company paid $12.5 million to Company Members of Novitium upon the achievement of the "Gross Profit Earn-Out," as defined in the Agreement (Note 14).

The fair value of the contingent consideration was approximately $11.6 million and $24.0 million as of March 31, 2024 and December 31, 2023, respectively, and is reflected as a current and non-current accrued contingent consideration liability in the unaudited interim condensed consolidated balance sheets.

The recurring Level 3 fair value measurements of contingent consideration for which a liability is recorded include the following significant unobservable inputs:

Payment Type

Valuation Technique

Unobservable Input

Assumptions

Profit-based milestone payments

Probability-weighted discounted cash flow

Discount rate

~~14.0%~~13.0%

Projected fiscal year of payment

~~2024-2030~~2025-2035

Product development-based milestone payments

Probability-weighted discounted cash flow

Discount rate

~~9.0%~~7.0% - 13.0%

Probability of payment

100.0%

~~Projected fiscal year~~Year of payment

2024

The following table presents the changes in contingent consideration balances classified as Level 3 ~~balances~~ for the three ~~and six~~ months ended ~~June 30, 2023~~March 31, 2024 and ~~2022:~~2023:


		Three Months Ended June 30,				Six Months Ended June 30,
	Three Months Ended March 31,												Three Months Ended March 31,
(in thousands)	(in thousands)	2023		2022		2023		2022		(in thousands)	2024	2023
Beginning balance	Beginning balance	$	36,019	$	32,053	$	35,058	$	31,000
Measurement period adjustment		—		—		—		300
Payment of Gross-Profit earn-out
Change in fair value	Change in fair value	1,035		(1,095)		1,996		(342)
Ending balance	Ending balance	$	37,054	$	30,958	$	37,054	$	30,958

3330

The following table presents our financial assets and liabilities accounted for at fair value on a recurring basis as of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, by level within the fair value hierarchy:


(in thousands) Description	(in thousands) Description	Fair Value at June 30, 2023		Level 1		Level 2		Level 3		(in thousands) Description	Fair Value at March 31, 2024	Level 1	Level 2	Level 3
Assets	Assets
Money Market Fund
Money Market Fund
Money Market Fund
Interest rate swap	Interest rate swap	$	9,174	$	—	$	9,174	$	—
CG Oncology - Investment in equity securities
Liabilities	Liabilities									Liabilities
Contingent consideration	Contingent consideration	$	37,054	$	—	$	—	$	37,054


Description	Description	Fair Value at December 31, 2022		Level 1		Level 2		Level 3		Description	Fair Value at December 31, 2023	Level 1	Level 2	Level 3
Assets	Assets									Assets
Money Market Fund
Interest rate swap	Interest rate swap	$	8,759	$	—	$	8,759	$	—
Liabilities	Liabilities									Liabilities
Contingent consideration	Contingent consideration	$	35,058	$	—	$	—	$	35,058
CVRs		$	—	$	—	$	—	$	—

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

~~We do not have any~~There are no financial assets ~~and~~or liabilities that are measured at fair value on a non-recurring basis.

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

~~We do not have any~~There are no non-financial assets ~~and~~or liabilities that are measured at fair value on a recurring basis.

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

~~We measure our long-lived~~Long-lived assets, including property, plant, and equipment, right-of-use (“ROU”) assets, intangible assets, and goodwill, are measured at fair value on a non-recurring ~~basis. These assets are recognized at fair value when they are deemed to be other-than-temporarily impaired. No~~basis, and no such fair value impairment was recognized in the three ~~and six~~ months ended ~~June 30, 2023~~March 31, 2024 and ~~2022.~~

~~Acquired Non-Financial Assets Measured at Fair Value~~

On May 25, 2023, we acquired two ANDAs and one pipeline product from the Chapter 7 Trustee for the estates of Akorn Holding Company and certain of its affiliates for total consideration of $4.8 million. The transaction was funded from cash on hand. We accounted for this transaction as an asset acquisition and capitalized the transaction costs directly related to the acquisition. The product portfolio included two commercial products and one pipeline product. We recognized $4.3 million as acquired ANDA intangible assets. The payment was allocated to the acquired intangible assets and in-process research and development based on relative fair value, which was determined using Level 3 unobservable inputs. The ANDA’s will be amortized in full over its useful life of seven years and will be tested for impairment when events or circumstances indicate that the carrying value of the asset may not be recoverable. No such triggering events were identified during the period from the date of acquisition to June 30, 2023, and therefore no impairment loss was recognized for the three and six months ended June 30, 2023.

~~On July 21, 2022, we ac~~quired four ANDAs from Oakrum Pharma, LLC for total consideration of $8.0 million plus an immaterial amount for the purchase of finished goods inventory. The transaction was funded from cash on hand. We accounted for this transaction as an asset acquisition and capitalized the transaction costs directly related to the acquisition. The product portfolio included one commercial product, one approved product with a launch completed in September and two filed products, with approval pending. We recognized $7.2 million as acquired ANDA intangible assets and $1.2 million as research and development expense because certain of the generic products have significant remaining work required in order to be commercialized and the products do not have an alternative future use. The payment was allocated to the acquired intangible assets and in-process research and development based on relative fair value, which was determined using Level 3 unobservable inputs. We used the present value of the estimated cash flows related to the products, using a discount rate of 13% to determine the fair value of the acquired intangible assets and in-process research and development. The inventory acquired was immaterial. Contingent liabilities are accrued when they are both estimable and probable. As of June 30, 2023, we accrued $0.2 million in contingent payments due to a third party upon the launch of a product completed in September. This was accrued and recorded in the fair value of acquired intangible assets as it was probable at the acquisition date. The ANDA’s will be amortized in full over its useful life of seven years and will be tested for impairment when events or circumstances indicate that the carrying value of the asset may not be recoverable. No such triggering events were identified during the period from the date of acquisition to June 30, 2023, and therefore no impairment loss was recognized for the three and six months ended June 30, 2023.

14. RELATED PARTY TRANSACTIONS

PIPE Shares

On March 8, 2021, wethe Company entered into an Equity Commitment and Investment Agreement with the PIPE Investor, pursuant to which ~~we agreed to issue and sell~~ 25,000 shares ~~of our PIPE Shares~~were purchased for ~~a purchase price of~~ $1,000 per share ~~and~~for an aggregate purchase price of ~~$25.0 million. This agreement closed and the shares were sold and issued for~~ $25.0 million on November 19, 2021. The Chairman of ~~our~~the Company's board of directors is an operating partner of Ampersand Capital Partners, an affiliate of the PIPE Investor.

Novitium

In connection with ~~our~~the acquisition of Novitium, wethe Company entered into employment agreements with the two executives and founders of Novitium, Muthusamy Shanmugam, Head of R&D and COO of NJ Operations of ANI, and Chad ~~Gassert.~~Gassert, Sr. Vice President, Corporate Development and Strategy of ANI. Both serve as executive officers of the Company and Mr. Shanmugam also serves on the ~~Company’s~~Company's board of directors. Mr. Shanmugam holds a minority interest in Scitus Pharma Services (“Scitus”), which provides clinical research services to ~~Novitium;~~Novitium, a majority interest in SS Pharma LLC (“SS Pharma”), which acquires and supplies API to ~~Novitium; majority interest in Esjay Pharma LLC (“Esjay”), which provided research and development and facilities consulting services; and~~Novitium, a minority interest in Nuray Chemical Private Limited (“Nuray”), which ~~manufactures~~manufactured and supplied API to Novitium in prior periods, and a minority interest in SThree Chemicals Pvt Ltd (“SThree”), which acquires and supplies API to Novitium. ~~As of September 30, 2022, Esjay no longer provided research and development and facilities consulting services to Novitium or ANI. Mr. Gassert holds a minority interest in Scitus.~~

3531

A summary of ~~our~~ payments to related parties is presented below:


		Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022		2023		2022
	Three Months Ended March 31,										Three Months Ended March 31,
	2024									2024		2023
Scitus Pharma Services	Scitus Pharma Services	$	1,188	$	730	$	1,905	$	1,291
SS Pharma LLC	SS Pharma LLC	1,978		687		3,579		1,645
Esjay Pharma LLC		—		27		—		101
Nuray Chemical Private Limited		—		—		—		868
		$	3,166	$	1,444	$	5,484	$	3,905
SThree Chemicals Pvt Ltd
	$

As of ~~June 30, 2023,~~March 31, 2024, the outstanding balances due to Scitus, ~~and~~ SS Pharma, and SThree were $0.4 million, $0.2 million, and $0.3 million res~~$1.2~~pectively.

On December 12, 2023, the Company paid $12.5 million of cash consideration to the Company Members of Novitium for the achievement of the "ANDA Filing Earn-Out," as defined in the Novitium acquisition agreement, as discussed in Note 2. The Company paid Mr. Shanmugam and ~~$0.3~~Esjay, and Mr. Gassert's company Chali Properties LLC, approximately $6.7 million~~, respectively. There was no outstanding balance~~ and $1.9 million, respectively, for their portion of the cash consideration due to ~~Nuray at June 30, 2023.~~them as part of the Novitium acquisition.

On February 22, 2024, the Company paid $12.5 million of cash consideration to the Company Members of Novitium for the achievement of the "Gross Profit Earn-Out," as defined in the Novitium acquisition agreement, as discussed in Note 2. The Company paid Mr. Shanmugam and Esjay, and Mr. Gassert's company Chali Properties LLC, approximately $6.7 million and $1.9 million, respectively, for their portion of the cash consideration due to them as part of the Novitium acquisition.

15. SEGMENT REPORTING

An operating segment is defined as a component of an entity that engages in business activities from which it may recognize revenues and incur expense, its operating results are regularly reviewed by the entity’s chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance, and its discrete financial information is available. ~~We determined that we have~~The Company is organized into two operating segments as follows:

•Generics, Established Brands, and Other – Consists of operations related to the development, manufacturing, and marketing of generic and established brand pharmaceuticals, including those sold through traditional channels, contract manufactured products, product development services, royalties, and other.

•Rare Disease – Consists of operations related to the development, manufacturing and marketing of pharmaceuticals used in the treatment of patients with rare conditions. The rare disease segment currently consists of operations related to Cortrophin Gel.

~~Our~~The CODM evaluates ~~our~~the two operating segments based on revenues and earnings before interest, income taxes, depreciation, and amortization (“EBITDA”), exclusive of corporate expenses and other expenses not directly allocated or attributable to an operating segment. These expenses include, but are not limited to, certain management, legal, accounting, human resources, insurance, and information technology expenses.

~~We do~~The Company does not manage assets of the Company by operating segment and our CODM does not review asset information by operating segment. Accordingly, ~~we do~~the Company does not present total assets by operating segment.

3632

Financial information by reportable segment is as follows:


		Three Months Ended June 30,				Six Months Ended June 30,
	Three Months Ended March 31,												Three Months Ended March 31,
(in thousands)	(in thousands)	2023		2022		2023		2022		(in thousands)	2024	2023
Net Revenues	Net Revenues
Generics, Established Brands, and Other
Generics, Established Brands, and Other
Generics, Established Brands, and Other	Generics, Established Brands, and Other	$	92,243	$	63,653	$	182,699	$	126,838
Rare Disease	Rare Disease	24,304		10,202		40,634		11,494
Total net revenues	Total net revenues	$	116,547	$	73,855	$	223,333	$	138,332

Segment earnings (loss) before interest, taxes, depreciation and amortization (“EBITDA”) and reconciliation to income (loss) before income taxes
Segment earnings before interest, taxes, depreciation and amortization (“EBITDA”) and reconciliation to income before income taxes
Segment earnings before interest, taxes, depreciation and amortization (“EBITDA”) and reconciliation to income before income taxes
Segment earnings before interest, taxes, depreciation and amortization (“EBITDA”) and reconciliation to income before income taxes
Generics, Established Brands, and Other
Generics, Established Brands, and Other
Generics, Established Brands, and Other	Generics, Established Brands, and Other	$	39,937	$	15,473	$	78,765	$	30,004
Rare Disease	Rare Disease	4,215		(6,663)		2,964		(17,111)
Depreciation and amortization	Depreciation and amortization	(14,690)		(13,764)		(29,390)		(28,321)
Corporate and other unallocated expenses(1)	Corporate and other unallocated expenses(1)	(17,060)		(7,959)		(30,042)		(16,680)
Total operating income (loss)		12,402		(12,913)		22,297		(32,108)
Total operating income

Unrealized gain on investment in equity securities
Unrealized gain on investment in equity securities
Unrealized gain on investment in equity securities
Interest expense, net	Interest expense, net	(7,100)		(6,669)		(14,796)		(13,282)
Other (expense) income, net		(53)		764		(87)		675
Income (Loss) Before Income Tax Benefit		$	5,249	$	(18,818)	$	7,414	$	(44,715)
Other expense, net
Income Before Income Tax Expense

(1)Includes expenses not directly allocated or attributable to a reporting segment, including certain management, legal, accounting, human resources, insurance, and information technology expenses, and are included in selling, general, and administrative expenses in our unaudited interim consolidated statement of operations. This amount also includes the gain on the sale of the Oakville, Ontario site, refer to Note 3 for further information.

Geographic Information

~~Our operations~~Operations are currently located in the United States and India. ~~We have~~The Company has ceased operations at our Oakville, Ontario, Canada location as of ~~June 30,~~March 31, 2023. The majority of the assets of the Company are located in the United States.

The following table depicts the Company’s revenue by geographic operations during the following periods:


(in thousands)	(in thousands)	Three Months Ended June 30,				Six Months Ended June 30,				(in thousands)	Three Months Ended March 31,
Location of Operations	Location of Operations	2023		2022		2023		2022		Location of Operations	2024	2023
United States	United States	$	116,547	$	72,811	$	222,768	$	136,571
Canada	Canada	—		1,044		565		1,761
Total Revenue	Total Revenue	$	116,547	$	73,855	$	223,333	$	138,332

The following table depicts the Company’s property, plant and equipment, net according to geographic location, ~~as of:~~

(in thousands) June 30, 2023 December 31, 2022
United States $ 43,156 $ 40,343
Canada(1)
— 1,856
India 1,215 1,047
Total property and equipment, net $ 44,371 $ 43,246

~~(1)~~which ~~Amounts as of June 30, 2023 exclude~~excludes the land and building at ~~our~~the Company's Canada facility, which ~~are~~was classified as held for sale as of ~~June 30,~~December 31, 2023. These assets ~~have~~had a carrying value of approximately $8.0 million. The land and building at the Canada facility was sold on March 28, 2024, refer to Note 3. The Company's property, plant and equipment are as follows:


(in thousands)	March 31, 2024		December 31, 2023
United States	$	46,905	$	43,163
India	1,621		1,430
Total property and equipment, net	$	48,526	$	44,593

3733

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the unaudited interim condensed consolidated financial statements and the accompanying notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, the audited consolidated financial statements and the accompanying notes thereto in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2022~~2023 (the ~~“2022~~“2023 Annual Report”), as well as the information contained under Management’s Discussion and Analysis of Financial Condition and Results of Operations and “Risk Factors” contained in the ~~2022~~2023 Annual Report, and Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q , and other information provided from time to time in our other filings with the SEC. This discussion contains forward-looking statements, based on current expectations and related to future events and our future financial performance, that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many important factors, including those set forth under “Risk Factors” in our ~~2022~~2023 Annual Report and this Quarterly Report on Form 10-Q.

EXECUTIVE OVERVIEW

ANI Pharmaceuticals, Inc. and its consolidated subsidiaries (together, “ANI,” the “Company,” “we,” “us,” or “our”) is a diversified bio-pharmaceutical company serving patients in need by developing, manufacturing, and marketing high quality branded and generic prescription pharmaceuticals, including for diseases with high unmet medical need. Our team is focused on delivering sustainable growth by scaling up our Rare Disease business through the ~~successful~~ launch of our lead asset, Cortrophin Gel, strengthening our generics business with enhanced development capability, innovation in established brands and leveraging our ~~North American~~U.S.-based manufacturing capabilities. Our three pharmaceutical manufacturing facilities, of which two are located in Baudette, Minnesota, and one is located in East Windsor, New Jersey, are together capable of producing oral solid dose products, as well as semi-solids, liquids and topicals, controlled substances, and potent products that must be manufactured in a fully-contained environment. ~~On June 2, 2022, we announced that we intended to cease~~We ceased operations at our subsidiary in Oakville, Ontario, Canada ~~manufacturing plant by the end~~as of ~~the first quarter~~March 31, 2023. This action was part of ongoing initiatives to capture operational synergies following our acquisition of Novitium Pharma LLC (“Novitium”) in November 2021. We ~~previously~~have fully completed the transition of the products manufactured or packaged in Oakville to one of our three ~~U.S.-based~~U.S. based manufacturing sites. In February 2024, our Canadian subsidiary entered into an agreement for the purchase and sale of the Oakville site, for a purchase price of $19.2 million Canadian Dollars, or approximately $14.2 million, based on the current exchange rate. The sale closed on March 28, 2024 (see Note 3).

Strategy

Our objective is to build a sustainable and growing biopharmaceutical company serving patients in need and creating long-term value for our investors. Our overall strategy is enabled by an empowered, collaborative, and purposeful team with high performance-orientation, Serving Patients, Improving Lives.

Our growth strategy is driven by the following key growth drivers:

Building a successful Rare Disease platform

We have spent significant time, effort and resources in establishing our Rare Disease platform. We acquired the NDAs for Cortrophin Gel and Cortrophin-Zinc in January 2016 and executed long-term supply agreements with a supplier of our primary raw material for corticotrophin ~~active pharmaceutical ingredient (“API”),~~API, a supplier of corticotrophin API with whom we have advanced the manufacture of commercial scale batches of API, and a Cortrophin Gel fill/finish contract manufacturer. During the second quarter of 2021, we submitted a Supplemental New Drug Application (“sNDA”) to the FDA.

On October 29, 2021, the FDA approved the Company’s sNDA for Purified Cortrophin Gel (Repository Corticotropin Injection USP) for the treatment of certain chronic autoimmune disorders, including acute exacerbations of multiple sclerosis (“MS”) and rheumatoid arthritis (“RA”), in addition to excess urinary protein due to nephrotic syndrome. Cortrophin Gel is an adrenocorticotropic hormone (“ACTH”), also known as purified corticotropin.

During 2021 and 2022, we invested significantly in leadership, expertise and infrastructure in the areas of commercialization of rare disease therapies and developed a launch strategy and commercial plan for this product. During this timeframe, we hired a significant number of new employees and assembled and trained our Rare Disease field force. On January 24, 2022, we announced the commercial launch of Cortrophin Gel in the U.S as our foundational Rare Disease asset.

Throughout 2023 and the first quarter of 2024, we continued to build and invest in our infrastructure to support growth in new areas of opportunity, such as pulmonology, ophthalmology, and gout in the ACTH market. On October 2, 2023, we announced FDA approval and commercial availability of a 1-mLvial of Cortrophin Gel, appropriate for adjunctive treatment of certain patients with acute gouty arthritis flares. As a result of the ~~build out of~~continued investment in our Rare Disease ~~team,~~Platform, our expenditures ~~in support of these efforts~~ were significantly higher ~~in 2022~~during the first quarter of 2024 as compared to the prior ~~year, and we~~year.

We plan to continue to ~~invest behind Cortrophin Gel and~~expand our Rare Disease ~~platform~~business, through a combination of organic growth, as described above, and acquisition. While we continue to execute against our strategic initiatives that we believe will result in ~~2023~~the long-term, sustainable growth and ~~beyond.~~value to our stockholders, we continue to evaluate potential acquisitions and other strategic transactions of businesses that we believe complement our existing portfolio, infrastructure and capabilities or provide us with the opportunity to expand our existing capabilities.

Strengthening our Generics, Established Brands, and Other segment through continued investment in our generic research and development capability and increased focus on niche opportunities

We have grown our generics business through a combination of market share gains on existing products and new product launches. We have also successfully acquired numerous ANDAs through business and asset acquisitions. Our most recent business acquisition was Novitium, including its portfolio of commercial and pipeline generic products, manufacturing and development facilities and expert workforce. The Novitium acquisition significantly increased our generic pharmaceutical research and development and manufacturing ~~capabilities.~~capabilities. We have begun to increase our focus on niche lower competition opportunities such as injectables, Paragraph IV, and ~~Competitive Generic Therapy~~competitive generic therapy ("CGT") designation filings. Additionally, we will continue to seek opportunities to enhance our ~~capabilities~~capabilities through strategic partnerships and acquisitions of assets and businesses. ~~On July 21,~~During 2022, we completed an asset acquisition of four ANDAs from Oakrum Pharma, including two that were ~~commercial~~commercial at the time of acquisition. ~~On May 25,~~During 2023, we acquired two ANDAs and one pipeline product from the Chapter 7 Trustee for the estates of Akorn Holding Company and certain of its ~~affiliates.~~affiliates, acquired an ANDA and registered patents and pending patent applications from Slayback Pharma Limited Liability Company, and acquired additional ANDAs and product rights for two products in the second half of 2023.

We have grown our established brand product offerings through acquisition. We have acquired the NDAs for and market Atacand, Atacand HCT, Arimidex, Casodex, Lithobid, Vancocin, Inderal LA, Inderal XL, InnoPran XL, Oxistat, Veregen, and Pandel. We are innovating in our go-to-market strategy through creative partnerships.

Our overall strategy is enabled by an empowered, collaborative, and purposeful team with a high performance-orientation.

Generic Product Development Considerations

We consider a variety of criteria in determining which products to ~~develop, all of which influence the level of competition upon product launch.~~develop: These criteria include:

•Formulation ~~Complexity.~~Complexity. Our development and manufacturing capabilities enable us to manufacture pharmaceuticals that are ~~difficult to produce, including highly potent, extended~~differentiatedand include high potency, modified release, combination, and ~~low dosage~~hormonal products. This ability to manufacture a variety of ~~complex~~differentiated products is a competitive strength that we intend to leverage in selecting products to develop ~~or manufacture.~~

•~~Patent Status.~~ ~~We seek to develop products whose branded bioequivalents do not have long-term patent protection or existing patent challenges.~~and commercialize.

•Market ~~Size.~~Size and Patient Need. When determining whether to develop or acquire an individual product, we review the current and expected market size for that ~~product at launch, as well as forecasted price erosion upon conversion from branded to generic pricing.~~product. and competitive environment. We endeavor to ~~manufacture~~pursue products with sufficient market size to enable us to enter the market with a strong likelihood of serving patients in need and thus being able to price our products both competitively and at a profit.

•Profit Potential. ~~We research the availability and cost of active pharmaceutical ingredients in determining which products to develop or acquire.~~ In determining the potential profit of a product, we forecast our anticipated market share, pricing, ~~including the expected price erosion caused by competition from other generic manufacturers,~~competitive environment and the estimated cost to manufacture the products.

•Manufacturing.We generally seek to develop and manufacture products at our own manufacturing plants ~~in order~~ to ~~optimize the utilization of our facilities,~~ ensure quality control inof our products, supply chain reliability and to more closely control the economic inputs and outputs of our products.

•Competition.When determining whether to develop or acquire a product, we research existing and expected competition. We seek to develop products for which we can obtain sufficient market share and may decline to develop a product if we anticipate significant competition. Our ~~specialized~~ manufacturing facilities provide a means of entering niche markets, such as hormone therapies, in which fewer generic companies ~~are able to~~typically compete.

3935

Recent Developments

P~~ublic Offering~~Restructuring

~~In May 2023, through~~On February 15, 2024, ANI Pharmaceuticals, Canada, Inc., a ~~public offering, we~~wholly owned subsidiary of the Company, entered into an agreement (the "Agreement") with 1540700 Ontario Limited ("Buyer") for the sale of ANI's Oakville, Ontario former manufacturing site (the "Property") for a total purchase price of $19.2 million Canadian Dollars, or approximately $14.2 million, based on the current exchange rate, subject to certain market adjustments. During February 2024, and in accordance with the Agreement, the Buyer deposited a total of approximately $1.9 million Canadian Dollars, or approximately $1.4 million in refundable deposits in escrow as part of the total purchase price.

On March 28, 2024 the Company completed the ~~issuance and~~ sale of ~~2,183,545 shares~~the Property. After payment of ~~ANI common stock, resulting~~ ~~in net proceeds after issuance~~commissions, taxes, and other related costs of ~~$80.6 million.~~ approximately $0.6 million, the Company received a net cash amount of approximately $13.5 million at closing. The proceeds are being used to in-license, acquire or invest in additional businesses, technologies, products or assets, to fund our commercialization efforts, including, but not limited to, sales and marketing and consulting expenses related thereto, and for general corporate purposes.

~~Restructuring Update~~

~~On June 2, 2022, we announced that we intended to cease operations at our Oakville, Ontario, Canada manufacturing plant by~~gain on the ~~first quarter of 2023. This action was part of ongoing initiatives to capture operational synergies following our acquisition of Novitium in November 2021. We previously completed the transition~~sale of the ~~products manufactured or packaged~~Property was approximately $5.3 million, recorded in ~~Oakville to one~~the unaudited interim condensed consolidated statements of our three U.S.-based manufacturing sites. We are seeking to find potential buyers for the Oakville site, though there can be no assurance as to when or if that will occur or the amount of any net proceeds that may be received.operations.

Product Launches

Refer to our website at www.anipharmaceuticals.com for information on the products, including indications/treatments.

GENERAL

Impacts to our ~~2023~~first quarter 2024 and ~~2022~~2023 results of operations, including to net revenues, operating expenses, interest and other expense, net, and income taxes are described below.

The following table summarizes our results of operations for the periods indicated:


			Three Months Ended June 30,				Six Months Ended June 30,
		Three Months Ended March 31,												Three Months Ended March 31,
(in thousands)	(in thousands)		2023		2022		2023		2022		(in thousands)	2024	2023
Net Revenues	Net Revenues		$	116,547	$	73,855	$	223,333	$	138,332
Operating Expenses	Operating Expenses
Cost of sales (excluding depreciation and amortization)
Cost of sales (excluding depreciation and amortization)
Cost of sales (excluding depreciation and amortization)	Cost of sales (excluding depreciation and amortization)		42,284		35,294		79,992		69,565
Research and development	Research and development		7,374		4,165		13,298		9,439
Selling, general, and administrative	Selling, general, and administrative		38,760		31,958		75,228		60,775
Depreciation and amortization	Depreciation and amortization		14,690		13,764		29,390		28,321
Contingent consideration fair value adjustment	Contingent consideration fair value adjustment		1,035		(1,095)		1,996		(342)
Restructuring activities	Restructuring activities		2		2,570		1,132		2,570
Intangible asset impairment charge			—		112		—		112
Operating Income (Loss)			12,402		(12,913)		22,297		(32,108)
Gain on sale of building
Operating Income
Unrealized gain on investment in equity securities
Interest expense, net	Interest expense, net		(7,100)		(6,669)		(14,796)		(13,282)
Other (expense) income, net			(53)		764		(87)		675
Income (Loss) Before Income Tax Benefit			5,249		(18,818)		7,414		(44,715)
Income tax benefit			996		3,895		270		9,662
Net Income (Loss)			$	6,245	$	(14,923)	$	7,684	$	(35,053)
Other expense, net
Income Before Income Tax Expense
Income tax expense
Net Income

4036

The following table sets forth, for all periods indicated, items in our unaudited interim condensed consolidated statements of operations as a percentage of net revenues:


		Three Months Ended June 30,					Six Months Ended June 30,
		2023			2022		2023		2022
			Three Months Ended March 31,																Three Months Ended March 31,
			2024													2024				2023
Net Revenues	Net Revenues	100		%	100	%	100	%	100	%	Net Revenues		100	%			100	%
Operating Expenses	Operating Expenses
Cost of sales (excluding depreciation and amortization)
Cost of sales (excluding depreciation and amortization)
Cost of sales (excluding depreciation and amortization)	Cost of sales (excluding depreciation and amortization)	36.3		%	47.8	%	35.8	%	50.3	%		35.8	%			35.3	%
Research and development	Research and development	6.3		%	5.6	%	6.0	%	6.8	%	Research and development		7.6	%			5.5	%
Selling, general, and administrative	Selling, general, and administrative	33.3		%	43.3	%	33.7	%	43.9	%	Selling, general, and administrative		34.9	%			34.2	%
Depreciation and amortization	Depreciation and amortization	12.6		%	18.6	%	13.2	%	20.5	%	Depreciation and amortization		10.7	%			13.8	%
Contingent consideration fair value adjustment	Contingent consideration fair value adjustment	0.9		%	(1.5)	%	0.9	%	(0.2)	%	Contingent consideration fair value adjustment		0.1	%			0.9	%
Restructuring activities	Restructuring activities	—		%	3.5	%	0.5	%	1.9	%	Restructuring activities		—	%			1.1	%
Intangible asset impairment charge		—		%	0.2	%	—	%	0.1	%
Operating Income (Loss)		10.6		%	(17.5)	%	10.0	%	(23.2)	%
Gain on sale of building											Gain on sale of building		(3.9)	%			—	%
Operating Income											Operating Income		14.8	%			9.2	%
Unrealized gain on investment in equity securities											Unrealized gain on investment in equity securities		7.0	%			—	%
Interest expense, net	Interest expense, net	(6.1)		%	(9.0)	%	(6.6)	%	(9.6)	%	Interest expense, net		(3.3)	%			(7.2)	%
Other (expense) income, net		—		%	1.0	%	—	%	0.5	%
Income (Loss) Before Income Tax Benefit		4.5		%	(25.5)	%	3.3	%	(32.3)	%
Income tax benefit		0.9		%	5.3	%	0.1	%	7.0	%
Net Income (Loss)		5.4		%	(20.2)	%	3.4	%	(25.3)	%
Other expense, net											Other expense, net				(0.0)%
Income Before Income Tax Expense											Income Before Income Tax Expense		18.5	%			2.0	%
Income tax expense											Income tax expense		5.2	%			0.7	%
Net Income											Net Income		13.3	%			1.3	%

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED ~~JUNE 30,~~MARCH 31, 2024 AND 2023 ~~AND 2022~~

Net Revenues


			Three Months Ended June 30,
		Three Months Ended March 31,
(in thousands)
(in thousands)
(in thousands)	(in thousands)		2023		2022		Change		% Change			2024						2023							Change							% Change
Generics, Established Brands, and Other Segment	Generics, Established Brands, and Other Segment
Generic pharmaceutical products
Generic pharmaceutical products
Generic pharmaceutical products	Generic pharmaceutical products		$	63,317	$	49,863	$	13,454	27.0	%		$	70,217			$		$	63,713			$			$	6,504			10.2				10.2		%
Established brand pharmaceutical products, royalties, and other pharmaceutical services	Established brand pharmaceutical products, royalties, and other pharmaceutical services		28,926		13,790		15,136		109.8	%	Established brand pharmaceutical products, royalties, and other pharmaceutical services			30,276			26,743				26,743			3,533					3,533		13.2						13.2	%
Generics, established brands, and other segment total net revenues	Generics, established brands, and other segment total net revenues		$	92,243	$	63,653	$	28,590	44.9	%	Generics, established brands, and other segment total net revenues			$	100,493		$			$	90,456		$				$	10,037		11.1					11.1		%
Rare Disease Segment	Rare Disease Segment
Rare disease pharmaceutical products	Rare disease pharmaceutical products		24,304		10,202		$	14,102	138.2	%
Rare disease pharmaceutical products
Rare disease pharmaceutical products														$	36,937					$	16,330						$	20,607						126.2		%
Total net revenues	Total net revenues		$	116,547	$	73,855	$	42,692	57.8	%	Total net revenues			$	137,430		$			$	106,786		$				$	30,644		28.7					28.7		%

We derive substantially all of our revenues from sales of generic, rare disease, and established brand pharmaceutical products, royalties on net sales of certain products, and other pharmaceutical services. Many of our established brand products as well as our generic products face competition from generic products and we expect them to continue to face competition from generic products in the future. The primary means of competition among generic manufacturers are pricing, contract terms, service levels, and reliability. Increased competition generally results in decreased average selling prices of generic and brand products over time. In addition, due to strategic partnerships between wholesalers and pharmacy chains, we have experienced, and expect to continue to experience, increases in net sales to the wholesalers, with corresponding decreases in net sales to the pharmacy chains.

Net revenues for the three months ended ~~June 30, 2023~~March 31, 2024 were ~~$116.5~~$137.4 million compared to ~~$73.9~~$106.8 million for the same period in ~~2022,~~2023, an increase of ~~57.8%~~28.7%, primarily as a result of the following factors:

•Net revenues for generic pharmaceutical products were ~~$63.3~~$70.2 million during the three months ended ~~June 30, 2023,~~March 31, 2024, an increase of ~~27.0%~~10.2% compared to ~~$49.9~~$63.7 million for the same period in ~~2022,~~2023, driven by increased volumes on the base business and the ~~annualization~~inclusion of ~~2022~~2023 launches and new product launches in ~~2023.~~ 2024. From a product perspective, the increase was principally driven by revenues from year over year increases in ~~Digoxin, Famotidine, Levocarnitine Tablets, Misoprostol, Mixed Amphetamine Salts Extended Release,~~products such as Colestipol, Nitrofurantoin, ~~Prochlorperazine, Pyrazinamide,~~Lacosamide, and various other products tempered by a decrease in revenues of ~~Mesalamine, Oxybutynin Chloride,~~Meloxicam, Nebivolol, and ~~Prazosin,~~Famotidine, among others.

•Net revenues for ~~established brand~~branded pharmaceutical products, royalties, and other pharmaceutical services were ~~$28.9~~$30.3 million during the three months ended ~~June 30, 2023,~~March 31, 2024, an increase of ~~109.8%~~13.2% compared to ~~$13.8~~$26.7 million for the same period in ~~2022,~~2023, driven by ana net increase in volume.

•Net revenues of rare disease pharmaceutical products, which ~~consist~~consists entirely of sales of Cortrophin Gel, were ~~$24.3~~$36.9 million during the three months ended ~~June 30, 2023~~March 31, 2024, an increase of ~~$14.1~~$20.6 million from ~~$10.2~~$16.3 million for the same period in ~~2022.~~2023. This increase was driven by increased volume ~~as the product~~in this third year of launch (product was launched in late January ~~2022.~~2022).

In addition to the above, within our ~~Generic, established brand,~~Generics, Established Brand, and ~~other~~Other segment, ~~in the current year period,~~from time to time we ~~were~~have been successful in supplying incremental volume in markets that were experiencing supply chain disruptions for ~~competitive~~competing products. ~~There~~This factor favorably impacted the established brand portion of the segment in the current year period as compared to favorably impacting both the generic and established brand portion of the segment in the prior year period. Generally, when opportunities for volume and revenue upside related to our products arise in the marketplace, there is no assurance as to how long ~~into future periods~~ these favorable market conditions ~~will~~may persist.

Cost of Sales (Excluding Depreciation and Amortization)


			Three Months Ended June 30,
		Three Months Ended March 31,
(in thousands)
(in thousands)
(in thousands)	(in thousands)		2023		2022		Change		% Change			2024				2023				Change				% Change
Cost of sales (excluding depreciation and amortization)	Cost of sales (excluding depreciation and amortization)		$	42,284	$	35,294	$	6,990	19.8	%	Cost of sales (excluding depreciation and amortization)		$	49,157	$		$	37,708	$		$	11,449	30.4		30.4	%

Cost of sales consists of direct labor, including manufacturing and packaging, active and inactive pharmaceutical ingredients, freight costs, packaging components, and royalties payable related to profit-sharing arrangements. Cost of sales does not include depreciation and amortization expense, which is reported as a separate component of operating expenses on our unaudited interim condensed consolidated statements of operations.

For the three months ended ~~June 30, 2023,~~March 31, 2024, cost of sales increased to ~~$42.3~~$49.2 million from ~~$35.3~~$37.7 million for the same period in ~~2022,~~2023, an increase of ~~$7.0~~$11.4 million, or ~~19.8%~~30.4%. The increase is primarily due to a ~~significant~~net increase in sales volumes of ~~generic~~pharmaceutical products across all segments and ~~rare disease~~ ~~pharmaceutical~~a significant net increase in sales of products. During the three months ended June 30, 2022, we recognized $1.0 million in cost of sales representing the excess of fair value over cost for inventory acquired in acquisitions and subsequently sold during the three months ended June 30, 2022. There are no comparable expenses in the three months ended June 30, 2023. that bear a royalty payable, including Cortrophin Gel.

Cost of sales, as a percentage of net revenues, ~~decreased~~increased slightly from ~~47.8%~~35.3% to ~~36.3%~~ 35.8% for the three months ended ~~June 30, 2023~~,March 31, 2024, compared to the same period in ~~2022. The decrease was~~2023, primarily due to a shift in product mix year over year as well as the non-recurrence of $1.0 million expense recognized in the three months ended June 30, 2022, related to the excess of fair value over cost for inventory acquired in an asset acquisition.year.

During the three months ended ~~June 30, 2023, no single vendor represented more than 10%~~March 31, 2024, we purchased approximately 25% of our raw material inventory ~~purchases.~~from one supplier. During the three months ended ~~June 30, 2022, one~~March 31, 2023, no single vendor represented ~~18%~~more than 10% of our raw material inventory purchases.

Other Operating Expenses, net

~~Other Operating Expenses~~


			Three Months Ended June 30,
		Three Months Ended March 31,
(in thousands)
(in thousands)
(in thousands)	(in thousands)		2023		2022		Change		% Change				2024				2023					Change						% Change
Research and development	Research and development		$	7,374	$	4,165	$	3,209	77.0	%		Research and development		$	10,511	$		$	5,924	$			$	4,587		77.4				77.4		%
Selling, general, and administrative	Selling, general, and administrative		38,760		31,958		6,802		21.3	%		Selling, general, and administrative		48,021		36,468			36,468		11,553				11,553		31.7					31.7	%
Depreciation and amortization	Depreciation and amortization		14,690		13,764		926		6.7	%		Depreciation and amortization		14,686		14,700			14,700		(14)				(14)		(0.1)					(0.1)	%
Contingent consideration fair value adjustment	Contingent consideration fair value adjustment		1,035		(1,095)		2,130		(194.5)	%		Contingent consideration fair value adjustment		90		961			961		(871)				(871)		(90.6)					(90.6)	%
Restructuring activities	Restructuring activities		2		2,570		(2,568)		(99.9)	%		Restructuring activities		—		1,130			1,130		(1,130)				(1,130)		(100.0)					(100.0)	%
Intangible asset impairment charge			—		112		(112)		NM		(1)
Total other operating expenses			$	61,861	$	51,474	$	10,387	20.2	%
Gain on sale of building												Gain on sale of building		(5,347)				—					(5,347)						100.0		%
Total other operating expenses, net												Total other operating expenses, net		$	67,961			$	59,183				$	8,778					14.8		%

~~(1)Not meaningful~~

For the three months ended ~~June 30, 2023, other~~March 31, 2024, other operating expenses, net increased to ~~$61.9~~$68.0 million from ~~$51.5~~$59.2 million for the same period in ~~2022,~~2023, an increase of ~~$10.4~~$8.8 million, or ~~20.2%~~14.8%, primarily as a result of the following factors:

•Research and ~~development~~development expenses increased from ~~$4.2~~$5.9 million to ~~$7.4~~$10.5 million, an increase of ~~$3.2~~$4.6 million or ~~77.0%~~77.4%, primarily due to expenses related to a FDA filing fee for a 505(b)(2) for one product of approximately $2.0 million, and a higher level of activity associated with ~~generic~~ongoing and new projects ~~coupled with an increase associated with projects related to Cortrophin Gel~~ in the three months ended ~~June 30, 2023.~~March 31, 2024.

•Selling, general, and administrative expenses increased from ~~$32.0~~$36.5 million to ~~$38.8~~$48.0 million, an increase of ~~$6.8~~$11.6 million, or ~~21.3%~~31.7%,~~primarily~~ due to increased employment related costs, continued investment in our Rare Disease segment sales and ~~increased~~marketing activities, legal ~~expenses.~~expenses, as well as an overall increase in activities required to support the growth of our business.

•Depreciation and amortization expense was $14.7 million for the three months ended ~~June 30, 2023,~~March 31, 2024, compared to ~~$13.8~~$14.7 million for the same period in ~~2022, an increase~~2023, a nominal decrease of ~~$0.9 million.~~approximately $14.0 thousand year-over-year.

•~~As described in Note 13,~~ ~~Fair Value Disclosures~~,We recognized losses of $0.1 million and $1.0 million in the ~~unaudited interim condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, we recognized a~~three months ended March 31, 2024 and 2023, respectively, for the contingent consideration fair value adjustment. The change in the fair value adjustment ~~of $1.0 million and $(1.1) million adjustment in~~during the three months ended ~~June 30, 2023 and 2022, respectively.~~ ~~The expense~~ March 31, 2024 is ~~principally due~~primarily related to changes in the ~~passage~~anticipated timing of ~~time~~cash flows (i.e., moving closer to the anticipated payment ~~date~~dates of the ~~consideration) and an increase to the probability of payment~~consideration for the ~~product development-based~~third milestone) and fluctuations in the discount rates, offset by adjustments recorded upon payment of the Gross Profit Earn-Out during the first quarter. Additionally, the fair value measurement adjustment in the three months ended March 31, 2024 is related to only the third milestone, ~~payments.~~whereas the fair value adjustment at March 31, 2023 related to all three milestones.

•We recognized restructuring activities expenses of ~~$2.6~~$1.1 million ~~of expense~~ in the three months ended June 30, 2022, in relation to the closure of our Oakville, Ontario, Canada facility. Costs included $1.4 million in termination benefits, $0.9 million in fixed asset impairments and accelerated depreciation, and $0.3 million of other costs. The restructuring activities recognized in the three months ended June 30,March 31, 2023. In 2023 ~~was immaterial.~~

•~~We recognized an impairment of $0.1 million in the three months ended June 30, 2022, in relation to an ANDA asset. No impairment charges were recognized in the three months ended June 30, 2023.~~

~~Other Expense, net~~

Three Months Ended June 30,
(in thousands) 2023 2022 Change % Change
Interest expense, net $ (7,100) $ (6,669) $ (431) 6.5 %
Other (expense) income, net (53) 764 (817) (106.9) %
Total other expense, net $ (7,153) $ (5,905) $ (1,248) 21.1 %

For the three months ended June 30, 2023, we recognized total other expense, net of $7.2 million versus total other expense of $5.9 million for the same period in 2022, an increase of $1.2 million. Interest expense, net for the three months ended June 30, 2023 and 2022 consisted primarily of interest expense on borrowings under our Term Facility. The increase in interest expense is due to an increased borrowing rate on the $300.0 million Term Facility and an increase in amortization of finance fees offset income from our interest rate swap and increased interest income earned on higher cash balances. For the three months ended June 30, 2023, there was $0.3 m~~illion of interest capitalized into construction in progress.~~ ~~For the three months ended June 30, 2022, there was less than $0.1 million of interest capitalized into construction in progress.~~

~~Income Tax Benefit~~

Three Months Ended June 30,
(in thousands) 2023 2022 Change % Change
Income tax benefit $ 996 $ 3,895 $ (2,899) (74.4) %

~~Income tax benefit consists of current and deferred components, which include changes in our deferred tax assets, our deferred tax liabilities, and our valuation allowance.~~

~~For the three months ended June 30, 2023, we recognized an income tax benefit of $1.0 million. The Company's effective tax rate was~~ ~~(19.0)%~~ for the three months ended June 30, 2023. The effective tax rate differed from the federal statutory rate of 21% primarily due to the recognition of the U.S. federal research and development credit, permanent differences, and discrete tax benefit primarily related to remeasurement of its gross deferred assets due to change in state deferred effective tax rate.

For the three months ended June 30, 2022, we recognized an income tax benefit of $3.9 million. The income tax benefit resulted from applying an estimated annual worldwide effective tax rate of 20.7% to pre-tax consolidated loss of $18.8 million reported during the period. There were no material discrete items occurring during the three months ended June 30, 2022.

~~RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022~~

~~Net Revenues~~

Six Months Ended June 30,
(in thousands) 2023 2022 Change % Change
Generics, Established Brands, and Other Segment
Generic pharmaceutical products $ 127,030 $ 98,970 $ 28,060 28.4 %
Established brand pharmaceutical products, royalties, and other pharmaceutical services $ 55,669 $ 27,868 27,801 99.8 %
Generics, established brands, and other segment total net revenues $ 182,699 $ 126,838 $ 55,861 44.0 %
Rare Disease Segment
Rare disease pharmaceutical products 40,634 11,494 $ 29,140 253.5 %
Total net revenues $ 223,333 $ 138,332 $ 85,001 61.4 %

~~Net revenues for the six months ended June 30, 2023 were $223.3 million compared to $138.3 million for the same period in 2022, an increase of 61.4%, primarily as a result of the following factors:~~

•~~Net revenues for generic pha~~rmaceutical products were $127.0 million during the six months ended June 30, 2023, an increase of 28.4% compared to $99.0 million for the same period in 2022, driven by increased volumes on the base business, increased volumes from the annualization of 2022 launches and 2023 new prdouct launches. From a product perspective, the increase was principally driven by revenues from year over year increases in Acebutolol, Digoxin, Famotidine, Fludrocortisone, Glipizide, Levocarnitine Tablets, Meloxicam, Miglustat, Misoprostol, Nebivolol, Prochlorperazine, Pyrazinamide, Tolterodine, Trimethorpim, and various other products tempered by a decrease in revenues of Cholestyramine, Fenofibrate, Mesalamine, Oxybutynin Chloride, and Prazosin, among others.

•~~Net revenues for established brand pharmaceutical products, royalties, and other pharmaceutical services were $55.7 million~~ ~~during the six months ended June 30, 2023, an increase of 99.8% compared to $27.9 million for the same period in 2022, driven by an increase in volume.~~

•Net revenues of rare disease pharmaceutical products, which consist entirely of sales of Cortrophin Gel, were $40.6 million during the six months ended June 30, 2023 an increase of $29.1 million from $11.5 million for the sam~~e period in 2022. This increase was driven by increased volume as the product was launched in late January 2022.~~

In addition to the above, within our Generic, established brand, and other segment in the current year period, we were successful in supplying incremental volume in markets that were experiencing supply chain disruptions for competitive products. There is no assurance as to how long into future periods these favorable market conditions will persist.

~~Cost of Sales (Excluding Depreciation and Amortization)~~

Six Months Ended June 30,
(in thousands) 2023 2022 Change % Change
Cost of sales (excluding depreciation and amortization) $ 79,992 $ 69,565 $ 10,427 15.0 %

~~For the six months ended June 30, 2023, cost of sales increased to $80.0 million from $69.6 million for the same period in 2022, an increase of $10.4 million, or 15.0%.~~ The increase is primarily due to a significant increase in sales volumes of generic and rare disease pharmaceutical products. During the six months ended June 30, 2022, we recognized $4.8 million in cost of sales representing the excess of fair value over cost for inventory acquired in acquisitions and subsequently sold during the six months ended June 30, 2022. There are no comparable expenses in the six months ended June 30, 2023.

Cost of sales, as a percentage of net revenues, decreased from 50.3% to 35.8% for the six months ended June 30, 2023, compared to the same period in 2022. The decrease was primarily due to the non-recurrence of $4.8 million expense recognized in the six months ended June 30, 2022, related to the excess of fair value over cost for inventory acquired in a business combination, as well as the increased sales of Established brand pharmaceutical products, royalties,

~~and other pharmaceutical services products and Cortrophin Gel coupled with increased generic volumes with a mix shift in higher margin products.~~

~~During the six months ended June 30, 2023, no single vendor represented more than 10% of inventory purchases. During the six months ended June 30, 2022, one vendor represented 17% of inventory purchases.~~

~~Other Operating Expenses~~

Six Months Ended June 30,
(in thousands) 2023 2022 Change % Change
Research and development $ 13,298 $ 9,439 $ 3,859 40.9 %
Selling, general, and administrative $ 75,228 $ 60,775 14,453 23.8 %
Depreciation and amortization $ 29,390 $ 28,321 1,069 3.8 %
Contingent consideration fair value adjustment $ 1,996 $ (342) 2,338 (683.6) %
Restructuring activities $ 1,132 $ 2,570 (1,438) (56.0) %
Intangible asset impairment charge $ — $ 112 (112) NM (1)
Total other operating expenses $ 121,044 $ 100,875 $ 20,169 20.0 %

~~(1)Not meaningful~~

For the six months ended June 30, 2023, other operating expenses increased to $121.0 million from $100.9 million for the same period in 2022, an increase of $20.2 million, or 20.0%, primarily as a result of the following factors:

•~~Research and development expenses increased from $9.4 million to $13.3 million, an increase of $3.9 million or 40.9%, primarily due to a higher level of activity associated with generic projects coupled with an increase associated with projects related to Cortrophin Gel in the~~ ~~six months ended June 30, 2023.~~

•~~Selling, general, and administrative expenses increased from $60.8 million to $75.2 million, an increase of $14.5 million, or 23.8%, primarily due to increased sales and marketing expenses related to Cortrophin Gel and increased employment related costs.~~

•~~Depreciation and amortization expense was $29.4 million for the six months ended June 30, 2023, compared to $28.3 million for the same period in 2022, an increase of $1.1 million.~~

•~~As described in Note 13,~~ ~~Fair Value Disclosures~~, in the unaudited interim condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, we recognized a contingent consideration fair value adjustment of $2.0 million and $(0.3) million adjustment in the six months ended June 30, 2023 and 2022, respectively. The expense is principally due to the passage of time (i.e., moving closer to the anticipated payment date of the consideration) and an increase to the probability of payment for the product development-based milestone payments.

•~~We recognized restructuring activities of $1.1 million of expense in the six months ended June 30, 2023, in relation~~ ~~to the closure of our Oakville, Ontario, Canada facility. Costs~~costs included severance and other employee benefits costs of $0.2 million, $0.7 million of accelerated depreciation costs and $0.2 million for other miscellaneous costs ~~accrued~~accrued in 2022. WeThere were no restructuring expenses recognized ~~restructuring activities of $2.6 million of expense~~ in the ~~six~~three months ended June 30, 2022, in relation to the closure of our Oakville, Ontario, Canada facility. Costs included $1.4 million in termination benefits, $0.9 million in fixed asset impairments and accelerated depreciation, and $0.3 million of other costs.March 31, 2024.

•We recognized ~~an impairment~~a gain related to the sale of ~~$0.1~~the former Oakville, Ontario manufacturing site of approximately $5.3 million during the three months ended March 31, 2024. There was no comparable sale in the three months ended ~~June 30, 2022, in relation to an ANDA asset. No impairment charges were recognized in the six months ended June 30,~~March 31, 2023.

Other ~~Expense,~~Income (Expense), net


			Six Months Ended June 30,
		Three Months Ended March 31,
(in thousands)	(in thousands)		2023		2022		Change		% Change
(in thousands)
(in thousands)												2024			2023			Change				% Change
Unrealized gain on investment in equity securities											Unrealized gain on investment in equity securities	$	9,655		$	—		$	9,655			(100.0)	%
Interest expense, net	Interest expense, net		$	(14,796)	$	(13,282)	$	(1,514)	11.4	%	Interest expense, net	(4,600)		(7,696)		(7,696)	3,096			3,096	(40.2)			(40.2)	%
Other (expense) income, net			(87)		675		(762)		(112.9)	%
Total other expense, net			$	(14,883)	$	(12,607)	$	(2,276)	18.1	%
Other expense, net											Other expense, net	(32)			(34)			2				(5.9)	%
Total other income (expense), net											Total other income (expense), net	$	5,023		$	(7,730)		$	12,753			(165.0)	%

For the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024, we recognized total other ~~expense, net~~income of ~~$14.9~~$5.0 million ~~versus~~as compared to total other expense of ~~$12.6~~$7.7 million for the same period in ~~2022,~~2023, an increase of ~~$2.3~~$12.8 million.

The increase in Unrealized gain on investment in equity securities of approximately $9.7 million is due to the recognition of our investment of CG Oncology upon their January 2024 IPO and the subsequent mark to market to fair value of equity securities held in CG Oncology as of the balance sheet date. There was no comparable gain on investment in the three months ended March 31, 2023.

Interest expense, net for the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 ~~and 2022 consisted~~consists primarily of interest expense on borrowings under our Term ~~Facility. The increase in interest expense is due to an increased borrowing rate on the $300.0~~Facility of approximately $8.5 million ~~Term Facility~~ and ~~an increase in~~ amortization of ~~finance fees~~deferred debt issuance costs of approximately $0.6 million, offset by dividend income ~~from~~earned on our money market funds and interest earned on our cash balances of approximately $2.8 million, the effects of the interest rate swap ~~and increased interest income earned on higher cash balances. For the six months ended June 30, 2023, there was $0.3~~of approximately $1.6 million, ofand interest capitalized into construction in progress. ~~For~~The decrease in interest expense is primarily related to the ~~six~~increase in the dividend income and interest income earned on our larger cash balances during the current period, as interest expense on borrowing under our Term Facility and amortization of deferred debt issuance costs are consistent with the three months ended ~~June 30, 2022, there was less than $0.1 million of interest capitalized into construction in progress.~~March 31, 2023.

Income Tax ~~Benefit~~Expense


			Six Months Ended June 30,
		Three Months Ended March 31,													Three Months Ended March 31,
(in thousands)	(in thousands)		2023	2022		Change		% Change		(in thousands)	2024		2023			Change		% Change
Income tax benefit			270	$	9,662	$	(9,392)	(97.2)	%
Income tax expense										Income tax expense	$	7,128	$	726		$	6,402	881.8	%

Income tax expense consists of current and deferred components, which include changes in our deferred tax assets, our deferred tax liabilities, and our valuation allowance.

For the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024, wewe recognized an income tax ~~benefit~~ expense of ~~$0.3~~$7.1 million. The Company's effective tax rate was ~~(3.7)%~~ 28.1% after discrete items for the ~~six~~three months ended ~~June 30, 2023.~~ March 31, 2024. The effective tax rate differed from the federal statutory rate of 21% primarily due to state taxes, stock based compensation, tax on the ~~recognition~~sale of the ~~U.S. federal research~~Oakville, Ontario manufacturing site, and ~~development credit, permanent differences, and discrete~~recording of a withholding tax ~~benefit primarily related to remeasurement~~liability on the proceeds of ~~gross deferred assets due to change in state deferred effective tax rate.~~the sale.

For the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, we recognized an income tax ~~benefit~~expense of ~~$9.7~~$0.7 million. The income tax ~~benefit~~expense resulted from applying an estimated annual worldwide effective tax rate of ~~21.6%~~34.9% to pre-tax consolidated ~~loss~~income of ~~$44.7~~$2.2 million reported during the period. There were no material discrete items occurring during the ~~six~~three months ended ~~June 30, 2022.~~March 31, 2023.

4641

LIQUIDITY AND CAPITAL RESOURCES

Debt Financing

The Term Facility proceeds were used to finance the cash portion of the consideration for the Novitium acquisition, repay borrowings under our Prior Credit Agreement, and pay fees, costs and expenses incurred in connection with the acquisition of Novitium. Proceeds from the Revolving Facility are expected to be used, subject to certain limitations, for working capital and other general corporate purposes.

The Term Facility matures in November 2027 and the Revolving Facility in November 2026. Each permits both base rate borrowings (“ABR Loans”) and Eurodollar rate borrowings (“Eurodollar Loans”), plus a spread of (a) 5.00% above the base rate in the case of ABR Loans under the Term Facility and 6.00% above the LIBOR Rate (as defined in the Credit Agreement, which includes a floor of 0.75%) in the case of loans under the Term Facility and (b) 3.75% above the base rate in the case of ABR Loans under the Revolving Facility and 4.75% above the LIBOR Rate (as defined in the Credit Agreement) in the case of loans under the Revolving Facility. The Credit Facility has a subjective acceleration clause in case of a material adverse effect. The Term Facility includes a repayment schedule, pursuant to which $750 thousand of the loan will be paid in quarterly installments during the 12 months ending ~~June 30, 2023~~. As of ~~June 30, 2023~~March 31, 2024, $3.0 million of principal of the loan was recorded as current borrowings in the condensed consolidated balance sheet. As of ~~June 30, 2023~~March 31, 2024, we had not drawn on the Revolving Facility and $40.0 million remained available for borrowing subject to certain conditions.

~~In July 2023, the Company’s debt instruments that referenced LIBOR were amended to replace the benchmark rate with the Secured Overnight Financing Rate (~~“~~SOFR~~”~~) in anticipation of the termination of published LIBOR rates.~~

Equity Financing

In May 2023, through a public offering, we completed the issuance and sale of 2,183,545 shares of ANI common stock, resulting in net proceeds after issuance costs of $80.6 million. The proceeds are intended to be used to in-license, acquire or invest in additional businesses, technologies, products or assets, to fund our commercialization efforts, including, but not limited to, sales and marketing and consulting expenses related thereto, and for general corporate purposes.

Concurrently with the execution of the merger agreement related to the Novitium acquisition, on March 8, 2021, we entered into that certain Equity Commitment and Investment Agreement with Ampersand 2020 Limited Partnership (the “PIPE Investor”) pursuant to which, on November 19, 2021, we issued and sold to the PIPE Investor, and the PIPE Investor purchased, 25,000 shares of our Series A Convertible Preferred Stock , for a purchase price of $1,000 per share and an aggregate purchase price of $25.0 million, in a private placement issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Regulation D promulgated thereunder.

In November 2021, through a public offering, we completed the issuance and sale of 1,500,000 shares of ANI common stock, resulting in net proceeds after issuance costs of $69.7 million. The proceeds were used to fund our initial Cortrophin Gel commercialization efforts, including sales and marketing and consulting expenses related thereto, and for general corporate purposes.

We believe that our financial resources, consisting of current working capital, anticipated future operating revenue and corresponding collections from customers, and our Credit Facility, under which $40.0 million remains available for borrowing as of ~~June 30,~~March 31, 2024, will be sufficient to enable us to meet our working capital requirements and debt obligations for at least the next 12 months.

Cash Flows

The following table summarizes the net cash and cash equivalents (used in) provided by operating activities, investing activities, and financing activities for the periods indicated:


			Six Months Ended June 30,
		Three Months Ended March 31,								Three Months Ended March 31,
(in thousands)	(in thousands)		2023		2022		(in thousands)	2024	2023
Operating Activities	Operating Activities		$	42,050	$	(30,426)
Investing Activities	Investing Activities		$	(9,179)	$	(2,782)
Financing Activities	Financing Activities		$	75,602	$	(3,707)

Net Cash Provided by ~~(Used in)~~ Operations

Net cash provided by operating activities was ~~$42.1~~$18.3 million for the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024, compared to ~~$30.4 million used in~~net cash provided by operating activities of $21.4 million during the same period in ~~2022,~~2023, a change of ~~$72.5~~$3.2 million. The ~~increase~~decrease in cash provided by operating activities was driven by net income in the current year period due to increased sales and gross profit offset by non-recurring transactions such as gain on the sale of the Oakville, Ontario manufacturing site, the gain on investment of equity securities as well as significant fluctuations in our assets and ~~the non-recurrence of significant utilization of cash during the initial launch period of Cortrophin Gel (launched January 2022).~~liabilities due to increased activities.

Net Cash ~~Used in~~Provided by (Used in) Investing Activities

Net cash ~~used~~provided by in ~~investing~~vesting activities for the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 was ~~$9.2~~$8.9 million, principally due to ~~$4.9~~the proceeds received from the sale of the Oakville, Ontario manufacturing site in March 2024 of approximately $13.5 million ofoffset by capital expenditures ~~and due to the acquisition~~ of ~~ANDAs from~~ ~~the estates of Akorn Holding Company~~ ~~for $4.3~~approximately $4.6 million. Net cash used in investing ~~activities~~activities for the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 was ~~$2.8~~$2.4 million, principally due to ~~the $3.3~~$2.3 million of capital ~~expenditures partially offset by $0.8 million of proceeds from the sale of long-lived assets during the period.~~expenditures.

Net Cash Used in Financing Activities

Net ~~Cash Provided by (Used in) Financing Activities~~

~~Net~~ cash ~~provided by~~used in financing activities for the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 was ~~$75.6~~$19.7 million, principally ~~due~~resulting from $12.5 million paid to ~~$80.6~~the Company Members of Novitium, $8.7 million ~~in proceeds from~~of treasury stock purchased related to restricted stock vests, $0.8 million maturity payments on the ~~May 2023 public offering~~Term Facility, and ~~$1.4~~$0.4 million convertible preferred stock dividends paid, offset by $2.6 million from proceeds from stock option exercises and ESPP purchases. ~~This is offset by~~Net cash used in financing activities ~~related to $1.5~~for the three months ended March 31, 2023 was $4.5 million, ~~maturity payments on the Term Facility, $4.1~~primarily resulting from $3.5 million of treasury stock purchased in relation to restricted stock vests, ~~and~~ $0.8 ~~million convertible preferred stock dividends paid. Net cash used in financing activities for the~~ ~~six months ended June 30, 2022~~ ~~was $3.7 million, principally due to the $1.5~~ million maturity payments on the Term Facility, ~~$1.6 million of treasury stock purchased in relation to restricted stock vests,~~ and ~~$0.8~~$0.4 million convertible preferred stock dividends paid.

CRITICAL ACCOUNTING ~~POLICIES AND USE OF~~ ESTIMATES

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our unaudited interim condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. In our consolidated financial statements, estimates are used for, but not limited to, stock-based compensation, revenue recognition, allowance for credit losses, variable consideration determined based on accruals for chargebacks, administrative fees and rebates, government rebates, returns and other allowances, allowance for inventory obsolescence, valuation of financial instruments and intangible assets, accruals for contingent liabilities, including contingent consideration in acquisitions, fair value of long-lived assets, income tax provision or benefit, deferred taxes and valuation allowance, determination of right-of-use assets and lease liabilities, purchase price allocations, and the depreciable lives of long-lived assets.

A summary of our significant accounting policies is included in Part II, Item 8. Consolidated Financial Statements, Note 1, Description of Business and Summary of Significant Accounting Policies, in our Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023. Certain of our accounting policies are considered critical, as these policies require significant, difficult or complex judgments by management, often requiring the use of estimates about the effects of matters that are inherently uncertain. ~~Such policies are summarized in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of~~There have been no material changes to our ~~Annual Report on~~critical accounting estimates since the 2023 Form ~~10-K for the year ended December 31, 2022.~~10-K.

~~RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS~~

~~A discussion of the recently issued accounting pronouncements is described in Note 1,~~ ~~Business, Presentation, and Recent Accounting Pronouncements, in the unaudited interim condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and is incorporated herein by reference.~~

CONTRACTUAL OBLIGATIONS

As of ~~June 30, 2023,~~March 31, 2024, our contractual obligations have not changed materially from the amounts reported in our ~~most recent 2022 Annual Report.~~2023 Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risks include interest rate risk, equity risk, foreign currency exchange rate risk, commodity price risk, and other relevant market rate or price risks. Of these risks, interest rate risk, equity risk, and foreign currency exchange rate risk could have a significant impact on our results of operations.

~~On November 19, 2021, we entered into the Credit Agreement, which is secured by substantially all of the personal property and certain~~ There have been no material ~~real property owned by ANI and our wholly-owned domestic subsidiaries, and obligations under the Credit Agreement are guaranteed by certain of our wholly-owned domestic subsidiaries.~~

~~The Term Facility proceeds were used to finance a portion of the consideration for the Novitium acquisition, repay our existing credit facility, and pay fees, costs and expenses incurred~~changes in ~~connection with the acquisition. Proceeds from the Revolving Facility are expected to be used, subject to certain limitations, for working capital and other general corporate purposes.~~

The Term Facility matures on the six-year anniversary of November 19, 2021 (the “Closing Date”) and the Revolving Facility matures on the five-year anniversary of the Closing Date. The Revolving Facility and the Term Facility each permit both base rate borrowings (“ABR Loans”) and Eurodollar rate borrowings (“Eurodollar Loans”), plus a spread of (a) 5.00% above the base rate in the case of ABR Loans under the Term Facility and 6.00% above the LIBOR Rate (as defined in the Credit Facility) in the case of Eurodollar Loans under the Term Facility and (b) 3.75% above the base rate in the case of ABR Loans under the Revolving Facility and 4.75% above the LIBOR Rate (as defined in the Credit Facility) in the case of Eurodollar Loans under the Revolving Facility.

The Credit Agreement contains usual and customary representations and warranties of the parties for credit facilities of this type, subject to customary exceptions and materiality standards. In addition, we are required to maintain, a total net leverage ratio not to exceed 4.75:1.00 and, solely with respect to the Revolving Facility, (a) during the period beginning on October 1, 2022 and ending on September 30, 2023, a total net leverage ratio not to exceed 4.50:1.00 and (b) for all periods thereafter, a total net leverage ratio not to exceed 4.25:1.00.

The Credit Agreement also contains certain customary covenants and events of default, as well as, in the event of an occurrence of an event of default under the Credit Agreement, customary remedies for the lenders, including the acceleration of any amounts outstanding under the Credit Agreement.

~~In April 2020, we entered into an interest rate swap with Citizens Bank, N.A. to manage~~ our exposure to ~~changes in LIBOR-based interest rates underlying total borrowings under term facilities related to our Prior Credit Agreement. The interest rate swap matures in December 2026. Concurrent with~~market risks since the ~~termination~~end of the Prior Credit Agreement and entry into the Credit Facility with Truist Bank, the interest rate swap with a notional value of $168.6 million at origin on November 21, 2021 was novated and is now with Truist Bank and is used to manage changesmost recent fiscal year as reported in ~~LIBOR-based interest rates underlying a portion of the borrowing under the Term Facility. We are exposed to interest rate risk on the unhedged portion of~~ our Term Facility and if interest rates increased or decreased by 1%, interest expense would have increased or decreased by approximately $1.4 million. If our Revolving Facility were fully drawn and interest rates increased or decreased by 1%, interest expense would have increased or decreased by approximately $0.4 million. The interest rate swap provides an effective fixed interest rate of 2.26% and has been designated as an effective cash flow hedge and therefore qualifies for hedge accounting. As a result of the interest rate swap, our exposure to interest rate volatility is minimized.

We are exposed to risks associated with changes in interest rates. The returns from certain of our cash and cash equivalents will vary as short-term interest rates change. A 100 basis-point adverse movement (decrease) in short-term interest rates would decrease the interest income earned on our cash balance in the quarter ended June 30, 2023 ~~by approximately $0.1 million.~~

We are exposed to risks associated with foreign currency exchange rate risks as we remeasure certain Indian rupee-denominated transactions from our Indian subsidiary from the Indian-rupee to the U.S. dollar. Changes in exchange rates can positively or negatively impact our revenue, income, assets, liabilities, and equity. Currency exchange rates did not have a material impact on our revenue, income, assets, liabilities, or equity during the quarter ended June 30, 2023.

Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management has carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of ~~June 30, 2023.~~ ~~Due to the material weaknesses in internal control over financial reporting,~~March 31, 2024. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, ~~due to~~as of the ~~on-going remediation associated with~~end of the ~~material weakness identified in our 2022 Annual Report on Form 10-K (“2022 Form 10-K"),~~period covered by this report, our disclosure controls and procedures were ~~ineffective as of June 30, 2023 to provide~~effective at the reasonable assurance ~~that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act of 1934 is recorded, processed, summarized~~level. In designing and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

For a more comprehensive discussion of the material weaknesses in internal control over financial reporting previously identified by management as of December 31, 2022 and the remedial measures undertaken to address these material weaknesses, investors are encouraged to review ~~Item 9A, Disclosure Controls and Procedures, of~~evaluating our ~~2022 Form 10-K~~.

~~Since March 8, 2023, the date of our 2022 Form 10-K, management has made progress with remediation efforts, including the following:~~

•~~Hired a qualified Vice President and Corporate Controller with significant accounting and control expertise,~~

•~~Added accounting resources at our Novitium location and in other areas of the overall ANI finance and accounting organization.~~

•~~Implemented our ERP system and consolidated our accounts payable process at Novitium into ANI company~~disclosure controls and procedures, aswe recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of ~~July 1, 2023.~~achieving the desired control objectives.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, ~~other than the ongoing remediation effort discussed above,~~ during the quarter ended ~~June 30, 2023~~March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II — OTHER INFORMATION

Item 1. Legal Proceedings

Please refer to Note 12, Commitments and Contingencies, in the unaudited interim condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated into this item by reference.

Item 1A. Risk Factors

In addition to the other information set forth in this report, please carefully consider the factors described under the heading “Risk Factors” in our most recent Annual Report on Form 10-K for the fiscal year ended December 31, ~~2022~~2023 in Part I, Item ~~1A and in our Form 8-K filed on May 11, 2023.~~1A. The risks described are not the only risks facing us. Additional risks and uncertainties not currently known to us, or that our management currently deems to be immaterial, also may adversely affect our business, financial condition, and/or operating results.

The following risk factor is provided to update and supplement the risk factors of the Company previously disclosed under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.

We are subject to United States federal and state laws related to healthcare fraud and abuse and health information privacy and security, and the failure to comply with such laws may adversely affect our business.

Many of our products are eligible for reimbursement under federal and state health care programs such as Medicaid, Medicare, TRICARE, and/or state pharmaceutical assistance programs, and as a result, certain U.S. federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are, and will be, applicable to our business. We could be subject to healthcare fraud and abuse and patient privacy regulation by both the federal government and the states in which we conduct our business.

The domestic and foreign laws that may affect our ability to operate include, but are not limited to: (i) the U.S. Anti-Kickback Statute, which applies to our marketing and research practices, educational programs, pricing policies and relationships with healthcare providers or other entities, by prohibiting, among other things, soliciting, receiving, offering or paying remuneration, directly or indirectly, as a means of inducing, or in exchange for, either the referral of an individual or the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs; (ii) U.S. federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment to Medicare, Medicaid or other federal healthcare program payers that are false or fraudulent; (iii) new federal criminal statutes that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; (iv) the U.S. Physician Payments Sunshine Act, which among other things, requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually information related to certain "payments or other transfers of value" made to physicians, physician assistants, advanced practice nurses and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members, and similar state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and may require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; (v) the government pricing rules applicable to the Medicare and Medicaid programs, the 340B Drug Pricing Program, the U.S. Department of Veterans Affairs program, the TRICARE program, and state price transparency reporting laws; and (vi) state and foreign law equivalents of each of the above U.S. laws, such as anti-kickback and false claims laws which may apply to items or services. Defense of litigation claims and government investigations can be costly, time-consuming, and distract management, and it is possible that we could incur judgments, settlements, deferred or non-prosecution agreements, or corporate integrity agreements that would require us to change the way we operate our business. We are committed to conducting the sales and marketing of our products in compliance with the healthcare fraud and abuse laws, but certain applicable laws may impose liability even in the absence of specific intent to defraud. Furthermore, should there be ambiguity, a governmental authority may take a position contrary to a position we have taken, or should an employee violate these laws without our knowledge, a governmental authority may impose civil and/or criminal sanctions.

Any adverse outcome in these types of actions, or the imposition of penalties or sanctions for failing to comply with fraud and abuse laws, could adversely affect us and may have a material adverse effect on our business, results of operations, financial condition and cash flows. Some of the statutes and regulations that govern our activities, such as federal and state anti-kickback and false claims laws, are broad in scope, and while exemptions and safe harbors protecting certain common activities exist, they are often narrowly drawn and construed by the courts. While we manage our business activities to comply with these statutory provisions, due to their breadth, complexity and, in certain cases, uncertainty of application, it is possible that our activities could be subject to challenge by various government agencies. In particular, the FDA, the DOJ, the Office of Inspector General at the U.S. Department of Health and Human Services, and other agencies have increased their enforcement activities with respect to the manufacturing, sales, marketing, research and similar activities of pharmaceutical companies in recent years, and many pharmaceutical companies have been subject to government investigations related to these practices. A determination that we are in violation of these and/or other government regulations and legal requirements may result in civil damages and penalties, criminal fines and prosecution, administrative remedies, the recall of products, the total or partial suspension of manufacturing and/or distribution activities, seizure of products, injunctions, whistleblower lawsuits, failure to obtain approval of pending product applications, withdrawal of existing product approvals, exclusion from participation in government healthcare programs and other sanctions.

Any of these types of investigations or enforcement actions could affect our ability to commercially distribute our products and could materially and adversely affect our business, financial condition, results of operations and cash flows.”

We are subject to certain privacy laws, information security laws, regulations, policies and contractual obligations related to data privacy and security and changes in such laws, regulations, policies, contractual obligations and failure to comply with such requirements, as well as any breach of unsecured identifiable personal information protected by law, could subject us to significant costs, fines, penalties (civil and criminal), and civil litigation which may have a material adverse effect on our business, financial condition or results of operations.

As regulatory focus on privacy issues continues to increase, and laws and regulations concerning the protection of personal information expand and become more complex, these potential risks to our business could intensify. In addition, the interpretation and application of consumer, health-related, and data protection laws are often uncertain, contradictory, and in flux, which complicates compliance efforts.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

Period
Total Number
of Shares
Purchased(1)
Average Price
Paid per Share Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs Maximum Number (or
approximate dollar
value) of Shares
that may yet be
Purchased Under the
Plans or Programs
April 1 - April 30, 2023 13,221 $ 38.51 — $ —
May 1 - May 31, 2023 1,059 $ 41.87 — $ —
June 1 - June 30, 2023 553 $ 50.71 — $ —
Total 14,833 $ 39.21 —
There were no repurchases of equity securities pursuant to a repurchase plan or program during the three months ended March 31, 2024.


Period	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or approximate dollar value) of Shares that may yet be Purchased Under the Plans or Programs
January 1 - January 31, 2024	3,320	$	56.74	—	$	—
February 1 - February 29, 2024	49,066	$	66.47	—	$	—
March 1 - March 31, 2024	76,630	$	68.00	—	$	—
Total	129,016	$	67.13	—

(1)Shares purchased during the period were transferred to the Company from employees in satisfaction of minimum tax withholding obligations associated with the vesting of restricted stock awards during the period.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

~~(c)~~ Our directors and executive officers may from time to time enter into plans or other arrangements for the purchase or sale of our common stock that are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or may represent a non-Rule 10b5-1 trading arrangement under the Exchange Act. During the quarter ended ~~June 30, 2023,~~March 31, 2024, no such plans or other arrangements were adopted or ~~terminated~~.

terminated.

Item 6. Exhibits

The exhibits listed in the Index to Exhibits, which is incorporated herein by reference, are filed or furnished as part of this Quarterly Report on Form 10-Q.

5244

INDEX TO EXHIBITS


Exhibit No.						Description

10.1						~~Amendment No. 2023-1 To ANI~~Assignment and Technology Transfer Agreement between Bio S ante Pharmaceuticals , Inc. ~~Amended~~ and ~~Restated 2022 Stock Incentive Plan (incorporated by reference to Exhibit 10.1~~Cold Genesys , Inc ., date d as of ~~the Company’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on June 23, 2023).~~November 1 5, 20 10
31.1						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Rule 13(a)-14(a)/15d-14(a).
31.2						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Rule 13(a)-14(a)/15d-14(a).
32.1						Certification of Chief Executive Officer and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101						The following financial information from this quarterly report on Form 10-Q for the fiscal quarter ended ~~June 30, 2023~~March 31, 2024 formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations; (iii) Condensed Consolidated Statements of Comprehensive Income; (iv) Condensed Consolidated Statements of Changes in Stockholders’ Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Condensed Consolidated Financial Statements.
104						Cover Page Interactive Data File (embedded within the Inline XBRL document).

*In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		ANI Pharmaceuticals, Inc. (Registrant)

Date:	~~August 9, 2023~~May 10, 2024	By:	/s/ Nikhil Lalwani
			Nikhil Lalwani
			President and
			Chief Executive Officer
			(principal executive officer)

Date:	~~August 9, 2023~~May 10, 2024	By:	/s/ Stephen P. Carey
			Stephen P. Carey
			Senior Vice President, Finance and
			Chief Financial Officer
			(principal financial and accounting officer)

5446


Supplemental disclosure for cash flow information:
Cash paid for interest, net of amounts capitalized	$	15,456	$	11,400
Cash paid for income taxes	$	141	$	124
Right-of-use assets obtained in exchange for lease obligations	$	4,499	$	—
Supplemental non-cash investing and financing activities:
Property and equipment purchased and included in accounts payable	$	539	$	779