UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 20212022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                       to                       
Commission file number 001-38485
Amneal Pharmaceuticals, Inc.
(Exact name of registrant as specified in its charter)
Delaware32-0546926
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
Amneal Pharmaceuticals, Inc.
400 Crossing Boulevard, Bridgewater, NJ
08807
(Address of principal executive offices)(Zip Code)
(908) 947-3120
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.01 per shareAMRXNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large“large accelerated filer," "accelerated” “accelerated filer," "smaller” “smaller reporting company," and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act:
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No
As of April 30, 2021,25, 2022, there were 148,720,537150,807,252 shares of Class A common stock outstanding and 152,116,890 shares of Class B common stock outstanding, both with a par value of $0.01.
1


Amneal Pharmaceuticals, Inc.
Table of Contents
21


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

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


Summary of Material Risks

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

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


such other factors as may be set forth elsewhere in the Company's Annual Report on Form 10-K for the year ended December 31, 2020,2021, particularly in the section entitled 1A. Risk Factors and our public filings with the SEC.

3


Investors should carefully read our Annual Report on Form 10-K for the year ended December 31, 2020,2021, including the section captioned 1A. Risk Factors, for a description of certain risks that could, among other things, cause our actual results to differ materially from those expressed in our forward-looking statements. Investors should understand that it is not possible to predict or identify all such factors and should not consider the risks described herein and in our Annual Report to be a complete statement of all potential risks and uncertainties. The Company does not undertake to publicly update any forward-looking statement that may be made from time to time, whether as a result of new information or future events or developments.
43


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


Three Months Ended March 31,Three Months Ended March 31,
2021202020222021
Net revenueNet revenue$493,105 $498,533 Net revenue$497,633 $493,105 
Cost of goods soldCost of goods sold301,543 313,578 Cost of goods sold323,062 301,543 
Cost of goods sold impairment charges1,456 
Gross profitGross profit191,562 183,499 Gross profit174,571 191,562 
Selling, general and administrativeSelling, general and administrative90,726 77,976 Selling, general and administrative98,665 90,726 
Research and developmentResearch and development48,182 36,379 Research and development52,798 48,182 
In-process research and development impairment charges960 
Intellectual property legal development expensesIntellectual property legal development expenses3,582 1,270 Intellectual property legal development expenses764 3,582 
Acquisition, transaction-related and integration expensesAcquisition, transaction-related and integration expenses2,802 2,575 Acquisition, transaction-related and integration expenses434 2,802 
Charges related to legal matters, net4,500 
Credit related to legal matters, netCredit related to legal matters, net(2,326)— 
Restructuring and other chargesRestructuring and other charges363 2,048 Restructuring and other charges731 363 
Change in fair value of contingent considerationChange in fair value of contingent consideration200 — 
Operating incomeOperating income45,907 57,791 Operating income23,305 45,907 
Other (expense) income:Other (expense) income:Other (expense) income:
Interest expense, netInterest expense, net(33,885)(39,899)Interest expense, net(33,335)(33,885)
Foreign exchange gain (loss), net2,088 (5,181)
Foreign exchange (loss) gain, netForeign exchange (loss) gain, net(2,013)2,088 
Other income, netOther income, net794 633 Other income, net2,122 794 
Total other expense, netTotal other expense, net(31,003)(44,447)Total other expense, net(33,226)(31,003)
Income before income taxes14,904 13,344 
Provision for (benefit from) income taxes359 (108,173)
Net income14,545 121,517 
Less: Net income attributable to non-controlling interests(7,839)(6,450)
Net income attributable to Amneal Pharmaceuticals, Inc.$6,706 $115,067 
Net income per share attributable to Amneal Pharmaceuticals, Inc.'s class A common stockholders:
(Loss) income before income taxes(Loss) income before income taxes(9,921)14,904 
(Benefit from) provision for income taxes(Benefit from) provision for income taxes(3,461)359 
Net (loss) incomeNet (loss) income(6,460)14,545 
Less: Net loss (income) attributable to non-controlling interestsLess: Net loss (income) attributable to non-controlling interests4,742 (7,839)
Net (loss) income attributable to Amneal Pharmaceuticals, Inc. before accretion of redeemable non-controlling interestNet (loss) income attributable to Amneal Pharmaceuticals, Inc. before accretion of redeemable non-controlling interest(1,718)6,706 
Accretion of redeemable non-controlling interestAccretion of redeemable non-controlling interest(438)— 
Net (loss) income attributable to Amneal Pharmaceuticals, Inc.Net (loss) income attributable to Amneal Pharmaceuticals, Inc.$(2,156)$6,706 
Net (loss) income per share attributable to Amneal Pharmaceuticals, Inc.'s class A common stockholders:Net (loss) income per share attributable to Amneal Pharmaceuticals, Inc.'s class A common stockholders:
BasicBasic$0.05 $0.78  Basic$(0.01)$0.05 
DilutedDiluted$0.04 $0.78  Diluted$(0.01)$0.04 
Weighted-average common shares outstanding:Weighted-average common shares outstanding:Weighted-average common shares outstanding:
BasicBasic148,013 147,180  Basic149,892 148,013 
DilutedDiluted151,220 147,956  Diluted149,892 151,220 



The accompanying notes are an integral part of these consolidated financial statements.
54


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



Three Months Ended March 31,
20212020
Net income$14,545 $121,517 
Less: Net income attributable to non-controlling interests(7,839)(6,450)
Net income attributable to Amneal Pharmaceuticals, Inc.6,706 115,067 
Other comprehensive income (loss):
Foreign currency translation adjustments arising during the period(6,366)(5,135)
Unrealized gain (loss) on cash flow hedge, net of tax20,772 (62,658)
Less: Other comprehensive (income) loss attributable to non-controlling interests(7,302)34,456 
Other comprehensive income (loss) attributable to Amneal Pharmaceuticals, Inc.7,104 (33,337)
Comprehensive income attributable to Amneal Pharmaceuticals, Inc.$13,810 $81,730 
Three Months Ended March 31,
20222021
Net (loss) income$(6,460)$14,545 
Less: Net loss (income) attributable to non-controlling interests4,742 (7,839)
Net (loss) income attributable to Amneal Pharmaceuticals, Inc. before accretion of redeemable non-controlling interest(1,718)6,706 
Accretion of redeemable non-controlling interest(438)— 
Net (loss) income attributable to Amneal Pharmaceuticals, Inc.(2,156)6,706 
Other comprehensive (loss) income:
Foreign currency translation adjustments arising during the period(4,079)(6,366)
Unrealized gain on cash flow hedge, net of tax53,624 20,772 
Less: Other comprehensive income attributable to non-controlling interests(24,955)(7,302)
Other comprehensive income attributable to Amneal Pharmaceuticals, Inc.24,590 7,104 
Comprehensive income attributable to Amneal Pharmaceuticals, Inc.$22,434 $13,810 

















The accompanying notes are an integral part of these consolidated financial statements.
65


Amneal Pharmaceuticals, Inc.
Consolidated Balance Sheets
(unaudited; in thousands)thousands, except per share amounts)
March 31, 2021December 31, 2020March 31, 2022December 31, 2021
AssetsAssetsAssets
Current assets:Current assets:Current assets:
Cash and cash equivalentsCash and cash equivalents$452,097 $341,378 Cash and cash equivalents$210,477 $247,790 
Restricted cashRestricted cash3,717 5,743 Restricted cash6,068 8,949 
Trade accounts receivable, netTrade accounts receivable, net530,600 638,895 Trade accounts receivable, net538,309 662,583 
InventoriesInventories497,008 490,649 Inventories512,241 489,389 
Prepaid expenses and other current assetsPrepaid expenses and other current assets75,137 73,467 Prepaid expenses and other current assets121,408 110,218 
Related party receivablesRelated party receivables1,102 1,407 Related party receivables1,175 1,179 
Total current assetsTotal current assets1,559,661 1,551,539 Total current assets1,389,678 1,520,108 
Property, plant and equipment, netProperty, plant and equipment, net471,165 477,754 Property, plant and equipment, net500,911 514,158 
GoodwillGoodwill522,758 522,814 Goodwill602,893 593,017 
Intangible assets, netIntangible assets, net1,262,954 1,304,626 Intangible assets, net1,209,818 1,166,922 
Operating lease right-of-use assetsOperating lease right-of-use assets32,396 33,947 Operating lease right-of-use assets37,675 39,899 
Operating lease right-of-use assets - related partyOperating lease right-of-use assets - related party24,110 24,792 Operating lease right-of-use assets - related party19,846 20,471 
Financing lease right-of-use assetsFinancing lease right-of-use assets67,465 9,541 Financing lease right-of-use assets64,204 64,475 
Financing lease right-of-use assets - related party58,676 
Other assetsOther assets19,561 22,344 Other assets63,943 20,614 
Total assetsTotal assets$3,960,070 $4,006,033 Total assets$3,888,968 $3,939,664 
Liabilities and Stockholders' EquityLiabilities and Stockholders' EquityLiabilities and Stockholders' Equity
Current liabilities:Current liabilities:Current liabilities:
Accounts payable and accrued expensesAccounts payable and accrued expenses$574,322 $611,867 Accounts payable and accrued expenses$539,734 $583,345 
Current portion of long-term debt, netCurrent portion of long-term debt, net29,817 44,228 Current portion of long-term debt, net30,523 30,614 
Current portion of operating lease liabilitiesCurrent portion of operating lease liabilities6,637 6,474 Current portion of operating lease liabilities9,901 9,686 
Current portion of operating and financing lease liabilities - related partyCurrent portion of operating and financing lease liabilities - related party2,883 3,978 Current portion of operating and financing lease liabilities - related party2,692 2,636 
Current portion of financing lease liabilitiesCurrent portion of financing lease liabilities3,020 1,794 Current portion of financing lease liabilities3,233 3,101 
Current portion of note payable - related party1,000 
Related party payable - short term20,100 7,561 
Related party payables - short termRelated party payables - short term15,960 47,861 
Total current liabilitiesTotal current liabilities636,779 676,902 Total current liabilities602,043 677,243 
Long-term debt, netLong-term debt, net2,728,212 2,735,264 Long-term debt, net2,672,661 2,680,053 
Note payable - related partyNote payable - related party36,828 36,440 Note payable - related party38,443 38,038 
Operating lease liabilitiesOperating lease liabilities28,435 30,182 Operating lease liabilities30,378 32,894 
Operating lease liabilities - related partyOperating lease liabilities - related party22,308 23,049 Operating lease liabilities - related party18,093 18,783 
Financing lease liabilitiesFinancing lease liabilities61,871 2,318 Financing lease liabilities60,286 60,251 
Financing lease liabilities - related party60,193 
Related party payable - long term2,061 1,584 
Related party payables - long termRelated party payables - long term10,371 9,619 
Other long-term liabilitiesOther long-term liabilities63,789 83,365 Other long-term liabilities32,866 38,903 
Total long-term liabilitiesTotal long-term liabilities2,943,504 2,972,395 Total long-term liabilities2,863,098 2,878,541 
Commitments and contingencies (Notes 5 and 14)00
Commitments and contingencies (Notes 5 and 13)Commitments and contingencies (Notes 5 and 13)00
Redeemable non-controlling interestsRedeemable non-controlling interests13,079 11,804 Redeemable non-controlling interests16,420 16,907 
Stockholders' EquityStockholders' EquityStockholders' Equity
Preferred stock, $0.01 par value, 2,000 shares authorized; NaN issued at both March 31, 2021 and December 31, 2020
Class A common stock, $0.01 par value, 900,000 shares authorized at both March 31, 2021 and December 31, 2020; 148,715 and 147,674 shares issued at March 31, 2021 and December 31, 2020, respectively1,485 1,475 
Class B common stock, $0.01 par value, 300,000 shares authorized at both March 31, 2021 and December 31, 2020; 152,117 shares issued at both March 31, 2021 and December 31, 20201,522 1,522 
Preferred stock, $0.01 par value, 2,000 shares authorized, none issued at both March 31, 2022 and December 31, 2021Preferred stock, $0.01 par value, 2,000 shares authorized, none issued at both March 31, 2022 and December 31, 2021— — 
Class A common stock, $0.01 par value, 900,000 shares authorized at both March 31, 2022 and December 31, 2021; 150,775 and 149,413 shares issued at March 31, 2022 and December 31, 2021, respectivelyClass A common stock, $0.01 par value, 900,000 shares authorized at both March 31, 2022 and December 31, 2021; 150,775 and 149,413 shares issued at March 31, 2022 and December 31, 2021, respectively1,506 1,492 
Class B common stock, $0.01 par value, 300,000 shares authorized at March 31, 2022 and December 31, 2021; 152,117 shares issued at both March 31, 2022 and December 31, 2021Class B common stock, $0.01 par value, 300,000 shares authorized at March 31, 2022 and December 31, 2021; 152,117 shares issued at both March 31, 2022 and December 31, 20211,522 1,522 
Additional paid-in capitalAdditional paid-in capital634,484 628,413 Additional paid-in capital666,799 658,350 
Stockholders' accumulated deficitStockholders' accumulated deficit(280,115)(286,821)Stockholders' accumulated deficit(278,353)(276,197)
Accumulated other comprehensive lossAccumulated other comprehensive loss(34,361)(41,318)Accumulated other comprehensive loss(349)(24,827)
Total Amneal Pharmaceuticals, Inc. stockholders' equityTotal Amneal Pharmaceuticals, Inc. stockholders' equity323,015 303,271 Total Amneal Pharmaceuticals, Inc. stockholders' equity391,125 360,340 
Non-controlling interestsNon-controlling interests43,693 41,661 Non-controlling interests16,282 6,633 
Total stockholders' equityTotal stockholders' equity366,708 344,932 Total stockholders' equity407,407 366,973 
Total liabilities and stockholders' equityTotal liabilities and stockholders' equity$3,960,070 $4,006,033 Total liabilities and stockholders' equity$3,888,968 $3,939,664 
The accompanying notes are an integral part of these consolidated financial statements.
76


Amneal Pharmaceuticals, Inc.
Consolidated Statements of Cash Flows
(unaudited; in thousands)
Three Months Ended March 31,
20212020
Cash flows from operating activities:
Net income$14,545 $121,517 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization55,549 58,083 
Unrealized foreign currency (gain) loss(1,970)5,514 
Amortization of debt issuance costs and discount2,183 2,004 
Intangible asset impairment charges2,416 
Stock-based compensation5,330 4,539 
Inventory provision16,021 15,200 
Other operating charges and credits, net1,431 1,266 
Changes in assets and liabilities:
Trade accounts receivable, net108,385 (60,893)
Inventories(20,283)(2,778)
Income taxes receivable associated with the CARES Act(110,069)
Prepaid expenses, other current assets and other assets602 (26,383)
Related party receivables301 76 
Accounts payable, accrued expenses and other liabilities(37,226)34,839 
Related party payables3,260 3,695 
Net cash provided by operating activities148,128 49,026 
Cash flows from investing activities:
Purchases of property, plant and equipment(11,776)(7,367)
      Deposits for future acquisition of property, plant, and equipment(917)
Acquisition of intangible assets(1,050)
Acquisitions, net of cash acquired(253,625)
Net cash used in investing activities(12,693)(262,042)
Cash flows from financing activities:
Proceeds from issuance of debt180,000 
Payments of principal on debt, financing leases and other(23,630)(7,158)
Net borrowings on revolving credit facility300,000 
Payments of deferred financing costs(4,102)
Proceeds from exercise of stock options676 
Employee payroll tax withholding on restricted stock unit vesting(2,102)(503)
Payments of principal on financing lease - related party(93)(263)
Repayment of related party note(1,000)
Net cash (used in) provided by financing activities(26,149)467,979 
Effect of foreign exchange rate on cash(593)(860)
Net increase in cash, cash equivalents, and restricted cash108,693 254,103 
Cash, cash equivalents, and restricted cash - beginning of period347,121 152,822 
Cash, cash equivalents, and restricted cash - end of period$455,814 $406,925 
Cash and cash equivalents - end of period$452,097 $405,238 
Restricted cash - end of period3,717 1,687 
Cash, cash equivalents, and restricted cash - end of period$455,814 $406,925 
Supplemental disclosure of cash flow information:
Cash paid for interest$29,917 $35,386 
Cash paid for income taxes, net$733 $3,430 
Supplemental disclosure of non-cash investing and financing activity:
Notes payable for acquisitions - related party$$36,033 
Tax distribution to non-controlling interests$9,757 $
Three Months Ended March 31,
20222021
Cash flows from operating activities:
Net (loss) income$(6,460)$14,545 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization57,815 55,549 
Unrealized foreign currency loss (gain)3,140 (1,970)
Amortization of debt issuance costs and discount2,195 2,183 
Stock-based compensation8,065 5,330 
Inventory provision3,578 16,021 
Change in fair value of contingent consideration200 — 
Other operating charges and credits, net1,155 1,431 
Changes in assets and liabilities:
Trade accounts receivable, net124,268 108,385 
Inventories(25,549)(20,283)
Prepaid expenses, other current assets and other assets(4,423)602 
Related party receivables301 
Accounts payable, accrued expenses and other liabilities(48,777)(37,226)
Related party payables5,132 3,260 
Net cash provided by operating activities120,343 148,128 
Cash flows from investing activities:
Purchases of property, plant and equipment(10,793)(11,776)
Deposits for future acquisition of property, plant, and equipment(1,888)(917)
Acquisition of business(84,714)— 
Net cash used in investing activities(97,395)(12,693)
Cash flows from financing activities:
Payments of principal on debt, financing leases and other(9,796)(23,630)
Proceeds from exercise of stock options111 676 
Employee payroll tax withholding on restricted stock unit vesting(3,001)(2,102)
Tax distributions to non-controlling interests(3,164)— 
Acquisition of redeemable non-controlling interest(1,722)— 
Payments of deferred consideration for acquisitions - related party(43,998)— 
Payments of principal on financing lease - related party— (93)
Repayment of related party note— (1,000)
Net cash used in financing activities(61,570)(26,149)
Effect of foreign exchange rate on cash(1,572)(593)
Net (decrease) increase in cash, cash equivalents, and restricted cash(40,194)108,693 
Cash, cash equivalents, and restricted cash - beginning of period256,739 347,121 
Cash, cash equivalents, and restricted cash - end of period$216,545 $455,814 
Cash and cash equivalents - end of period$210,477 $452,097 
Restricted cash - end of period6,068 3,717 
Cash, cash equivalents, and restricted cash - end of period$216,545 $455,814 
Supplemental disclosure of cash flow information:
Cash paid for interest$27,289 $29,917 
Cash paid for income taxes, net$4,387 $733 
Supplemental disclosure of non-cash investing and financing activity:
Tax distributions to non-controlling interests$3,284 $9,757 
Contingent consideration for acquisition$8,796 $— 

The accompanying notes are an integral part of these consolidated financial statements.
87


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



Class A Common
Stock
Class B Common
Stock
Additional
Paid-in Capital
Stockholders'
Accumulated Deficit
Accumulated
Other
Comprehensive Loss
Non-
Controlling Interests
Total EquityRedeemable Non-Controlling Interests
SharesAmountSharesAmount
Balance at January 1, 2021147,674 $1,475 152,117 $1,522 $628,413 $(286,821)$(41,318)$41,661 $344,932 $11,804 
Net income— — — — — 6,706 — 6,043 12,749 1,796 
Foreign currency translation
      adjustment
— — — — — — (3,139)(3,227)(6,366)— 
Stock-based compensation— — — — 5,330 — — — 5,330 — 
Exercise of stock options244 — — 677 — (34)31 676 — 
Restricted stock unit vesting,
      net of shares withheld to
      cover payroll taxes
797 — — 64 — (113)(2,108)(2,149)— 
Unrealized gain on cash flow
      hedge, net of tax
— — — — — — 10,243 10,529 20,772 — 
Tax distribution— — — — — — — (9,236)(9,236)(521)
Balance at March 31, 2021148,715 $1,485 152,117 $1,522 $634,484 $(280,115)$(34,361)$43,693 $366,708 $13,079 
Class A Common
Stock
Class B Common
Stock
Additional
Paid-in Capital
Stockholders'
Accumulated Deficit
Accumulated
Other
Comprehensive Loss
Non-
Controlling Interests
Total EquityRedeemable Non-Controlling Interests
SharesAmountSharesAmount
Balance at January 1, 2022149,413 $1,492 152,117 $1,522 $658,350 $(276,197)$(24,827)$6,633 $366,973 $16,907 
Net (loss) income— — — — — (1,718)— (7,099)(8,817)2,357 
Foreign currency translation adjustments— — — — — — (2,024)(2,055)(4,079)— 
Stock-based compensation— — — — 8,065 — — — 8,065 — 
Exercise of stock options— — — 65 — — 46 111 — 
Restricted stock unit vesting, net of shares withheld to cover payroll taxes1,355 14 — — 319 — (112)(3,365)(3,144)— 
Unrealized gain on cash flow hedge, net of tax— — — — — — 26,614 27,010 53,624 — 
Tax distributions, net— — — — — — — (4,443)(4,443)(2,005)
Reclassification of redeemable non-controlling interest— — — — — (438)— (445)(883)883 
Acquisition of redeemable non-controlling interest— — — — — — — — — (1,722)
Balance at March 31, 2022150,775 $1,506 152,117 $1,522 $666,799 $(278,353)$(349)$16,282 $407,407 $16,420 





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






Class A Common
Stock
Class B Common
Stock
Additional
Paid-in Capital
Stockholders'
Accumulated Deficit
Accumulated
Other
Comprehensive Loss
Non-
Controlling Interests
Total EquityRedeemable Non-Controlling Interests
SharesAmountSharesAmount
Balance at January 1, 2020147,070 $1,470 152,117 $1,522 $606,966 $(377,880)$(68)$114,778 $346,788 $
Net income— — — — — 115,067 — 5,362 120,429 1,088 
Foreign currency translation
      adjustment
— — — — — — (2,525)(2,610)(5,135)— 
Stock-based compensation— — — — 4,539 — — — 4,539 — 
Exercise of stock options— — — — — — — 
Restricted stock unit vesting,
     net of shares withheld to
     cover payroll taxes
240 — — 90 — — (602)(510)— 
Unrealized loss on cash flow
     hedge, net of tax
— — — — — — (30,812)(31,846)(62,658)— 
Non-controlling interests from
     Rondo transaction
— — — — — — — — — 11,475 
Balance at March 31, 2020147,311 $1,472 152,117 $1,522 $611,600 $(262,813)$(33,405)$85,082 $403,458 $12,563 






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

98


Amneal Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
(unaudited)
1. Nature of Operations
Amneal Pharmaceuticals, Inc. (the “Company”) is a pharmaceutical company specializing in developing, manufacturing, marketing and distributing high-value generic and branded specialty pharmaceutical products across a broad array of dosage forms and therapeutic areas. The Company operates principally in the United States, India, and Ireland, and sells to wholesalers, distributors, hospitals, chain pharmacies and individual pharmacies, either directly or indirectly. The Company is a holding company, whose principal assets are common units (“Amneal Common Units”) of Amneal Pharmaceuticals, LLC (“Amneal”).On May 4,
In 2018, Amneal completed the acquisition of Impax Laboratories, Inc. (“Impax”), a generic and specialty pharmaceutical company. In 2020, Amneal acquired a 65.1% controlling interest in both AvKARE Inc., a Tennessee corporation now a limited liability company (“AvKARE, LLC”), and Dixon-Shane, LLC d/b/a R&S Northeast LLC, a Kentucky limited liability company (“R&S”) (collectively, the “Rondo Acquisitions”). AvKARE, LLC is one of the largest private label providers of generic pharmaceuticals in the U.S. federal agency sector, primarily focused on serving the Department of Defense and the Department of Veterans Affairs. R&S is a national pharmaceutical wholesaler focused primarily on offering 340b-qualified entities products to provide consistency in care and pricing.
The group of investors, together with their affiliates and certain assignees, who owned Amneal when it was a private company (the “Amneal Group”“Members”) held 50.6%50.2% of Amneal Common Units and the Company held the remaining 49.4%49.8% as of March 31, 2021. Although the Company has a minority economic interest in Amneal, it is Amneal’s sole managing member, having the sole voting power to make all of Amneal’s business decisions and control its management. Therefore, the Company consolidates the financial statements of Amneal and its subsidiaries. The Company records non-controlling interests for the portion of Amneal’s economic interests that it does not hold.2022.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements, which are prepared in accordance with generally accepted accounting principles in the United States of America, should be read in conjunction with Amneal’s annual audited financial statements for the year ended December 31, 20202021 included in the Company’s 20202021 Annual Report on Form 10-K. Certain information and footnote disclosures normally included in annual financial statements have been omitted from the accompanying unaudited consolidated financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the Company's financial position as of March 31, 2021,2022, cash flows for the three months ended March 31, 20212022 and 20202021 and the results of its operations, its comprehensive income and its changes in stockholders'stockholders’ equity for the three months ended March 31, 20212022 and 2020.2021. The consolidated balance sheet data at December 31, 20202021 was derived from the Company'sCompany’s audited annual financial statements, but does not include all disclosures required by generally accepted accounting principles in the United States of America.
TheExcept for the updates included in this Note, the accounting policies of the Company are set forth in Note 2. Summary of Significant Accounting Policies contained in the Company’s 20202021 Annual Report on Form 10-K. The following significant accounting policy has been updated to include the Company's accounting for foreign currency transactions that are of a long-term investment in nature.
Foreign Currencies

The Company has operations in the U.S., India, Ireland, and other international jurisdictions. Generally, foreign subsidiaries’ functional currency is the local currency of operations and the net assets of foreign operations are translated into U.S. dollars using current exchange rates. The U.S. dollar results that arise from such translation, as well as exchange gains and losses on intercompany balances of a long-term investment nature, are included in the foreign currency translation adjustments in accumulated other comprehensive loss.
Use of Estimates
The preparation of financial statements requires the Company's management to make estimates and assumptions that affect the reported financial position at the date of the financial statements and the reported results of operations during the reporting period. Such estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities in the consolidated financial statements and accompanying notes. The following are some, but not all, of such estimates: the determination of chargebacks, sales returns, rebates, billbacks, valuation of intangible and other assets acquired in business combinations, allowances for accounts receivable, accrued liabilities, initial and subsequent valuation of contingent consideration recognized in business combinations, stock-based compensation, valuation of inventory balances, the determination of useful lives for product rights and the assessment of
10


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

Prior period balancesIn November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832), Disclosures by Business Entities About Government Assistance, which requires entities to provide disclosures on material government assistance transactions for annual reporting periods. The disclosures include information around the nature of the assistance, the related accounting policies used to (i) financing lease right-of-use assetsaccount for government assistance, the effect of $10 million formerly included in other assets, (ii) current portiongovernment assistance on the entity’s financial statements, and any significant terms and conditions of financing lease liabilities of $2 million formerly included in accounts payablethe agreements, including commitments and accrued expenses,contingencies. The new standard is effective for the Company on January 1, 2022 and (iii) long-term lease liabilities of $2 million formerly included in other long-term liabilities as of December 31, 2020only impacts annual financial statement footnote disclosures. The Company is currently evaluating the impact this guidance will have been reclassified to their respective balance sheet captions to conform to the current period presentation in theon its consolidated balance sheets.

financial statements.
3. Acquisitions and Divestitures
Kashiv Specialty Pharmaceuticals, LLCSaol Baclofen Franchise Acquisition
On January 11,December 30, 2021, the Company and Kashiv Biosciences, LLC (a related party, see Note 16. Related Party Transactions) (“Kashiv”) entered into a definitivean asset purchase agreement for Amneal to acquire a 98% interest in Kashiv Specialty Pharmaceuticals, LLC (“KSP”with certain entities affiliated with Saol International Limited (collectively, “Saol”), a subsidiaryprivate specialty pharmaceutical company, pursuant to which it agreed to acquire Saol’s baclofen franchise, including Lioresal®, LYVISPAH™, and a pipeline product under development (the “Saol Acquisition”). The Saol Acquisition expands the Company’s commercial institutional and specialty portfolio in neurology while adding commercial infrastructure in advance of Kashiv focusedits entry into the biosimilar institutional market. The transaction closed on February 9, 2022.
Consideration for the development of innovative drug delivery platforms, novel 505(b)(2) drugs and complex generics. The acquisition was fundedSaol Acquisition included $84.7 million, paid at closing with cash on hand, and closed on April 2, 2021.

Under the terms of the transaction, which will be accounted for as a business combination, Amneal paid an upfront purchase price of $70 million with cash on hand at the closing, which is subject to certain customary purchase price adjustments, and will make a cash payment of $30 million on January 11, 2022. Kashiv is also eligible to receive up to an additional $8 million in contingent payments upon the achievement of certain regulatory milestones and potential royalty payments from high single-digits to mid double-digits, dependingbased on the net sales amount, of aggregate annual net sales for certain future pharmaceutical products.

Due to the timingacquired assets, beginning in 2023. Cash paid at closing included $1.1 million for inventory acquired in excess of the acquisition, the initial accounting for the acquisition, including the valuation of the intangible assets acquired, is incomplete. As such, the Company is not able to disclose certain information relating to the acquisition including the preliminary fair value of assets acquired and liabilities assumed.
AvKARE and R&S Acquisitions
On December 10, 2019, the Company, through its investment in Rondo Partners, LLC (“Rondo”), entered into an equity purchase and operating agreements to acquire approximately a 65.1% controlling financing interest in both AvKARE Inc., a Tennessee corporation, and Dixon-Shane, LLC d/b/a R&S Northeast LLC, a Kentucky limited liability company (“R&S”) (collectively the “Acquisitions”). Prior to closing, AvKARE, Inc. converted to a limited liability company, AvKARE, LLC. AvKARE, LLC is one of the largest private label providers of generic pharmaceuticalsnormalized level, as defined in the U.S. federal agency sector, primarily focused on serving the Department of Defense and the Department of Veterans Affairs. R&S is a national pharmaceutical wholesaler focused primarily on offering 340b-qualified entities products to provide consistency in care and pricing.
On January 31, 2020, the Company completed the Acquisitions.  Theasset purchase price of $294 million, included cash of $254 million and the issuance of long-term promissory notes to the sellers with an aggregate principal amount of $44 million (estimated fair value of $35 million) (the “Sellers Notes”) and a short-term promissory note (the “Short-Term Seller Note”) with a principal amount of $1 million to the sellers.  The cash purchase price was funded by $76 million of cash on hand and
11


$178 million of proceeds from a $180 million term loan.  The remaining $2 million consisted of workingagreement (working capital costs. The Company is not party to or a guarantor of the term loan, Sellers Notes or Short-Term Sellers Note. For further detail of the purchase price, refer to the table below.adjustment).
For the three months ended March 31, 2020, there were $12022, the Company incurred $0.1 million ofin transaction costs associated with the AcquisitionsSaol Acquisition, which was recorded in acquisition, transaction-related and integration expenses (NaN for the three months ended March 31, 2021).expenses.
The Acquisitions wereSaol Acquisition was accounted for under the acquisition method of accounting, with Amneal as the accounting acquirer of AvKARE, LLC and R&S.
acquirer. The preliminary purchase price was calculated as follows (in thousands):
Cash$254,00084,714 
Sellers NotesContingent consideration (royalties) (1)
35,033 
Settlement of Amneal trade accounts receivable from R&S (2)
6,855 
Short-Term Seller Note (3)
1,000 
Working capital adjustment (4)
(2,640)8,796 
Fair value of consideration transferred$294,24893,510 
(1)In accordance with ASC 805, Business Combinations, all consideration transferred was measured at its acquisition-date fair value. The Sellers Notes are stated at the fair value estimate of $35 million, which is the $44 million aggregate principal amount less a $9 million discount.  Theestimated fair value of contingent consideration on the Sellers Notesacquisition date was estimated using$8.8 million and was based on significant Level 3 inputs that were not observable in the Monte-Carlo simulation approach undermarket. Key assumptions included the option pricing framework.discount rate, projected year of payments and expected net product sales. Refer to Note 10. Fair Value Measurements, for additional information on the methodology and determination of this liability.
(2)Represents trade accounts receivable from R&S that was effectively settled upon closing of the Acquisitions.
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(3)Represents the principal amount due on the Short-Term Seller Note, which approximates fair value. The entire Short-Term Seller Note was repaid in February 2021.
(4)Represents a working capital adjustment pursuant to the terms of the purchase agreement. The entire amount was received in cash by the Company in September 2020.
The following is a summary of the preliminary purchase price allocation for the AcquisitionsSaol Acquisition (in thousands):
FinalPreliminary Fair Values as of
January 31, 2020February 9, 2022
Trade accounts receivable, netInventory$46,702 
Inventories71,9082,162 
Prepaid expenses and other current assets11,316 
Related party receivables61 
Property, plant and equipment5,27898 
Goodwill103,6797,553 
Intangible assets net130,800 
Operating lease right-of-use assets - related party5,54483,815 
Total assets acquired375,28893,628 
Accounts payable and accrued expenses62,489 
Related party payables1,532 
Operating lease liabilities - related party5,544 
Total liabilities assumed69,565 
Redeemable non-controlling interests11,475118 
Fair value of consideration transferred$294,24893,510 



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The acquired intangible assets are being amortized over their estimated useful lives as follows (in thousands):

Fair Values
Weighted-Average
Useful Life
Government licenses$66,700 7 years
Government contracts22,000 4 years
National contracts28,600 5 years
Customer relationships13,000 10 years
Trade name500 6 years
$130,800 

Fair Value
Weighted-Average
Useful Life (in years)
Marketed product rights$83,815 11.6
The estimated fair value of the government licensesidentifiable intangible assets was determined using the “with-and-without method,” which is a valuation technique that provides an estimate of the fair value of an intangible asset that is equal to the difference between the present value of the prospective revenues and expenses for the business with and without the subject intangible asset in place. The estimated fair values of the government contracts, national contracts, and customer relationships were determined using the “income approach,” which is a valuation technique that provides an estimate of the fair value of an intangible asset based on market participant expectations of the cash flows that an intangible asset would generate over its remaining useful life. The estimated fair value of the trade name was determined using the “relief from royalty method,” which is a valuation technique that provides an estimate of the fair value of an intangible asset equal to the present value of the after-tax royalty savings attributable to owning the intangible asset. The assumptions, including the expected projected cash flows, utilized in the purchase price allocation and in determining the purchase price were based on management's best estimates as of the closing date of the AcquisitionsSaol Acquisition on January 31, 2020.February 9, 2022.
Some of the more significant assumptions inherent in the development of those asset valuations included the estimated net cash flows for each year for each asset (including net revenues, cost of sales, selling and marketing costs and working capital / contributory asset charges), the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, the potential regulatory and commercial success risks, competitive trends impacting the asset and each cash flow stream, as well as other factors. The underlying assumptions used to prepare the discounted cash flow analysis may change; accordingly, for these and other reasons, actual results may vary significantly from estimated results.
Goodwill is calculated as the excess of the consideration transferred over the net assets recognized. Of the total goodwill acquired in connection with the Saol Acquisition, $5.2 million was allocated to the Company’s Generics segment and $2.4 million was allocated to the Specialty segment.
From the acquisition date of February 9, 2022 to March 31, 2022, the Saol Acquisition contributed net revenues and an operating loss of $2.9 million and $0.1 million, respectively.
Puniska Healthcare Pvt. Ltd.
On November 2, 2021, the Company entered into a definitive agreement to acquire Puniska Healthcare Pvt. Ltd. (“Puniska”), a privately held manufacturer of parenteral and injectable drugs in India, and land in a transaction valued at $93.0 million (the “Puniska Acquisition”). Upon execution of the agreement, the Company paid $72.9 million with cash on hand for approximately 74% of the equity interests of Puniska. Upon approval of the transaction by the government of India in March 2022, the Company paid, with cash on hand, an additional $1.7 million for the remaining 26% of the equity interests of Puniska (included in redeemable non-controlling interests in the Company’s consolidated balance sheet as of December 31, 2021) and $14.2 million for the satisfaction of a preexisting payable to the sellers (included in related party payables-short term in the Company’s consolidated balance sheet as of December 31, 2021). During December 2021, the Company paid $4.3 million with cash on hand for land associated with the Puniska Acquisition.
There were 0 transaction costs associated with the Puniska Acquisition for the three months ended March 31, 2022 or 2021.
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The Puniska Acquisition, excluding the land acquired in December 2021, was accounted for under the acquisition method of accounting, with Amneal as the accounting acquirer. The preliminary purchase price was calculated as follows (in thousands):
Cash (1)
$72,880 
Payable to sellers (2)
14,162 
Fair value of consideration transferred$87,042 
(1)     Cash includes the payment made upon execution of the agreement.
(2)     Due to the short-term nature of that payable to the sellers, the principal amount approximates fair value.
The following is a summary of the preliminary purchase price allocation for the Puniska Acquisition (in thousands):
Fair Values as of
November 2, 2021
Cash$165 
Trade accounts receivable, net232 
Inventories1,092 
Prepaid expenses and other current assets4,473 
Property, plant and equipment53,423 
Goodwill30,091 
Operating lease-right-of-use assets234 
Other assets1,303 
Total assets acquired91,013 
Accounts payable and accrued expenses1,732 
Operating lease liabilities234 
Other long-term liabilities263 
Total liabilities assumed2,229 
Redeemable non-controlling interests1,742 
Fair value of consideration transferred$87,042 
Goodwill is calculated as the excess of the consideration transferred and fair value of the redeemable non-controlling interests over the net assets recognized. All of the goodwill acquired in connection with the Puniska Acquisition was allocated to the Company’s Generics segment.
Kashiv Specialty Pharmaceuticals, LLC Acquisition
On January 11, 2021, the Company and Kashiv Biosciences, LLC (a related party, see Note 15. Related Party Transactions) (“Kashiv”) entered into a definitive agreement for Amneal to acquire a 98% interest in Kashiv Specialty Pharmaceuticals, LLC (“KSP”), a subsidiary of Kashiv focused on the development of innovative drug delivery platforms, novel 505(b)(2) drugs and complex generics (the “KSP Acquisition”).
On April 2, 2021, the Company completed the KSP Acquisition.  Under the terms of the transaction, the cash portion of the consideration was $104.5 million, comprised of a purchase price of $100.1 million (including initial and deferred consideration) and a working capital adjustment of $4.4 million.  The initial cash purchase price was funded by cash on hand. For further detail of the purchase price, refer to the table below.
Transaction costs associated with the KSP Acquisition were $1.2 million for the three months ended March 31, 2021 (none for the three months ended March 31, 2022).
The KSP Acquisition was accounted for under the acquisition method of accounting, with Amneal as the accounting acquirer.


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

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

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

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

Fair Value
Weighted-Average
Useful Life (in years)
Marketed product rights$29,400 5.9
The estimated fair value of the in-process research and development and identifiable intangible assets was determined using the “income approach”, which is a valuation technique that provides an estimate of the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. The assumptions, including the expected projected cash flows, utilized in the purchase price allocation and in determining the purchase price were based on management’s best estimates as of the closing date of the KSP Acquisition on April 2, 2021.
Some of the more significant assumptions inherent in the development of those asset valuations included the estimated net cash flows for each year for each asset or product (including net revenues, cost of sales, R&D, selling and marketing costs and working capital / contributory asset charges), the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, the potential regulatory and commercial success risks, competitive trends impacting the asset and each cash flow stream, as well as other factors. The underlying assumptions used to prepare the discounted cash flow analysis may change; accordingly, for these and other reasons, actual results may vary significantly from estimated results.
The Sellers Notes and redeemable non-controlling interests were estimated using the Monte-Carlo simulation approach under the option pricing framework. The non-controlling interests are redeemable at the option of either the non-controlling interest holder and Amneal. The fair value of the redeemable non-controlling interests considers these redemption rights.
Of the $104 million of goodwill acquired in connection with the Acquisitions, approximately $70 million was allocated to the Company’s AvKARE segment (refer to Note 15.Segment Information) and approximately $34 million was allocated to the Generics segment.  Goodwill was allocated to the Generics segment as net revenue of products manufactured from Amneal and distributed by the Acquisitions is reflected in Generics’ segment results.  Goodwill is calculated as the excess of the consideration transferred and fair value of the consideration transferred and the fair value of the redeemable non-controlling interests over the fair value of the net assets recognized. Factors that contributedOf the total goodwill acquired in connection with the KSP Acquisition, $40.8 million was allocated to the recognition of goodwill include Amneal’s intentCompany’s Generics segment and $2.7 million was allocated to diversify its business and open growth opportunities in the large, complex and growing federal healthcare market.Specialty segment.
Unaudited Pro Forma Information
The unaudited pro forma combined results of operations for the three months ended March 31, 2020 (assuming the closing of the Acquisitions occurred on January 1, 2020) are as follows (in thousands):
Net revenue$525,303 
Net income$122,521 
Net income attributable to Amneal Pharmaceuticals, Inc.$115,388 
The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the actual results of operations had the closing of the Acquisitions taken place on January 1, 2020. Adjustments to arrive at the unaudited pro forma information primarily related to increases in selling, general and administrative expenses for amortization of acquired intangible assets, net of the applicable tax impact.
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4. Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers.Customers. Revenue is recognized when the Company transfers control of its products to the customer, which typically occurs at a point-in-time, either upon shipment or delivery. Substantially all of the Company’s net revenues relate to products which are transferred to the customer at a point-in-time.
Concentration of Revenue
The Company's 3 largestfollowing table summarizes revenues from each of our customers which individually accounted for approximately 82% and 81%10% or more of our total gross sales of products for the three months ended March 31, 2021 and 2020, respectively.net revenues:
Three Months Ended March 31,
20222021
Customer A19 %20 %
Customer B18 %19 %
Customer C23 %26 %
Disaggregated Revenue
The Company's significant therapeutic classes for its Generics and Specialty segments and sales channels for its AvKARE segment, as determined based on net revenue for each of the three months ended March 31, 20212022 and 20202021 are set forth below (in thousands):
Three Months Ended March 31,
20212020
Generics
Anti-Infective$5,913 $13,253 
Hormonal106,703 87,481 
Antiviral (1)
(7,941)15,824 
Central Nervous System96,291 101,575 
Cardiovascular System35,311 29,679 
Gastroenterology19,458 23,536 
Oncology19,030 15,966 
Metabolic Disease/Endocrine6,557 17,229 
Respiratory8,178 10,067 
Dermatology12,878 15,245 
Other therapeutic classes9,731 21,746 
International and other399 985 
Total Generics net revenue312,508 352,586 
Specialty
Hormonal/Metabolic16,796 14,227 
Central Nervous System67,711 68,311 
Other therapeutic classes11,424 5,439 
Total Specialty net revenue95,931 87,977 
AvKARE (2)
Distribution45,499 31,586 
Government Label31,072 21,378 
Institutional5,179 3,413 
Other2,916 1,593 
Total AvKARE net revenue84,666 57,970 
Total net revenue$493,105 $498,533 
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Three Months Ended March 31,
20222021
Generics
Anti-Infective$6,245 $5,913 
Hormonal/ Allergy96,368 106,703 
Antiviral (1)
10,571 (7,941)
Central Nervous System81,125 96,291 
Cardiovascular System23,453 35,311 
Gastroenterology16,620 19,458 
Oncology17,208 19,030 
Metabolic Disease/Endocrine11,233 6,557 
Respiratory5,665 8,178 
Dermatology13,477 12,878 
Other therapeutic classes35,360 9,731 
International and other422 399 
Total Generics net revenue317,747 312,508 
Specialty
Hormonal/ Allergy19,419 16,796 
Central Nervous System58,168 67,711 
Gastroenterology70 — 
Other therapeutic classes7,429 11,424 
Total Specialty net revenue85,086 95,931 
AvKARE
Distribution60,263 45,499 
Government Label24,459 31,072 
Institutional6,315 5,179 
Other3,763 2,916 
Total AvKARE net revenue94,800 84,666 
Total net revenue$497,633 $493,105 
(1) Antiviral net revenue for the three months ended March 31, 2021 decreased from the prior year, primarily due to a $23 million decline in Oseltamivir (generic Tamiflu®) sales fromreflected lower demand and increased returns activity for Oseltamivir (generic Tamiflu®) above historical levels due to decreased influenza activity during the COVID-19 pandemic.
(2) The AvKARE segment consists of the businesses acquired in the Acquisitions on January 31, 2020. Net revenue for the three months ended March 31, 2020 represent two months of activity.
14


A rollforward of the major categories of sales-related deductions for the three months ended March 31, 20212022 is as follows (in thousands):
Contract
Charge - Backs
and Sales
Volume
Allowances
Cash Discount
Allowances
Accrued
Returns
Allowance
Accrued
Medicaid and
Commercial
Rebates
Contract
Charge - Backs
and Sales
Volume
Allowances
Cash Discount
Allowances
Accrued
Returns
Allowance
Accrued
Medicaid and
Commercial
Rebates
Balance at December 31, 2020$628,804 $22,690 $174,984 $131,088 
Balance at December 31, 2021Balance at December 31, 2021$503,902 $23,642 $161,978 $85,737 
Provision related to sales recorded in the periodProvision related to sales recorded in the period727,258 25,048 24,786 28,770 Provision related to sales recorded in the period728,830 24,852 19,207 18,452 
Credits/payments issued during the periodCredits/payments issued during the period(838,304)(25,402)(25,758)(26,852)Credits/payments issued during the period(861,717)(25,920)(25,629)(35,313)
Balance at March 31, 2021$517,758 $22,336 $174,012 $133,006 
Balance at March 31, 2022Balance at March 31, 2022$371,015 $22,574 $155,556 $68,876 
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5. Alliance and Collaboration
The Company has entered into several alliance, collaboration, license, distribution and similar agreements with respect to certain of its products and services with third-party pharmaceutical companies. The consolidated statements of operations include revenue recognized under agreements the Company has entered into to develop marketing and/or distribution relationships with its partners to fully leverage the technology platform and revenue recognized under development agreements which generally obligate the Company to provide research and development services over multiple periods. The Company's significant arrangements are discussed below.
Distribution, License, Development and Supply Agreement with AstraZeneca UK Limited
In January 2012, Impax entered into an agreement with AstraZeneca UK Limited ("AstraZeneca") to distribute branded products under the terms of a distribution, license, development and supply agreement (the "AZ Agreement"). The parties subsequently entered into a First Amendment to the AZ Agreement dated May 31, 2016 (as amended, the "AZ Amendment"). Under the terms of the AZ Agreement, AstraZeneca granted to Impax an exclusive license to commercialize the tablet, orally disintegrating tablet and nasal spray formulations of Zomig® (zolmitriptan) products for the treatment of migraine headaches in the United States and in certain U.S. territories, except during an initial transition period when AstraZeneca fulfilled all orders of Zomig® products on Impax’s behalf and AstraZeneca paid to Impax the gross profit on such Zomig® products. Pursuant to the AZ Amendment, under certain conditions, and depending on the nature and terms of the study agreed to with the FDA, Impax agreed to conduct, at its own expense, the juvenile toxicity study and pediatric study required by the FDA under the Pediatric Research Equity Act ("PREA") for approval of the nasal formulation of Zomig ® for the acute treatment of migraine in pediatric patients ages six through eleven years old, as further described in the study protocol mutually agreed to by the parties (the "PREA Study"). In consideration for Impax conducting the PREA Study at its own expense, the AZ Amendment provides for the total royalty payments payable by Impax to AstraZeneca on net sales of Zomig ® products under the AZ Agreement to be reduced by an aggregate amount of $30 million to be received in quarterly amounts specified in the AZ Amendment beginning from the quarter ended June 30, 2016 and through the quarter ended December 31, 2021. In the event the royalty reduction amounts exceed the royalty payments payable by Impax to AstraZeneca pursuant to the AZ Agreement in any given quarter, AstraZeneca will be required to pay Impax an amount equal to the difference between the royalty reduction amount and the royalty payment payable by Impax to AstraZeneca. Impax’s commitment to perform the PREA Study may be terminated, without penalty, under certain circumstances as set forth in the AZ Amendment. The Company recognizes the amounts received from AstraZeneca for the PREA Study as a reduction to research and development expense. The PREA Study was completed during March 2021.
In May 2013, Impax’s exclusivity period for branded Zomig® tablets and orally disintegrating tablets expired and Impax launched authorized generic versions of those products in the United States. As discussed above, pursuant to the AZ Amendment, the total royalty payments payable by Impax to AstraZeneca on net sales of Zomig ® products under the AZ Agreement is reduced by certain specified amounts beginning from the quarter ended June 30, 2016 and through the quarter ended December 31, 2020, with such reduced royalty amounts totaling an aggregate amount of $30 million. The Company recorded cost of sales for royalties under this agreement of $3 million and $4 million for the three months ended March 31, 2021 and 2020, respectively.
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Biosimilar Licensing and Supply Agreement
On May 7, 2018, the Company entered into a licensing and supply agreement with Mabxience S.L., for its biosimilar candidate for Avastin® (bevacizumab). The licensing agreement was subsequently amended on March 4, 2021 and the supply agreement was subsequently amended on March 2, 2021.The2021 and the licensing agreement was amended on March 4, 2021. The Company will be the exclusive partner in the U.S. market. The Company will pay development and regulatory milestone payments as well as commercial milestone payments on reaching pre-agreed sales targets in the market to Mabxience, up to $78$78.0 million. For the three months ended March 31, 2021, the Company recognized $2expensed a milestone of $2.0 million ofto research and development expense related to theunder this agreement (NaN(none for the three months ended March 31, 2020)2022).
On April 13, 2022, the Food and Drug Administration (“FDA”) approved the Company’s biologics license application for bevacizumab-maly, a biosimilar referencing Avastin®. In connection with this regulatory approval, the Company incurred a milestone payment of $10 million in the second quarter of 2022.
Agreements with Kashiv Biosciences, LLC
For detail on the Company’s related party agreements with Kashiv Biosciences, LLC, refer to Note 16.15. Related Party Transactions.in this Form 10-Q and the Company’s 2021 Annual Report on Form 10-K
6. Restructuring and Other Charges
On July 10, 2019, the Company announced a plan to restructure its operations that is intended to reduce costs and optimize its organizational and manufacturing infrastructure. Pursuant to the restructuring plan as revised, the Company expects to reduce its headcount over the course of this multi-year program by approximately 300 to 350 employees through December 31, 2021, primarily by closing its manufacturing facility located in Hauppauge, NY. Through March 31, 2021, the Company had reduced headcount by 280 employees under this plan.
For the three months ended March 31, 2021, there were no employee restructuring separation charges. For the three months ended March 31, 2020, employee restructuring charges were immaterial. The total employee separation-related liability as of both March 31, 2021 and December 31, 2020 was $1.6 million and included within accounts payable and accrued expenses. There were no payments made or adjustments to the liability during the three months ended March 31, 2021.

Other employee severance charges were $0.4 million and $2 million during the three months ended March 31, 2021 and 2020, respectively. Severance charges primarily consisted of the cost of benefits provided pursuant to our severance programs for former senior executives and management employees.
7.(Loss) Earnings per Share
Basic (loss) earnings per share of the Company’s class A common stock is computed by dividing net (loss) income attributable to Amneal Pharmaceuticals, Inc. by the weighted-average number of shares of class A common stock outstanding during the period. Diluted (loss) earnings per share of class A common stock is computed by dividing net (loss) income attributable to Amneal Pharmaceuticals, Inc. by the weighted-average number of shares of class A common stock outstanding, adjusted to give effect to potentially dilutive securities.
The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted (loss) earnings per share of class A common stock (in thousands, except per share amounts):
Three Months Ended
March 31,
Three Months Ended
March 31,
2021202020222021
Numerator:Numerator:Numerator:
Net income attributable to Amneal Pharmaceuticals, Inc.$6,706 $115,067 
Net (loss) income attributable to Amneal Pharmaceuticals, Inc.Net (loss) income attributable to Amneal Pharmaceuticals, Inc.$(2,156)$6,706 
Denominator:Denominator:Denominator:
Weighted-average shares outstanding - basicWeighted-average shares outstanding - basic148,013 147,180 Weighted-average shares outstanding - basic149,892 148,013 
Effect of dilutive securities:Effect of dilutive securities:Effect of dilutive securities:
Stock optionsStock options792 230 Stock options— 792 
Restricted stock unitsRestricted stock units2,415 546 Restricted stock units— 2,415 
Weighted-average shares outstanding - dilutedWeighted-average shares outstanding - diluted151,220 147,956 Weighted-average shares outstanding - diluted149,892 151,220 
Net earnings per share attributable to Amneal Pharmaceuticals, Inc.'s class A common stockholders:
Net (loss) earnings per share attributable to Amneal Pharmaceuticals, Inc.'s class A common stockholders:Net (loss) earnings per share attributable to Amneal Pharmaceuticals, Inc.'s class A common stockholders:
BasicBasic$0.05 $0.78 Basic$(0.01)$0.05 
DilutedDiluted$0.04 $0.78 Diluted$(0.01)$0.04 
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Shares of the Company's class B common stock do not share in the earnings or losses of the Company and, therefore, are not participating securities. As such, separate presentation of basic and diluted (loss) earnings per share of class B common stock under the two-class method has not been presented.
The following table presents potentially dilutive securities excluded from the computations of diluted (loss) earnings per share of class A common stock (in thousands):
Three Months Ended
March 31,
Three Months Ended
March 31,
2021202020222021
Stock optionsStock options347 (1)683 (1)Stock options3,035 (1)347 (3)
Restricted stock unitsRestricted stock units11,430 (1)— 

Performance stock unitsPerformance stock units5,124 (2)3,054 (2)Performance stock units7,947 (1)5,124 (4)
Shares of class B common stockShares of class B common stock152,117 (3)152,117 (3)Shares of class B common stock152,117 (2)152,117 (2)
(1)Excluded from the computation of diluted loss per share of class A common stock because the effect of their inclusion would have been anti-dilutive since there was a net loss attributable to the Company for the three months ended March 31, 2022.
(2)Shares of class B common stock are considered potentially dilutive shares of class A common stock. Shares of class B common stock have been excluded from the computations of diluted (loss) earnings per share because the effect of their inclusion would have been anti-dilutive under the if-converted method.   
(3)Excluded from the computation of diluted earnings per share of class A common stock because the exercise price of the stock options exceeded the average market price of the class A common stock during the period (out-of-the-money).periods (out-of-the-money.
(2)(4)Excluded from the computation of diluted earnings per share of class A common stock because the performance vesting conditions were not metmet.

7. Income Taxes
For the three months ended March 31, 2022, the Company’s (benefit from) provision for income taxes and effective tax rates were $(3.5) million and 34.9%, respectively, compared to $0.4 million and 2.4%, respectively, for the three months ended March 31, 2021 and 2020.
(3)Shares of class B common stock are considered potentially dilutive shares of class A common stock. Shares of class B common stock have been excluded from2021. The period-over-period change in the computations of diluted earnings per common share because the effect of their inclusion would have been anti-dilutive under the if-converted method.   

8. Income Taxes
For the three months ended March 31, 2021 and 2020, the Company's(benefit from) provision for (benefit from) income taxes and effective tax rates were $0.4 million and 2.4% and $(108) million and (810.6)%, respectively. The benefit from income taxes for the three months ended March 31, 2020was primarily impacted by a $110 million discreterelated to an Internal Revenue Service examination and Joint Committee review of the 2012-2018 federal income tax benefit fromreturns, which enabled the carryback of U.S. Federal Net Operating Loss (“NOL”) deferredCompany to recognize previously unrecognized tax assets (“DTAs”) under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”).benefits.
As of September 30, 2019, the Company established a valuation allowance based upon all available objective and verifiable evidence both positive and negative, including historical levels of pre-tax income (loss) both on a consolidated basis and tax reporting entity basis, legislative developments, expectations and risks associated with estimates of future pre-tax income, and prudent and feasible tax planning strategies. The Company estimated that as of September 30, 2019, it had generated a cumulative consolidated three-year pre-tax loss, which continued as of December 31, 2020.2021.  As a result of the initial September 30, 2019 and December 31, 20202021 analyses, the Company determined that it remained more likely than not that it would not realize the benefits of its gross DTAsdeferred tax assets (“DTAs”) and, therefore, maintained its valuation allowance. As of December 31, 2020,2021, this valuation allowance was $423$416.6 million, and it reduced the carrying value of these gross DTAs, net of the impact of the reversal of taxable temporary differences, to zero. As of March 31, 2021,2022, based on its evaluation of available positive and negative evidence, the Company has maintained its position with respect to the valuation allowance.
On March 27, 2020, President Trump signed into law the CARES Act. The CARES Act is an emergency economic stimulus package in response to the COVID-19 pandemic which, among other things, includes provisions relating to income and non-income-based tax laws. Some of the key income tax-related provisions include net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. Some of these tax provisions are effective retroactively for years ending before the date of enactment. Other non-income-based tax provisions include deferral of the employer share of Social Security payroll taxes due from the CARES Act date of enactment through December 31, 2021, and a potential 50% credit on qualified wages against employment taxes each quarter with any excess credits eligible for refunds.
The CARES Act permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs originating in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate refunds of previously paid income taxes. As a result of the CARES Act, the Company carried back approximately $345 million in NOLs generated in 2018 to prior taxable income years.
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ASC 740, Income Taxes, requires the effect from adjusting deferred tax assets or changes to valuation allowances due to the CARES Act to be recognized as a component of income taxes expense or benefit in the interim period that includes the period in which the legislation is enacted (quarter ended March 31, 2020), and it cannot be allocated to subsequent interim periods by an adjustment of the estimated annual effective tax rate. In the three months ended March 31, 2020, the Company reclassified the 2018 NOL carryback amount for previously paid income taxes to income tax receivable and reversed the corresponding valuation allowance. In carrying back the 2018 loss to an earlier year, the Company is able to benefit the losses at a 35% tax rate rather than the current U.S. corporate tax rate of 21%.  Accordingly, the Company recorded a discrete income tax benefit of $110 million, for the three months ended March 31, 2020. During July 2020, the Company received a cash refund for $106 million of the $110 million NOL carryback, plus interest of approximately $4 million. During February 2021, the Company received an additional cash refund for $2 million, plus interest, with the remainder of the NOL carryback expected to be received before December 31, 2021.
The Company entered into a tax receivable agreement (“TRA”) for which it is generally required to pay the other holders of Amneal Common Units 85% of the applicable tax savings, if any, in U.S. federal and state income tax that it is deemed to realize as a result of certain tax attributes of their Amneal Common Units sold to the Company (or exchanged in a taxable sale) and that are created as a result of (i) the sales of their Amneal Common Units for shares of Classclass A Common Stockcommon stock and (ii) tax benefits attributable to payments made under the TRA.  In conjunction with the valuation allowance recorded on the DTAs at September 30, 2019, the Company reversed the TRA liability.
The projection of future taxable income involves significant judgment. Actual taxable income may differ from the Company’s estimates, which could significantly impact the timing of the recognition of the contingent liability under the TRA. As noted
17


above, the Company has determined it is more-likely-than-not it will be unable to utilize all of its DTAs subject to the TRA; therefore, as of March 31, 2021,2022, the Company has not recognized the contingent liability under the TRA related to the tax savings it may realize from common units sold or exchanged. If utilization of these DTAs becomes more likely than not in the future, at such time, Amneal will recognize a liability under the TRA as a result of basis adjustments under Internal Revenue Code Section 754. As of both March 31, 2021 and December 31, 2020,2022, the contingent liability if recognized, amounts to $206associated with the TRA was approximately $206.3 million.
The timing and amount of any payments under the TRA may vary depending upon a number of factors, including the timing and number of Amneal common unitsCommon Units sold or exchanged for the Company's Classclass A Common Stock,common stock, the price of the Company's Classclass A Common Stockcommon stock on the date of sale or exchange, the timing and amount of the Company's taxable income, and the tax rate in effect at the time of realization of the Company's taxable income (the TRA liability is determined based on a percentage of the corporate tax savings from the use of the TRA's attributes). Further sales or exchanges occurring subsequent to March 31, 20212022 could result in future Amneal tax deductions and obligations to pay 85% of such benefits to the holders of Amneal common units.Common Units. These obligations could be incremental to and substantially larger than the approximate $206$206.3 million contingent liability as of March 31, 20212022 described above. Under certain conditions, such as a change of control or other early termination event, the Company could be obligated to make TRA payments in advance of tax benefits being realized. Payments could also be in excess of the tax savings that wethe Company may ultimately realize.

Any future recognition of these TRA liabilities will be recorded through charges in the Company’s consolidated statements of operations.  However, if the tax attributes are not utilized in future years, it is reasonably possible no amounts would be paid under the TRA.  Should the Company determine that a DTA with a valuation allowance is realizable in a subsequent period, the related valuation allowance will be releasedreversed and if a resulting TRA payment is determined to be probable, a corresponding TRA liability will be recorded.
9.8. Trade Accounts Receivable, Net
Trade accounts receivable, net iswas comprised of the following (in thousands):
March 31,
2021
December 31,
2020
March 31,
2022
December 31,
2021
Gross accounts receivableGross accounts receivable$1,072,138 $1,291,785 Gross accounts receivable$933,577 $1,191,792 
Allowance for credit lossesAllowance for credit losses(1,444)(1,396)Allowance for credit losses(1,679)(1,665)
Contract charge-backs and sales volume allowancesContract charge-backs and sales volume allowances(517,758)(628,804)Contract charge-backs and sales volume allowances(371,015)(503,902)
Cash discount allowancesCash discount allowances(22,336)(22,690)Cash discount allowances(22,574)(23,642)
SubtotalSubtotal(541,538)(652,890)Subtotal(395,268)(529,209)
Trade accounts receivable, netTrade accounts receivable, net$530,600 $638,895 Trade accounts receivable, net$538,309 $662,583 
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Concentration of Receivables
ReceivablesTrade accounts receivable from customers representing 10% or more of the Company’s grosstotal trade accounts receivable reflected 3 customers at March 31, 2021, equal to 34%, 28%, and 22%, respectively.  were as follows:
Receivables from customers representing 10% or more of the Company’s gross trade accounts receivable reflected 3 customers at December 31, 2020, equal to 39%, 26%, and 20%, respectively.
March 31,
2022
December 31,
2021
Customer A31 %37 %
Customer B21 %24 %
Customer C31 %25 %

10.



18


9. Inventories
Inventories arewere comprised of the following (in thousands):
March 31,
2021
December 31,
2020
March 31,
2022
December 31,
2021
Raw materialsRaw materials$205,874 $209,180 Raw materials$212,849 $214,508 
Work in processWork in process51,633 40,937 Work in process64,519 47,802 
Finished goodsFinished goods239,501 240,532 Finished goods234,873 227,079 
Total inventoriesTotal inventories$497,008 $490,649 Total inventories$512,241 $489,389 

11.10. Fair Value Measurements
Fair value is the exit price that would be received to sell an asset or paid to transfer a liability. Fair value is a market-based measurement that should be determined using assumptions that market participants would use in pricing an asset or liability. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Inputs other than Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Value is determined using pricing models, discounted cash flow methodologies, or similar techniques and also includes instruments for which the determination of fair value requires significant judgment or estimation.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level of classification for each reporting period. The following table sets forth the Company’s financial assets and liabilities that were measured at fair value on a recurring basis as of March 31, 20212022 and December 31, 20202021 (in thousands):
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Fair Value Measurement Based onFair Value Measurement Based on
March 31, 2021TotalQuoted
Prices in
Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
March 31, 2022March 31, 2022TotalQuoted
Prices in
Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets and LiabilitiesAssets and Liabilities
Interest rate swap asset (1)
Interest rate swap asset (1)
$42,151 $— $42,151 $— 
Deferred compensation plan liabilities (2)
Deferred compensation plan liabilities (2)
$12,817 $— $12,817 $— 
Contingent consideration liabilities (3)
Contingent consideration liabilities (3)
$14,896 $— $— $14,896 
December 31, 2021December 31, 2021
LiabilitiesLiabilitiesLiabilities
Interest rate swap (1)
$33,131 $$33,131 $
Interest rate swap liability (1)
Interest rate swap liability (1)
$11,473 $— $11,473 $— 
Deferred compensation plan liabilities (2)
Deferred compensation plan liabilities (2)
$14,500 $$14,500 $
Deferred compensation plan liabilities (2)
$13,883 $— $13,883 $— 
December 31, 2020
Liabilities
Interest rate swap (1)
$53,903 $53,903 
Deferred compensation plan liabilities (2)
$14,007 $14,007 
Contingent consideration liability (3)
Contingent consideration liability (3)
$5,900 $— $— $5,900 
(1)The fair value measurement of the Company’s interest rate swap classified within Level 2 of the fair value hierarchy is a model-derived valuation as of a given date in which all significant inputs are observable in active markets including
19


certain financial information and certain assumptions regarding past, present, and future market conditions. Refer to Note 12.11. Financial Instruments for information on the Company's interest rate swap.
(2)As of March 31, 2021, deferred compensation plan liabilities of $2 million and $13 million were recorded in current and non-current liabilities, respectively. As of December 31, 2020, deferred compensation plan liabilities of $2 million and $12 million were recorded in current and non-current liabilities, respectively. These liabilities are recorded at the value of the amount owed to the plan participants, with changes in value recognized as compensation expense. The calculation of the deferred compensation plan obligation is derived from observable market data by reference to hypothetical investments selected by the participants.
(3)The fair value measurement of contingent consideration liabilities has been classified as Level 3 recurring liabilities as the valuations require judgment and estimation of factors that are not currently observable in the market. If different assumptions were used for various inputs, the estimated fair values could be higher or lower than what the Company determined. As of March 31, 2022, contingent consideration liabilities of $6.1 million associated with the KSP Acquisition and $8.8 million associated with the Saol Acquisition were recorded within related party payables - long term and other long-term liabilities, respectively. As of December 31, 2021, a contingent consideration liability of $5.9 million associated with the KSP Acquisition was recorded within related party payables - long term. Refer to Note 3. Acquisitions for additional information related to contingent consideration associated with the KSP Acquisition and the Saol Acquisition.
There were no transfers between levels in the fair value hierarchy during the three months ended March 31, 2021.2022.
Contingent consideration

On April 2, 2021, the Company completed the KSP Acquisition, which provides for contingent milestone payments of up to an aggregate of $8.0 million (undiscounted) upon the achievement of certain regulatory milestones, as well as contingent royalty payments that are tiered depending on the aggregate annual net sales for certain future pharmaceutical products.

On February 9, 2022, the Company completed the Saol Acquisition, which provides for contingent royalty payments that are tiered depending on the aggregate annual net sales for certain pharmaceutical products, beginning in 2023.

The following table provides a reconciliation of the contingent consideration liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands):

Three Months Ended
March 31, 2022
Balance, beginning of period$5,900 
Addition due to the Saol Acquisition8,796 
Change in fair value during the period200 
Balance, end of period$14,896 


The fair value measurement of the contingent consideration liabilities were determined based on significant unobservable inputs, including the discount rate, estimated probabilities of success, timing of achieving specified regulatory milestones and the estimated amount of future sales of the acquired products. The contingent consideration liabilities were estimated by applying a probability-weighted expected payment model for contingent milestone payments and Monte Carlo simulation models for contingent royalty payments, which were then discounted to present value. Changes to the fair values of the contingent consideration liabilities can result from changes to one or a number of the aforementioned inputs. If different assumptions were used for various inputs, the estimated fair value could be higher or lower than what the Company determined.

20


The following table summarizes the significant unobservable inputs used in the fair value measurement of our contingent consideration liabilities as of March 31, 2022:

Contingent Consideration Liability
Fair Value as of
March 31, 2022
(in thousands)
Unobservable inputRange
Weighted Average(1)
Regulatory Milestones (KSP Acquisition)$500Discount rate4.3%-6.0%4.5%
Probability of payment1.8%-20.0%16.7%
Projected year of payment2023-20272023
Royalties (KSP Acquisition)$5,600Discount rate11.5%-11.5%11.5%
Probability of payment1.8%-20.0%18.0%
Projected year of payment2023-20322029
Royalties (Saol Acquisition)$8,796Discount rate16.9%16.9%16.9%
Projected year of payment202320372027

(1) Unobservable inputs were weighted by the relative fair value of each product candidate acquired.

Assets and Liabilities Not Measured at Fair Value on a Recurring Basis
The carrying amounts of cash, accounts receivable and accounts payable approximate their fair values due to the short-term maturity of these instruments.
The Company's outstanding Term Loan, falls intoas defined in Note 17. Debt in the Company’s 2021 Annual Report on Form 10-K, is in the Level 2 category within the fair value level hierarchy. The fair value was determined using market data for valuation. The fair value of the Term Loan as ofat both March 31, 20212022 and December 31, 20202021 was approximately $2.6 billion.
The Rondo Term Loan, entered intoas defined in Note 17. Debt in the Company’s 2021 Annual Report on January 31, 2020 falls intoForm 10-K, is in the Level 2 category within the fair value level hierarchy. The fair value of the Rondo Term Loan at March 31, 20212022 and December 31, 20202021 was approximately $170$136.7 million and $172$139.0 million, respectively.
The Sellers Notes falls intoare in the Level 2 category within the fair value level hierarchy. The carrying value of the Sellers Notes at March 31, 20212022 and December 31, 20202021 was $37$38.3 million and $36$38.0 million, respectively, which approximateapproximated their fair values.
Refer to Note 17. Debt in our 20202021 Annual Report on Form 10-K for detailed information about our indebtedness, including definitions of terms.
Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
There were no non-recurring fair value measurements during the three months ended March 31, 20212022 and 2020.2021.
12.11. Financial Instruments
The Company uses an interest rate swap to manage its exposure to market risks for changes in interest rates.
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Interest Rate Risk
Interest income earned on cash and cash equivalents may fluctuate as interest rates change; however, due to their relatively short maturities, the Company does not hedge these assets or their investment cash flows because the impact of interest rate risk is not material. The Company is exposed to interest rate risk on its debt obligations. The Company's debt obligations consist of variable-rate and fixed-rate debt instruments.  The Company's primary objective is to achieve the lowest overall cost of funding while managing the variability in cash outflows within an acceptable range.  In order to achieve this objective, the Company has entered into an interest rate swap on the Term Loan.
Interest income earned on cash and cash equivalents may fluctuate as interest rates change; however, due to their relatively short maturities, the Company does not hedge these assets or their investment cash flows because the impact of interest rate risk is not material.
Interest Rate Derivative – Cash Flow Hedge
The interest rate swap involves the periodic exchange of payments without the exchange of underlying principal or notional amounts. In October 2019, the Company entered into an interest rate lock agreement for a total notional amount of $1.3 billion
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to hedge part of the Company's interest rate exposure associated with the variability in future cash flows from changes in the one-month LIBOR associated with itsthe Term Loan.
As of March 31, 2021,2022, the total loss,gain, net of income taxes, related to the Company’s cash flow hedge was $33$42.2 million, of which $16$20.8 million was recognized in accumulated other comprehensive loss and $17$21.4 million was recognized in non-controlling interests.
A summary of the fair values of derivative instruments in the consolidated balance sheets was as follows (in thousands):
March 31, 2021December 31, 2020March 31, 2022December 31, 2021
Derivatives Designated as Hedging InstrumentsDerivatives Designated as Hedging InstrumentsBalance Sheet
Classification
Fair ValueBalance Sheet
Classification
Fair ValueDerivatives Designated as Hedging InstrumentsBalance Sheet
Classification
Fair ValueBalance Sheet
Classification
Fair Value
Variable-to-fixed interest rate swapVariable-to-fixed interest rate swapOther long-term liabilities$33,131 Other long-term liabilities$53,903 Variable-to-fixed interest rate swapOther Assets$42,151 Other long-term liabilities$11,473 
13.
12. Goodwill and Other Intangible Assets
The changes in goodwill for the three months ended March 31, 20212022 and for the year ended December 31, 20202021 were as follows (in thousands):
March 31,
2021
December 31,
2020
March 31,
2022
December 31,
2021
Balance, beginning of periodBalance, beginning of period$522,814 $419,504 Balance, beginning of period$593,017 $522,814 
Goodwill acquired during the periodGoodwill acquired during the period103,679 Goodwill acquired during the period7,553 70,584 
Adjustment during the period for Puniska AcquisitionAdjustment during the period for Puniska Acquisition3,075 — 
Currency translationCurrency translation(56)(369)Currency translation(752)(381)
Balance, end of periodBalance, end of period$522,758 $522,814 Balance, end of period$602,893 $593,017 
As of both March 31, 2021 and December 31, 2020, $3612022, $366.3 million, $92$167.1 million, and $70$69.5 million of goodwill was allocated to the Specialty, Generics, and AvKARE segments, respectively. As of December 31, 2021, $363.9 million, $159.6 million, and $69.5 million of goodwill was allocated to the Specialty, Generics, and AvKARE segments, respectively. For the three months ended March 31, 2022, goodwill acquired during the period was associated with the Saol Acquisition. For the year ended December 31, 2021, goodwill acquired during the period was associated with the Puniska Acquisition and the KSP Acquisition. Refer to Note 3. Acquisitions and Divestitures for additional information about the Acquisitions.information.
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Intangible assets at March 31, 20212022 and December 31, 20202021 were comprised of the following (in thousands):
March 31, 2021December 31, 2020
Weighted-Average
Amortization Period
(in years)
CostAccumulated
Amortization
NetCostAccumulated
Amortization
Net
Amortizing intangible assets:
Product rights8.8$1,149,245 $(360,174)$789,071 $1,153,096 $(328,587)$824,509 
Other intangible assets5.5133,800 (39,312)94,488 133,800 (33,078)100,722 
Subtotal$1,283,045 $(399,486)$883,559 $1,286,896 $(361,665)$925,231 
In-process research and development379,395 379,395 379,395 379,395 
Total intangible assets$1,662,440 $(399,486)$1,262,954 $1,666,291 $(361,665)$1,304,626 

The Company evaluated assets for potential impairment by comparing estimated future undiscounted net cash flows to the carrying amount of the asset. For the three months ended March 31, 2021, the Company did 0t recognize any intangible asset impairment charges.
The impairment charges for the three months ended March 31, 2020 were primarily related to 2 currently marketed products and 2 in-process research and development (“IPR&D”) products.  For the currently marketed products, 2 products experienced significant price erosion during 2020, without an offsetting increase in customer demand, resulting in significantly lower than expected future cash flows and negative margins. The IPR&D charges are associated with 2 products, 1 of which experienced a delay in its estimated launch date and the other of which was canceled due to the withdrawal of our development partner.
March 31, 2022December 31, 2021
Weighted-Average
Amortization Period
(in years)
CostAccumulated
Amortization
NetCostAccumulated
Amortization
Net
Amortizing intangible assets:
Product rights8.3$1,205,374 $(471,785)$733,589 $1,122,612 $(436,902)$685,710 
Other intangible assets4.7133,800 (62,996)70,804 133,800 (58,013)75,787 
Subtotal$1,339,174 $(534,781)$804,393 $1,256,412 $(494,915)$761,497 
In-process research and development405,425 — 405,425 405,425 — 405,425 
Total intangible assets$1,744,599 $(534,781)$1,209,818 $1,661,837 $(494,915)$1,166,922 
During the three months ended March 31, 2020,2022, the Company recognized $131$83.8 million of product rights intangible assets associated with the Acquisitions, of which all are classified in other intangible assets in the table above.  These intangible assets consist of government licenses, government contracts, national contracts, customer relationships and a trade name andSaol Acquisition. Product rights are amortized to selling, general, and administrativecost of goods sold over their estimated useful lives. Refer to Note 3. Acquisitions Acquisitions and Divestituresfor additional information.
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Amortization expense related to intangible assets recognized iswas as follows (in thousands):
Three Months Ended March 31,
20212020
Amortization$41,672 $42,576 
Three Months Ended March 31,
20222021
Amortization$40,919 $41,672 
The following table presents future amortization expense for the next five years and thereafter, excluding $379$405.4 million of IPR&D intangible assets (in thousands):
Future
Amortization
Future
Amortization
Remainder of 2021$125,091 
2022155,162 
Remainder of 2022Remainder of 2022$126,846 
20232023143,395 2023156,567 
20242024136,910 2024148,179 
2025202597,937 2025110,773 
2026202664,159 
ThereafterThereafter225,064 Thereafter197,869 
TotalTotal$883,559  Total$804,393 
The Company reviews intangible assets with finite lives for recoverability whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. Indefinite-lived intangible assets, including IPR&D, are tested for impairment if impairment indicators arise and, at a minimum, annually.

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14.13. Commitments and Contingencies
Commitments
Commercial Manufacturing, Collaboration, License, and Distribution Agreements
The Company continues to seek to enhance its product line and develop a balanced portfolio of differentiated products through product acquisitions and in-licensing. Accordingly, the Company, in certain instances, may be contractually obligated to make potential future development, regulatory, and commercial milestone, royalty and/or profit sharingprofit-sharing payments in conjunction with collaborative agreements or acquisitions that the Company has entered into with third parties. The Company has also licensed certain technologies or intellectual property from various third parties. The Company is generally required to make upfront payments as well as other payments upon successful completion of regulatory or sales milestones. The agreements generally permit the Company to terminate the agreement with no significant continuing obligation. The Company could be required to make significant payments pursuant to these arrangements. These payments are contingent upon the occurrence of certain future events and, given the nature of these events, it is unclear when, if ever, the Company may be required to pay such amounts. Further, the timing of any future payment is not reasonably estimable. Refer to Note 5. Alliance and Collaboration for additional information.Certain of these arrangements are with related parties (referparties. Refer to Note 16.15. Related Party Transactions)Transactions for additional information.
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Contingencies
Legal Proceedings
The Company's legal proceedings are complex, constantly evolving, and subject to uncertainty. As such, the Company cannot predict the outcome or impact of the legal proceedings set forth below. Additionally, the Company is subject to legal proceedings that are not set forth below. While the Company believes it has valid claims and/or defenses to the matters described below, the nature of litigation is unpredictable, and the outcome of the following proceedings could include damages, fines, penalties and injunctive or administrative remedies. For any proceedings where losses are probable and reasonably capable of estimation, the Company accrues for a potential loss. When the Company has a probable loss for which a reasonable estimate of the liability is a range of losses and no amount within that range is a better estimate than any other amount, the Company records the loss at the low end of the range. While these accruals have been deemed reasonable by the Company’s management, the assessment process relies heavily on estimates and assumptions that may ultimately prove inaccurate or incomplete. Additionally, unforeseen circumstances or events may lead the Company to subsequently change its estimates and assumptions. Unless otherwise indicated below, the Company is unable at this time to estimate the possible loss or the range of loss, if any, associated with such legal proceedings and claims.
The Company currently intends to vigorously prosecute and/or defend these proceedings as appropriate. From time to time, however, the Company may settle or otherwise resolve these matters on terms and conditions that it believes to be in its best interest. For the three months ended March 31, 2020,2022, the Company recorded a net credit of $2.3 million consisting of an insurance recovery of $4 million, partially offset by charges of $5 million (NaNfor legal proceedings (none for the three months ended March 31, 2021) for commercial legal proceedings. As of March 31, 2022, and claims. TheDecember 31, 2021, the Company hadrecorded total liabilities for legal proceedings as of both March 31, 2021$59.7 million and December 31, 2020$58.0 million, respectively, of $11 million. which $37.0 million and $33.0 million, respectively, were recorded for securities class actions covered by insurance (refer to Securities Class Actions below and Note 17. Prepaid Expenses and Other Current Assets for additional information). An insurance recovery will be recorded in the period in which it is probable the recovery will be realized.
The ultimate resolution of any or all claims, legal proceedings or investigations could differ materially from our estimate and have a material adverse effect on the Company's results of operations and/or cash flows in any given accounting period, or on the Company's overall financial condition. 
Additionally, the Company manufactures and derives a portion of its revenue from the sale of pharmaceutical products in the opioid class of drugs and may therefore face claims arising from the regulation and/or consumption of such products.
The Company believes it has meritorious claims and defenses in these matters and intends to vigorously prosecute and defend them. However, because the ultimate outcome and costs associated with litigation are inherently uncertain and difficult to predict, except as otherwise stated, the Company is not in a position to predict the likelihood of an unfavorable outcome or provide an estimate of the amount or range of potential loss in the event of an unfavorable outcome in any of these matters, and any adverse outcome could negatively affect the Company and could have a material adverse effect on the Company's results of operations, cash flows and/or overall financial condition.
Medicaid Reimbursement and Price Reporting Matters
The Company is required to provide pricing information to state agencies, including agencies that administer federal Medicaid programs. Certain state agencies have alleged that manufacturers have reported improper pricing information, which allegedly caused them to overpay reimbursement costs. Other agencies have alleged that manufacturers have failed to timely file required
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reports concerning pricing information. ReservesLiabilities are periodically established by the Company for any potential claims or settlements of overpayment. The Company intends to vigorously defend against any such claims. The ultimate settlement of any potential liability for such claims may be higher or lower than estimated.
Patent Litigation
There is substantial litigation in the pharmaceutical, biological, and biotechnology industries with respect to the manufacture, use, and sale of new products which are the subject of conflicting patent and intellectual property claims. One or more patents often cover the brand name products for which the Company is developing generic versions and the Company typically has patent rights covering the Company’s branded products.
Under federal law, when a drug developer files an Abbreviated New Drug Application ("ANDA"(“ANDA”) for a generic drug seeking approval before expiration of a patent which has been listed with the FDA as covering the brand name product, the developer
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must certify its product will not infringe the listed patent(s) and/or the listed patent is invalid or unenforceable (commonly referred to as a "Paragraph IV"“Paragraph IV” certification). Notices of such certification must be provided to the patent holder, who may file a suit for patent infringement within 45 days of the patent holder’s receipt of such notice. If the patent holder files suit within the 45-day period, the FDA can review and tentatively approve the ANDA, but generally is prevented from granting final marketing approval of the product until a final judgment in the action has been rendered in favor of the generic drug developer, or 30 months from the date the notice was received, whichever is sooner. The Company’s Generics segment is typically subject to patent infringement litigation brought by branded pharmaceutical manufacturers in connection with the Company’s Paragraph IV certifications seeking an order delaying the approval of the Company’s ANDA until expiration of the patent(s) at issue in the litigation. Likewise, the Company’s Specialty segment is currently involved in patent infringement litigation against generic drug manufacturers that have filed Paragraph IV certifications to market their generic drugs prior to expiration of the Company’s patents at issue in the litigation.
The uncertainties inherent in patent litigation make the outcome of such litigation difficult to predict. For the Company’s Generics segment, the potential consequences in the event of an unfavorable outcome in such litigation include delaying the launch of its generic products until patent expiration. If the Company were to launch its generic product prior to successful resolution of a patent litigation, the Company could be liable for potential damages measured by the profits lost by the branded product manufacturer rather than the profits earned by the Company if it is found to infringe a valid, enforceable patent, or enhanced treble damages in cases of willful infringement. For the Company’s Specialty segment, an unfavorable outcome may significantly accelerate generic competition ahead of expiration of the patents covering the Company’s branded products. All such litigation typically involves significant expense.
The Company is generally responsible for all of the patent litigation fees and costs associated with current and future products not covered by its alliance and collaboration agreements. The Company has agreed to share legal expenses with respect to third-party and Company products under the terms of certain of the alliance and collaboration agreements. The Company records the costs of patent litigation as expense in the period when incurred for products it has developed, as well as for products which are the subject of an alliance or collaboration agreement with a third-party.
Patent Defense Matter

Biogen International GMBH, et al. v. Amneal Pharmaceuticals LLC, et al. (Dimethyl Fumarate)

In June 2017, Biogen International GMBH (“Biogen”) filed suit against Amneal and various other generic manufacturers in the United States District Court for the District of Delaware (“D. Del.”) alleging patent infringement based on the filing of ANDAs by Amneal and others for generic alternatives to Biogen’s Tecfidera® (dimethyl fumarate) capsules product (Biogen International GMBH, et al. v. Amneal Pharmaceuticals LLC, et al., No. 1:17-cv-00823-MN). Biogen also filed suit in June 2017 against Mylan Pharmaceuticals Inc. (“Mylan”) in the United States District Court for the Northern District of West Virginia (“N.D. W. Va.”) relating to Mylan’s own ANDA for Tecfidera®. On June 18, 2020, the N.D. W. Va. court issued an order finding the sole Biogen patent at issue invalid. Biogen has appealed the order (the “Mylan Appeal”) to the United States Court of Appeals for the Federal Circuit.Circuit (the “Federal Circuit”). On September 22, 2020, the D. Del. court entered judgment in favor of the defendants (including Amneal), adopting the finding of invalidity made by the N.D. W. Va. court but ordering that claims could be reinstated based oncourt. Biogen appealed the result of D. Del. Order (“the appeal ofAmneal Consolidated Appeal”). On November 30, 2021, the N.D. W. Va. court’s order. Amneal, like Mylan and a number of other generic manufacturers, has now launched its generic dimethyl fumarate capsules product “at-risk,” pending the outcome of Biogen’s appeal ofFederal Circuit affirmed the N.D. W. Va. court’s order beforethat Biogen’s patent is invalid, and, on March 23, 2022, issued a mandate in the Mylan Appeal. The Amneal Consolidated Appeal is currently stayed; Biogen intends to file a writ of certiorari in the Mylan Appeal and has requested that the Federal Circuit.Circuit continue the stay in the Amneal Consolidated Appeal. Amneal has requested the Federal Circuit to apply the judgment in the Mylan Appeal to the Amneal Consolidated Appeal, which will dispose of the Amneal Consolidated Appeal.
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Other Litigation Related to the Company’s Business

Opana ER® FTC Matters

On February 25, 2014, Impax received a Civil Investigative Demand (“CID”) from the Federal Trade Commission (“FTC”) concerning its investigation into the drug Opana® ER and its generic equivalents. On March 30, 2016, the FTC filed a complaint against Impax, Endo Pharmaceuticals Inc. ("Endo"(“Endo”), and others in the United States District Court for the Eastern District of Pennsylvania, alleging that Impax and Endo violated antitrust laws when they entered into a June 2010 settlement agreement that resolved patent litigation in connection with the submission of Impax’s ANDA for generic original Opana® ER. In October 2016, the Court granted Impax’s motion to sever, formally terminating the suit against Impax. In January 2017, the FTC filed a Part 3 Administrative Complaint against Impax with similar allegations regarding the 2010 settlement. Following trial, in May 2018, the Administrative Law Judge ruled in favor of Impax and dismissed the Complaint in its entirety. InFTC Complaint Counsel appealed the decision to the full Commission, and in March 2019, the FTC issued an Opinion & Order reversing the Administrative Law Judge’s decision, and in June 2019,decision. The Opinion & Order did not provide for any monetary damages but enjoined Impax from entering into future agreements containing certain terms. Impax filed a Petition for Review of the FTC’s Opinion & Order with the United States Court of Appeals for the Fifth Circuit. The Opinion & Order did not contain any monetary damages but enjoined Impax from entering into similar future agreements. OnCircuit, and on April 13, 2021, the Fifth Circuit issued a decision denying Impax’s Petition for Review, effectively affirming the FTC’s Opinion & Order. On September 10, 2021, Impax filed a petition for writ of certiorari in the U.S. Supreme Court, which was denied in December 2021.

On July 12, 2019, the Company received a CID from the FTC concerning an August 2017 settlement agreement between Impax and Endo, which resolved a subsequent patent infringement and breach of contract dispute between the parties regarding the above-referenced June 2010 settlement agreement related to Opana® ER. The Company cooperated with the FTC regarding the CID. On January 25, 2021, the FTC filed a complaint against Endo, Impax and Amneal in the United States District Court for the District of Columbia, alleging that the 2017 settlement violated antitrust laws. Impax and Amneal believe that they haveIn April 2021, the Company filed a motion to dismiss the FTC’s complaint, which the District Court granted on March 24, 2022. The District Court’s decision is still subject to appeal. The Company believes it has strong defenses to the FTC’s allegations and intendintends to vigorously defend the action.action, however, no assurance can be given as to the timing or outcome of the litigation.
Opana ER® Antitrust Litigation

From June 2014 to April 2015, a number ofseveral complaints styled as class actions on behalf of direct purchasers and indirect purchasers (or end-payors) and several separate individual complaints on behalf of certain direct purchasers (the “opt-out plaintiffs”) of Opana ER® were filed against Endo and Impax.

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

In December 2014, the United States Judicial Panel on Multidistrict Litigation (the "JPML"“JPML”) transferred the actions to the United States District Court for the Northern District of Illinois (“N.D. Ill.”) for coordinated pretrial proceedings, as In Re: Opana ER Antitrust Litigation (MDL No. 2580) (“MDL”).

In each case, the complaints allege that Endo engaged in an anticompetitive scheme by, among other things, entering into an anticompetitive settlement agreement with Impax to delay generic competition of Opana ER® and in violation of state and federal antitrust laws. Plaintiffs seek, among other things, unspecified monetary damages, and equitable relief, including disgorgement and restitution. On March 25, 2019, plaintiffs filed motions for class certification and served expert reports. Defendants’ oppositions to class certification and expert reports were filed and served on August 29, 2019. On February 5, 2020, the court entered a case schedule setting a trial date of March 15, 2021, which subsequently was re-set for November 1, 2021. On April 15, 2020, defendants filed motions for summary judgment and each side moved to exclude certain opposing experts. TheseOn June 4, 2021, the MDL court granted the end-payor plaintiffs’ and direct purchaser plaintiffs’ class certification motions. Defendants appealed certification of the end-payor plaintiffs’ class, and on July 13, 2021, the Seventh Circuit granted defendants’ petition and remanded the case to the MDL to consider specific issues regarding uninjured class members.On August 11, 2021, the MDL court entered an order certifying end-payor plaintiffs’ class with an amended class definition. On June 4, 2021, the MDL also denied defendants’ summary judgment motion except as to certain state law claims and issued an opinion excluding certain experts of both sides. Trial is currently scheduled for June 2022.
Sergeants Benevolent Association Health & Welfare Fund v. Actavis, PLC, et. al.

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

On July 14, 2014, Impax received a subpoena and interrogations from the State of Connecticut Attorney General ("Connecticut AG") concerning its investigation into sales of Impax's generic product, digoxin. According to the Connecticut AG, the investigation concerned whether anyone engaged in a contract, combination, or conspiracy in restraint of trade or commerce which had the effect of (i) fixing, controlling, or maintaining prices or (ii) allocating or dividing customers or territories relating to the sale of digoxin. Impax cooperated in the investigation and produced documents and information in response to the Subpoenasubpoena in 2014 and 2015. However, no assurance can be given as to the timing or outcome of this investigation.

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United States Department of Justice Investigations

On November 6, 2014, Impax disclosed that 1 of its sales representatives received a grand jury subpoena from the Antitrust Division of the United States Department of Justice (the "DOJ"“DOJ”). On March 13, 2015, Impax received a grand jury subpoena from the DOJ requesting the production of information and documents regarding the sales, marketing, and pricing of 4 generic prescription medications. Impax has cooperated in the investigation and produced documents and information in response to the subpoenas from 2014 to 2016. However, no assurance can be given as to the timing or outcome of the investigation.

On April 30, 2018, Impax received a CID from the Civil Division of the DOJ (the "Civil Division"“Civil Division”). The CID requests the production of information and documents regarding the pricing and sale of Impax’s pharmaceuticals and interactions with other generic pharmaceutical manufacturers regarding whether generic pharmaceutical manufacturers engaged in market allocation and price-fixing agreements, paid illegal remuneration, and caused false claims to be submitted to the Federal government. Impax has cooperated with the Civil Division’s investigation. However, no assurance can be given as to the timing or outcome of the investigation.
In Re Generic Pharmaceuticals Pricing Antitrust Litigation
Since March 2016, multiple putative antitrust class action complaints have been filed on behalf of direct purchasers, indirect purchasers (or end-payors), and indirect resellers, as well as individual complaints on behalf of certain direct and indirect purchasers, and municipalities (the “opt-out plaintiffs”) against manufacturers of generic drugs, including Impax and the Company. The complaints allege a conspiracy to fix, maintain, stabilize, and/or raise prices, rig bids, and allocate markets or customers for various generic drugs in violation of federal and state antitrust and consumer protection laws. Plaintiffs seek unspecified monetary damages and equitable relief, including disgorgement and restitution. The lawsuits have been consolidated in an MDL in the United States District Court for the Eastern District of Pennsylvania (In re Generic Pharmaceuticals Pricing Antitrust Litigation, No. 2724, (E.D. Pa.)).
On May 10, 2019, Attorneys General of 43 States and the Commonwealth of Puerto Rico filed a complaint in the United States District Court for the District of Connecticut against various manufacturers and individuals, including the Company, alleging a conspiracy to fix, maintain, stabilize, and/or raise prices, rig bids, and allocate markets or customers for multiple generic drugs. On November 1, 2019, the State Attorneys General filed an Amended Complaint on behalf of 9 additional states and territories. On June 10, 2020, Attorneys General of 46 States, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, the Territory of Guam, the U.S. Virgin Islands, and the District of Columbia filed a new complaint against various manufacturers and individuals, including the Company, alleging a conspiracy to fix prices, rig bids, and allocate markets or customers for additional generic drugs. Plaintiff States seek unspecified monetary damages and penalties and equitable relief, including disgorgement and restitution. On September 9, 2021, the State Attorneys General filed an Amended Complaint on behalf of California in addition to the original Plaintiff States. On March 30, 2022, the State of Alabama voluntarily dismissed all of its claims in the May 10, 2019, and the June 10, 2020, actions against all defendants, including the
27


Company, without prejudice. These lawsuits have been incorporated into MDL No. 2724.
Fact and document discovery in MDL No. 2724 are proceeding. In July 2020,May 2021, the Court orderedcourt issued a revised order designating certain plaintiffs’ complaints regarding 32 generic drug products to proceed as bellwether cases, along with the Plaintiff States’ November 2019 amended complaint. In February 2021,June 10, 2020, complaint involving the Court vacated the prior order regarding bellwether cases. Revised bellwether cases are under consideration and noCompany. No final scheduling order has yet been issued for this matter.
On June 3, 2020, the Company and Impax were also named in a putative class action complaint filed in the Federal Court of Canada in Toronto, Ontario against numerous generic pharmaceutical manufacturers, on behalf of a putative class of individuals who purchased generic drugs in the private sector from 2012 to the present (Kathryn Eaton v. Teva Canada Limited, et. al., No. T-607-20). The complaint alleges price fixing, among other claims, and has not progressed to date.
Prescription Opioid Litigation
The Company and certain of its affiliates have been named as defendants in various matters filed in state and federal courts relating to the sale of prescription opioid pain relievers. Plaintiffs in these actions include state Attorneys General, county and municipal governments, hospitals, Indian tribes, pension funds, third-party payors, and individuals. Plaintiffs seek unspecified monetary damages and other forms of relief based on various causes of action, including negligence, public nuisance, unjust enrichment, and civil conspiracy, as well as alleged violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), state and federal controlled substances laws and other statutes. All cases involving the Company also name other manufacturers, distributors and retail pharmacies as defendants, and there are numerous other cases involving allegations relating to prescription opioid pain relievers against other manufacturers, distributors, and retail pharmacies in which the Company and its affiliates are not named.

Nearly all cases pending in federal district courts have been consolidated for pre-trial proceedings in an MDL in the United States District Court for the Northern District of Ohio (In re: National Prescription Opiate Litigation, Case No. 17-mdl-2804). There are approximately 880914 cases in the MDL in which the Company or its affiliates have been named as defendants. The Company also is named in approximately 120115 state court cases pending in 11 states. The Company has filed motions to dismiss
26


in many of these cases. No firm trial dates have been set except in New Mexico (September 2022), and Alabama (July 2022) and(January 2023). Following a decision by the West Virginia (November 2021); itSupreme Court of Appeals in June 2021, the trial court in West Virginia set trial dates for April (manufacturers), which is in process, July (distributors), and September (pharmacies) 2022, but the Company is not known at this time ifa defendant in the manufacturer trial and there is no current information indicating that the Company will be involved in the West Virginia case trial.July and September trials.
Securities Class Actions

On April 17, 2017, New York Hotel Trades Council & Hotel Association of New York City, Inc. Pension Fund filed an amended putative class action complaint in the United States District Court for the Northern District of California against Impax and 4 former Impax officers alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 (Fleming v. Impax Laboratories Inc., et al., No. 4:16-cv-6557-HSG). Plaintiff alleges that Impax (1) concealed collusion with a competitorcompetitors to fix the price of the generic drug digoxin; (2) concealed anticipated erosion in the price of generic drug diclofenac; and (3) overstated the value of the generic drug budesonide. In August 2019, the Court granted Impax’s motion to dismiss Plaintiff’s subsequent second amended complaint in its entirety. Plaintiff appealed to the United States CourtJune 2021, Plaintiffs (New York Hotel Trades Council & Hotel Association of Appeals for the Ninth Circuit,New York City, Inc. Pension Fund, and on January 11, 2021, the Ninth Circuit issued an unpublished opinion affirming in part and reversing in part the District Court’s decision. Impax subsequently filed a motion for rehearing with the Ninth Circuit, and Plaintiff filed a motion to intervene seeking to add Sheet Metal Workers’ Pension Fund of Southern California, Arizona and Nevada, (“Sheet Metal Workers”)who had filed various motions to intervene as an additional named Plaintiff The Ninth Circuit denieda plaintiff in the motions,case) and on April 1, 2021,defendants reached a tentative agreement to settle all claims in the case was remandedfor $33.0 million, subject to certain terms and conditions and subject to court approval. The proposed settlement is covered in full by insurance (refer to Note 17. Prepaid Expenses and Other Current Assets). The district court entered an order granting preliminary approval of the District Court. On April 19,settlement on November 22, 2021, and held a fairness hearing on March 31, 2022. An order on the Company filed a motion to dismiss the remaining claims and an opposition to Sheet Metal Workers’ renewed motion to intervene.for final approval is pending.

On December 18, 2019, Cambridge Retirement System filed a putative class action complaint in the Superior Court of New Jersey, Somerset County against the Company and certain current or former officers alleging violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 (Cambridge Retirement System v. Amneal Pharmaceuticals, Inc., et al., No. SOM-L-1701-19). Plaintiffs allege that the May 7, 2018, amended registration statement and prospectus issued in connection with the Amneal/Impax business combination was materially false and/or misleading because it failed to disclose that Amneal allegedly engaged in anticompetitive conduct to fix generic drug prices. PlaintiffPlaintiffs filed a motion for class certification on October 30, 2020, and in response to Amneal’s opposition, PlaintiffsApril 2021 filed a second amended their complaint to includeincluding similar allegations with regard toregarding a November 2017 registration statement and prospectus issued by an Impax-related entity.in connection with the Amneal/ Impax business combination. The Court has set a briefing schedule for Amneal’sCompany’s motion to dismiss and Plaintiff’s motion for class certification are currently pending. In February 2022, the Amended Complaint.parties reached a tentative agreement to settle the claims, subject to, among other things, the negotiation and court approval of a definitive settlement agreement. On March 28, 2022, the parties executed a settlement agreement for $25 million that remains subject to, among other things, final court approval. A hearing on final approval is set for the week of August 15, 2022. For the three
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months ended March 31, 2022, the Company recorded an insurance recovery of $4.0 million related to this case (refer to Note 17. Prepaid Expenses and Other Current Assets).
United States Department of Justice / Drug Enforcement Administration Subpoenas

On July 7, 2017, Amneal Pharmaceuticals of New York, LLC received an administrative subpoena issued by the Long Island, NY District Office of the Drug Enforcement Administration (the “DEA”) requesting information related to compliance with certain recordkeeping and reporting requirements. On or about April 12, 2019, and May 28, 2019, the Company received grand jury subpoenas from the U.S. Attorney’s Office for the Eastern District of New York (the "USAO”“USAO”) relating to similar topics concerning the Company’s suspicious order monitoring program and its compliance with the Controlled Substances Act. The Company is cooperating with the USAO in responding to the subpoenas and has entered civil and criminal amended tolling agreements with the USAO through approximately May 12, 2021.November 14, 2022. It is not currently possible to determine the exact outcome of these investigations at this time.investigations.

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

On October 7, 2019, Amneal received a subpoena from the New York State Department of Financial Services seeking documents and information related to sales of opioid products in the state of New York. The Company is cooperating with the request and providing responsive information. It is not currently possible to determine the exact outcome of this investigation.

Ranitidine Litigation

The Company and its affiliates have been named as defendants, along with numerous other pharmaceutical manufacturers, wholesale distributors, and retail pharmacy chains, in In re Zantac/Ranitidine NDMA Litigation (MDL No. 2924), pending in the Southern District of Florida. 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. Consolidated groups of (a) personal injury plaintiffs, (b) economic loss/medical monitoring class action plaintiffs, and (c) third-party payor plaintiffs have each filed master complaints against brand and generic pharmaceutical manufacturers, distributors, retailers, and repackagers of ranitidine-containing products. The Company or its affiliates have been named in the 3 master complaints and approximately 190316 personal injury short form complaints. On December 31, 2020, the Court dismissed in full the 3 master complaints against the generic manufacturers, including the Company and its affiliates, with leave to file amended complaints on certain claims relating to manufacturing, storage, and transportation. Plaintiffs filed amended complaints onin February 8 and February 22, 2021, and Defendants have filed various motions to dismiss the amended complaints in March 2021. On July 8, 2021, the MDL dismissed all claims against the generic drug manufacturers, including the Company and its affiliates, without leave to file further amended complaints. Discovery remains ongoing.Plaintiffs have appealed the MDL court’s dismissal to the 11th Circuit Court of Appeals, which has consolidated the appeals of the personal injury cases.

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On June 18, 2020, Amneal Pharmaceuticals LLC was named in a lawsuit filed in New Mexico brought by the New Mexico Attorney General alleging claims of public nuisance, negligence, and violations of consumer protection laws against various brand and generic manufacturers and store-brand distributors of Zantac®/Ranitidine. Plaintiff seeks unspecified compensatory and punitive damages, as well as abatement, medical monitoring, restitution, and injunctive relief. The Company filed a motion to dismiss on May 17, 2021, and filed a notice of supplemental authority based on the MDL court’s July 2021 dismissal order. The Court denied the motion on August 17, 2021. The Company filed a motion to dismiss based on lack of personal jurisdiction on January 26, 2022, which remains pending. On November 12, 2020, Amneal Pharmaceuticals LLC was named in a public nuisance and consumer protection lawsuit filed in state court in Baltimore, Maryland, on behalf of the Mayor and City Council of Baltimore, alleging claims of public nuisance, negligence, and violations of state consumer protection laws against brand and generic manufacturers and store-brand distributors of Zantac®/ranitidine. Plaintiffs seek unspecified compensatory and punitive damages, as well as civil penalties and injunctive relief.Baltimore. Defendants removed the case to federal court and on January 6, 2021, a conditional transfer order to the MDL was issued. On April 2,1, 2021, the MDL Courtcase was remanded the case to state court. On February 5,August 23, 2021, the Company filed a motion to dismiss, which was granted.

On October 1, 2021, Amneal Pharmaceuticals LLC, and Amneal Pharmaceuticals of New York, LLC, were named in a lawsuit filed in Pennsylvania state court along with NaN other defendants, including brand-name manufacturers, generic manufacturers, and 1 Pennsylvania-based pharmacy. The Complaint tracks the dismissed master personal injury complaint from the MDL similarlyand was removed and subsequently transferred to the MDL on November 9, 2021. Although it has not occurred yet, the case will be remanded a New Mexicoto Pennsylvania state case that also had been removed to federal court.

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On February 8, 2022, plaintiff Gary Ross filed a lawsuit in Illinois state court naming Amneal Pharmaceuticals LLC and Amneal Pharmaceuticals of New York, LLC, along with twenty other defendants, including brand-name manufacturers, generic manufacturers, and retailers. The generic manufacturers filed a motion to dismiss on March 28, 2022.

On March 1, 2022, plaintiff Barbara Martin filed a lawsuit in Illinois state court naming Amneal Pharmaceuticals LLC, Amneal Pharmaceuticals of New York, LLC, and Amneal Pharmaceuticals, Inc., along with seven other defendants, including brand-name manufacturers, generic manufacturers, and retailers. Plaintiff has attempted to serve only Amneal Pharmaceuticals of New York, LLC, and the Company intends to file a motion to dismiss.
Metformin Litigation

Amneal and AvKARE, Inc. were named as defendants, along with numerous other manufacturers, retail pharmacies, and wholesalers, in several putative class action lawsuits pending in the United States District Court for the District of New Jersey (“D.N.J.”), consolidated as In Re Metformin Marketing and Sales Practices Litigation (No. 2:20-cv-02324-MCA-MAH). The lawsuits all allege that defendants made and sold to putative class members generic metformin products that were “adulterated” or “contaminated” with NDMA.

An economic loss complaint filed on behalf of consumers and third-party payors who purchased or paid or made reimbursements for metformin alleges that plaintiffs suffered economic losses in connection with their purchases or reimbursements due to the purported contamination. MedicalOn May 20, 2021, the Court granted Defendants’ motion to dismiss the economic loss complaint, and Plaintiffs filed an amended complaint on June 21, 2021. Defendants again moved to dismiss, and the Court granted in part and denied in part Defendants’ second motion to dismiss. Initial discovery has begun. Additionally, medical monitoring class action complaints were filed on behalf of consumers who consumed allegedly contaminated metformin allege “cellular damage, genetic harm, and/or are at an increased risk of developing cancer",cancer” and seek medical monitoring, including evaluation and treatment. These cases are currently stayed.

On March 29, 2021, a plaintiff filed a complaint in the United States District Court for the Middle District of Alabama asserting claims against manufacturers of Valsartan, Losartan, and Metformin based on the alleged presence of nitrosamines in those products. The only allegations against Amneal concern Metformin. (Davis v. Camber Pharmaceuticals, Inc., et al., C.A. No. 2:21-00254 (M.D. Ala.) (the “Davis Action”)). On May 5, 2021, the JPML transferred the Davis Action into the In re: Valsartan, Losartan, and Irbesartan Products Liability Litigation multi-district litigation for pretrial proceedings.

On October 29, 2021, three plaintiffs filed a complaint in the District Court of Douglas County, Nebraska asserting claims against Amneal based on the alleged presence of nitrosamines in metformin. On January 10, 2022, Amneal removed the case to the United States District Court for the District of Nebraska. (Conrad et al v. Amneal Pharmaceuticals, Inc., No. 22-cv-00011-BCB-SMB (D. Neb.)). Amneal moved to dismiss the complaint on March 3, 2022, and on March 31, 2022, plaintiffs filed an amended complaint.

Xyrem® (sodium oxybate)(Sodium Oxybate) Antitrust Litigation

Amneal has been named as a defendant, along with Jazz Pharmaceuticals, Inc. (“Jazz”) and numerous other manufacturers of generic versions of Jazz’s Xyrem® (sodium oxybate), in several putative class action lawsuits filed in the United States District Court for the Northern District of California and the United States District Court for the Southern District of New York, alleging that the generic manufacturers entered into anticompetitive agreements with Jazz in connection with settling patent litigation related to Xyrem®. Plaintiffs seek unspecified monetary damages and penalties as well as equitable relief, including disgorgement and restitution. On December 16, 2020, the JPML transferred the actions to the United States District Court for the Northern District of California for consolidated pretrial proceedings. On April 22,proceedings consolidated as In re Xyrem (Sodium Oxybate) Antitrust Litigation (No. 5:20-md-02966-LHK). Plaintiffs filed a consolidated amended class complaint in March 2021, which Defendants moved to dismiss.On August 13, 2021, the Court granted in part and denied in part Defendants’ motion, dismissing the federal damages claims and several state-law claims, while permitting the remaining claims to proceed. Discovery is currently ongoing.

Value Drug Company v. Takeda Pharmaceuticals U.S.A., Inc.

On August 5, 2021, Value Drug Company filed a purported class action lawsuit in the United States District Court for the Eastern District of Pennsylvania against Takeda Pharmaceuticals U.S.A., Inc. (“Takeda”) and numerous other manufacturers of generic versions of Takeda’s Colcrys® (colchicine), including Amneal Pharmaceuticals LLC, alleging that the generic manufacturers conspired with Takeda to restrict output of generic Colcrys in order to maintain higher prices, in violation of the antitrust laws. The Company, along with the other defendants, moved to dismiss Plaintiffs' claims.for failure to state a claim, and on December 28, 2021, the Court granted the motion in full, with leave to amend. On January 18, 2022, Plaintiff filed its amended complaint,
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making substantively the same antitrust allegations, but alleging that the violations were effectuated by either a single overarching conspiracy or a series of bilateral conspiracies. The Company moved to dismiss the amended complaint for failure to state a claim. On March 30, 2022, the Court granted in part and denied in party defendants��� motion, dismissing the newly pled bilateral conspiracy claims but allowing the revised overarching conspiracy claim to proceed against all defendants.

Galeas v. Amneal Pharmaceuticals, Inc.

On July 27, 2021, Cesy Galeas filed a purported class action lawsuit in the U.S. District Court for the Eastern District of New York against Amneal Pharmaceuticals, Inc., alleging that the payment schedule for certain workers violated New York Labor Law. Specifically, the purported class, which presently consists of one named plaintiff contends that the Company paid the employees all owed wages, but did so bi-weekly, instead of weekly. In March 2022, the parties reached a tentative agreement to settle all claims for $1.2 million, subject to, among other things, the negotiation and court approval of a definitive settlement agreement. The Company recorded a $1.2 million charge associated with this matter for the three months ended March 31, 2022. The Company has not yet responded to the complaint in light of the foregoing tentative settlement agreement.

Russell Thiele, et al. v. Kashiv Biosciences, LLC, et.al.

On March 22, 2022, 2 purported Amneal stockholders filed a stockholder derivative lawsuit in the Court of Chancery of the State of Delaware against Kashiv and certain members of the Company’s Board of Directors. The Company is named as a nominal defendant. The suit alleges that the Company’s January 2021 acquisition of a 98% interest in KSP, then a wholly owned subsidiary of Kashiv, was unfair to the Company, that the defendant Directors breached fiduciary duties of loyalty and good faith in connection with the transaction, and that the transaction unjustly enriched Kashiv and certain of the defendants who had a financial interest in Kashiv. The suit, which is allegedly brought on the Company’s behalf, seeks among other remedies rescission of the transaction and unspecified monetary damages.
15.14. Segment Information
The Company has 3 reportable segments: Generics, Specialty, and AvKARE.
Generics
Generics develops, manufactures and commercializes complex oral solids, injectables, ophthalmics, liquids, topicals, softgels, inhalation products and transdermals across a broad range of therapeutic categories. Generics’ retail and institutional portfolio contains approximately 250 product families, many of which represent difficult-to-manufacture products or products that have a high barrier-to-entry, such as oncologics, anti-infectives and supportive care products for healthcare providers.
Specialty
Specialty delivers proprietary medicines to the U.S. market. The Company offers a growing portfolio in core therapeutic categories including central nervous system disorders, endocrinology, parasitic infections and other therapeutic areas. The Company's specialty products are marketed through skilled specialty sales and marketing teams, who call on neurologists, movement disorder specialists, endocrinologists and primary care physicians in key markets throughout the U.S. Specialty also has a number of product candidates that are in varying stages of development.
AvKARE
AvKARE provides pharmaceuticals, medical and surgical products and services primarily to governmental agencies, primarily focused on serving the Department of Defense and the Department of Veterans Affairs.  AvKARE is also a wholesale distributor of bottle and unit dose pharmaceuticals under the registered names of AvKARE and AvPAK, as well as medical and surgical products.  AvKARE is also a packager and wholesale distributor of pharmaceuticals and vitamins to its retail and
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institutional customers who are located throughout the United States focused primarily on offering 340b-qualified entities products to provide consistency in care and pricing.
Chief Operating Decision Markers
The Company’s chief operating decision maker evaluatesmakers evaluate the financial performance of the Company’s segments based upon segment operating income (loss). Items below operating income (loss) are not reported by segment, since they are excluded from the measure of segment profitability reviewed by the Company’s chief operating decision maker.makers. Additionally, general and administrative expenses, certain selling expenses, certain litigation settlements, and non-operating income and expenses are
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included in "Corporate“Corporate and Other." The Company does not report balance sheet information by segment since it is not reviewed by the Company’s chief operating decision maker.makers.
The tables below present segment information reconciled to total Company financial results, with segment operating income (loss) including gross profit less direct selling, general and administrative expenses, research and development expenses, and other operating expenses to the extent specifically identified by segment (in thousands):
Three Months Ended March 31, 2021
Generics (1)
Specialty
AvKARE (1)
Corporate
and Other
Total
Company
Three Months Ended March 31, 2022Three Months Ended March 31, 2022
Generics (1)
Specialty
AvKARE (1)
Corporate
and Other
Total
Company
Net revenueNet revenue$312,508 $95,931 $84,666 $$493,105 Net revenue$317,747 $85,086 $94,800 $— $497,633 
Cost of goods soldCost of goods sold185,298 48,198 68,047 301,543 Cost of goods sold199,030 43,853 80,179 — 323,062 
Gross profitGross profit127,210 47,733 16,619 191,562 Gross profit118,717 41,233 14,621 — 174,571 
Selling, general and administrativeSelling, general and administrative18,762 19,881 13,704 38,379 90,726 Selling, general and administrative27,593 24,400 13,410 33,262 98,665 
Research and developmentResearch and development36,117 12,065 48,182 Research and development43,221 9,577 — — 52,798 
Intellectual property legal development expenses3,582 3,582 
Intellectual property legal development expenses (credit)Intellectual property legal development expenses (credit)772 (8)— — 764 
Acquisition, transaction-related and integration expensesAcquisition, transaction-related and integration expenses931 1,871 2,802 Acquisition, transaction-related and integration expenses— — — 434 434 
Charges (credit) related to legal matters, netCharges (credit) related to legal matters, net1,674 — — (4,000)(2,326)
Restructuring and other chargesRestructuring and other charges80 283 363 Restructuring and other charges206 0— 525 731 
Change in fair value of contingent considerationChange in fair value of contingent consideration— 200 — — 200 
Operating income (loss)Operating income (loss)$68,669 $15,787 $1,984 $(40,533)$45,907 Operating income (loss)$45,251 $7,064 $1,211 $(30,221)$23,305 

Three Months Ended March 31, 2020
Generics (1)
Specialty
AvKARE (1,2)
Corporate
and Other
Total
Company
Net revenue$352,586 $87,977 $57,970 $$498,533 
Cost of goods sold218,865 47,818 46,895 313,578 
Cost of goods sold impairment charges1,456 01,456 
Gross profit132,265 40,159 11,075 183,499 
Selling, general and administrative16,623 20,942 10,788 29,623 77,976 
Research and development29,034 7,345 36,379 
In-process research and development impairment charges960 960 
Intellectual property legal development expenses1,265 1,270 
Acquisition, transaction-related and integration expenses2,575 2,575 
Charges related to legal matters, net2,500 2,000 4,500 
Restructuring and other charges46 2,002 2,048 
Operating income (loss)$81,837 $9,867 $287 $(34,200)$57,791 

Three Months Ended March 31, 2021
Generics (1)
Specialty
AvKARE (1)
Corporate
and Other
Total
Company
Net revenue$312,508 $95,931 $84,666 $— $493,105 
Cost of goods sold185,298 48,198 68,047 — 301,543 
Gross profit127,210 47,733 16,619 — 191,562 
Selling, general and administrative18,762 19,881 13,704 38,379 90,726 
Research and development36,117 12,065 — — 48,182 
Intellectual property legal development expenses3,582 — — — 3,582 
Acquisition, transaction-related and integration expenses— — 931 1,871 2,802 
Restructuring and other charges80 — — 283 363 
Operating income (loss)$68,669 $15,787 $1,984 $(40,533)$45,907 

(1)Operating results for the sale of Amneal products by AvKARE are included in Generics.
(2)The AvKARE segment consists of the businesses acquired in the Acquisitions on January 31, 2020. Operating results for the three months ended March 31, 2020 represent two months of activity.
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16.15. Related Party Transactions
The Company has various business agreements with certain third-party companiesparties in which there is some common ownership and/or management between those entities, on the one hand, andownership. However, the Company on the other hand. The Company has no direct ownershipdoes not directly own or management inmanage of any of such related party companies. Theparties. As of and for the three months ended March 31, 2022, there were no material changes to our related party agreements or relationships that generated income and/ or expensedescribed in the respective reporting periods are described below.
Financing Lease -Note 24. Related Party Transactions and Note 22. Stockholders’ Equity in our2021 Annual Report on Form 10-K.
The Companyfollowing table summarizes the Company’s related party transactions (in thousands):
Three Months Ended March 31,
Related Party and Nature of TransactionCaption in Balance Sheet and Statement of Operations20222021
Kashiv Biosciences LLC
Parking space lease (1)
Cost of goods sold$25 $25 
Development and commercialization agreements - various products (1)
Research and development— 32 
Development and commercialization agreement - Filgrastim and PEG-Filgrastim - regulatory approval milestone for Filgrastim(1)
Selling, general and administrative5,000 — 
Development and commercialization agreement - Ganirelix Acetate and Cetrorelix Acetate (1)
Research and development17 643 
Development and commercialization agreements - various products (2)
Research and development— (109)
Profit sharing - various products (2)
Cost of goods sold— 2,680 
Commercial product support for EluRyng and other products (2)
Inventory and cost of goods sold— 1,239 
K127 development and commercialization agreement (2)
Research and development— 3,000 
Transition services associated with the KSP AcquisitionSelling, general and administrative— 300 
   Total$5,042 $7,810 
LAX Hotel, LLC (3)
Financing leaseInventory and cost of goods sold$— $362 
Interest component of financing leaseInterest expense— 217 
Total$— $579 
Other Related Parties
Kanan, LLC - operating leaseInventory and cost of goods sold$526 $526 
Sutaria Family Realty, LLC - operating leaseInventory and cost of goods sold$296 $287 
PharmaSophia, LLC - research and development services incomeResearch and development$(15)$(257)
Fosun International Limited - license and supply agreementNet revenue$— $— 
Apace KY, LLC d/b/a Apace Packaging LLC - packaging agreementInventory and cost of goods sold$458 $2,101 
Tracy Properties LLC - operating leaseSelling, general and administrative$135 $131 
AzaTech Pharma LLC - supply agreementInventory and cost of goods sold$1,221 $1,143 
AvPROP, LLC - operating leaseSelling, general and administrative$40 $39 
Tarsadia Investments, LLC - financial consulting servicesSelling, general and administrative$— $— 
Avtar Investments, LLC consulting servicesSelling, general and administrative$84 $— 
TPG Operations, LLC consulting servicesSelling, general and administrative$19 $— 
(1) Agreement between Amneal and Kashiv was not affected by the Acquisition of KSP (refer to Note 3. Acquisitions for additional information).
(2) Agreement between Amneal and Kashiv was acquired with KSP and has become a financing lease fortransaction among Amneal’s consolidated subsidiaries subsequent to the transaction closing on April 2, buildings located in Long Island, New York, which are used as an integrated manufacturing and office facility.2021. The Company leased these buildings from LAX Hotel, LLC from 2012 until January 2021. During 2020, LAX Hotel, LLC was controlled by a member ofdisclosure relates to the Amneal Group, who also serves as observer on the Company's Board of Directors. As a result, this lease had been historically accounted forhistorical agreement as a related party financing lease.transaction through April 2, 2021 (refer to Note 3. Acquisitions for additional information).
(3) During January 2021, LAX Hotel LLC sold its interests in the leased buildings to an unrelated third party.third-party. Therefore, this lease iswas no longer a related party transaction and the corresponding financing lease right-of-use asset and liability have been reclassified in the consolidated balance sheet as of March 31, 2021 to reflect this change. For the three months ended March 31, 2021, lease costs and interest expense related to this lease were $0.2 million and $0.4 million, respectively. For the three months ended March 31, 2020, lease costs and interest expense were each approximately $1 million.
For annual payments required under the terms of the non-cancelable lease agreement over the next five years and thereafter, refer to Note 12. Leases in the Company’s 2020 Annual Report on Form 10-K.
Kanan, LLC
Kanan, LLC ("Kanan") is a real estate company which owns Amneal’s manufacturing facilities located at 65 Readington Road, Branchburg, New Jersey, 131 Chambers Brook Road, Branchburg, New Jersey and 1 New England Avenue, Piscataway, New Jersey. Certain executive officers of the Company beneficially own, through certain revocable trusts, equity securities of Kanan. In addition, they serve on the management team of Kanan. Amneal leases these facilities from Kanan under 2 separate triple-net lease agreements that expire in 2027 and 2031, respectively, at an annual rental cost of approximately $2 million combined, subject to CPI rent escalation adjustments as provided in the lease agreements. Rent expense paid to Kanan for both the three months ended March 31, 2021 and 2020 was $0.5 million.
Asana Biosciences, LLC
Asana Biosciences, LLC (“Asana”) is an early stage drug discovery and research and development company focusing on several therapeutic areas, including oncology, pain and inflammation. Certain executive officers of the Company beneficially own, directly and through certain revocable or irrevocable trusts for the benefit of their immediate families, outstanding equity securities of Asana. In addition, they serve on the management team of Asana. From time to time, Amneal provides research and development services to Asana under a development and manufacturing agreement. There was no income for the three months ended March 31, 2021 or 2020. As of March 31, 2021 and December 31, 2020, there was no amount due from Asana for research and development related services.
Industrial Real Estate Holdings NY, LLC and Sutaria Family Realty, LLC
Industrial Real Estate Holdings NY, LLC ("IRE") is a real estate management entity, which was the sub-landlord of Amneal’s leased manufacturing facility located at 75 Adams Avenue, Hauppauge, New York. IRE is controlled by a member of the Amneal Group, who also serves as an observer on the Company's Board of Directors. Effective June 1, 2020, the lease was assigned to the Company with the consent of the landlord, Sutaria Family Realty, LLC, which is also a related party because a member of Company management is a beneficial owner. Concurrently with the assignment of the lease, the Company exercised a renewal option for $0.1 million to extend the lease by 5 years until March 31, 2026. Monthly rent payments are $0.1 million and increase by 3% annually. Rent paid to the related parties for both of the three months ended March 31, 2021 and 2020 was $0.3 million.
Kashiv BioSciences, LLC
Kashiv is an independent contract development organization focused primarily on the development of 505(b)(2) NDA products. Amneal has various business agreements with Kashiv. Certain executive officers of the Company beneficially own, directly and
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through certain revocable or irrevocable trusts for the benefit of their immediate families, outstanding equity securities of Kashiv. In addition, they serve as managers of Kashiv.
On January 11, 2021, the Company and Kashiv entered into a definitive agreement for Amneal to acquire a 98% interest in Kashiv Specialty Pharmaceuticals, LLC (“KSP”), a subsidiary of Kashiv focused on the development of complex generics, innovative drug delivery platforms and novel 505(b)(2) drugs. The acquisition closed on April 2, 2021. Certain of the contracts between Amneal and Kashiv were acquired in this transaction and have become transactions among Amneal's consolidated subsidiaries subsequent to the transaction closing. Refer to Note 3. Acquisitions and Divestitures for further details on the KSP acquisition.
Agreements with Kashiv Not Affected by the Acquisition of KSP
The parties entered into a lease for parking spaces in Piscataway, NJ. The total amount of expense paid to Kashiv from this agreement for each of the three months ended March 31, 2021 and 2020 was less than $0.1 million.
Amneal also has various consulting arrangements with Kashiv to collaborate on the development and commercialization of certain generic pharmaceutical products. The total expenses associated with these arrangements for the three months ended March 31, 2021 was less than $0.1 million (NaN for the three months ended March 31, 2020).
The table below includes the terms and expenses recognized for each of the product specific contracts with Kashiv.
Amounts in millions
Research and development expenses for three months ended March 31,
ProductsAgreement Date20212020
Filgrastim and PEG-Filgrastim (1)
October 2017$$
Ganirelix Acetate and Cetrorelix acetate (2)
August 2020$$
(1) Kashiv granted Amneal an exclusive license, under its New Drug Application, to distribute and sell 2 bio-similar products in the U.S. Kashiv is responsible for development, regulatory filings, obtaining FDA approval, and manufacturing, and Amneal is responsible for marketing, selling and pricing activities. The term of the agreement is 10 years from the respective product’s launch date. The agreement provides for potential future milestone payments to Kashiv of (i) up to $21 million relating to regulatory approval, (ii) up to $43 million for successful delivery of commercial launch inventory, (iii) between $20 million and $50 million relating to number of competitors at launch for one product, and (iv) between $15 million and $68 million for the achievement of cumulative net sales for both products. The milestones are subject to certain performance conditions which may or may not be achieved, including FDA filing, FDA approval, launch activities and commercial sales volume objectives. In addition, the agreement provides for Amneal to pay a profit share equal to 50% of net profits, after considering manufacturing and marketing costs.
(2) Amneal and Kashiv entered into a product development agreement for the development and commercialization of 2 generic peptide products, Ganirelix Acetate and Cetrorelix Acetate. Under the agreement, the intellectual property and ANDA for these products are owned by Amneal, and Kashiv is to receive a profit share for all sales of the products made by Amneal. In connection with the agreement, Amneal made an upfront payment for $1 million during August 2020. The agreement also provides for potential future milestone payments to Kashiv of (i) up to $2 million relating to development milestones, and (ii) up to $0.3 million relating to regulatory filings. The milestones are subject to certain performance conditions which may or may not be achieved, including FDA filings. In addition, Amneal is to pay $3 million of development fees to Kashiv as the development work is completed.
Agreements with Kashiv Included in the Acquisition of KSP
The following contracts previously between Amneal and Kashiv were acquired with KSP and have become transactions among Amneal's consolidated subsidiaries subsequent to the transaction closing on April 2, 2021. The disclosures below relate to the historical agreements as related party transactions through March 31, 2021.
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Amneal has various development and commercialization arrangements with Kashiv to collaborate on the development and commercialization of certain generic pharmaceutical products. The total reimbursable expenses associated with these arrangements for the three months ended March 31, 2021 and 2020, respectively, was $0.1 million and $0.2 million.  Kashiv receives a percentage of net profits with respect to Amneal’s sales of these products. The total profit share paid to Kashiv for each of the three months ended March 31, 2021 and 2020 was $3 million.  
On February 20, 2020, the Company and Kashiv entered into a master services agreement covering certain services that Kashiv provides the Company for commercial product support related to EluRyng and other products, including Ranitidine and Nitrofurantoin. For each of the three months ended March 31, 2021 and 2020, the Company recorded $1 million to cost of goods sold to compensate Kashiv for services performed.
The following table includes the expenses recognized for each of the product specific contracts with Kashiv prior to the acquisition of these contracts as part of the KSP transaction.
Amounts in millions
Research and development expenses for three months ended March 31,
ProductsAgreement Date20212020
Levothyroxine Sodium(1)
June 2019$$
K127 (2)
November 2019$$
Posaconazole (3)
May 2020$$
(1) date.Pursuant to a product development agreement, Amneal and Kashiv agreed to collaborate on the development and commercialization of Levothyroxine Sodium. Under the agreement, the intellectual property and ANDA for this product is owned by Amneal, and Kashiv is to receive a profit share for all sales of the product made by Amneal. Amneal is precluded from selling the product made by Kashiv during the term of the license and supply agreement with Jerome Stevens Pharmaceuticals (refer to Note 5. Alliance and Collaboration, in the Company's 2020 Annual Report on Form 10-K for additional details). Under the terms of the amended agreement with Kashiv, Amneal paid $2 million in July 2019 and may be required to pay up to an additional $18 million upon certain regulatory milestones being met.
(2) Amneal and Kashiv have a licensing agreement for the development and commercialization of Kashiv’s orphan drug K127 (Pyridostigmine) for the treatment of Myasthenia Gravis. Under the terms of the agreement, Kashiv will be responsible for all development and clinical work required to secure Food and Drug Administration approval, and Amneal will be responsible for filing the NDA and commercializing the product. The Company made an upfront payment of approximately $2 million to Kashiv in December 2019, and Kashiv is eligible to receive development and regulatory milestones totaling approximately $17 million. Kashiv is also eligible to receive tiered royalties from the low double-digits to mid-teens on net sales of K127.
(3) Amneal and Kashiv have a product development agreement for the development and commercialization of Posaconazole. In connection with the agreement, Amneal paid an upfront amount of $0.3 million in May 2020 for execution of the agreement. The agreement also provides for potential future milestone payments to Kashiv of (i) up to $0.8 million relating to development milestones, (ii) up to $0.3 million relating to regulatory approval, and (iii) up to $1 million for the achievement of cumulative net sales. The milestones are subject to certain performance conditions which may or may not be achieved, including FDA filing, FDA approval and commercial sales volume objectives.
At March 31, 2021 and December 31, 2020, payables of approximately $8 million and $5 million, respectively, were due to Kashiv. Additionally, as of December 31, 2020 a receivable of $0.1 million was due from Kashiv.
PharmaSophia, LLC
PharmaSophia, LLC ("PharmaSophia") is a joint venture formed by Nava Pharma, LLC ("Nava") and Oakwood Laboratories, LLC for the purpose of developing certain products. Certain executive officers of the Company beneficially own, directly and through certain revocable or irrevocable trusts for the benefit of their immediate families, outstanding equity securities of Nava. Nava beneficially owns 50% of the outstanding equity securities of PharmaSophia. In addition, these executive officers also serve on the management team of Nava. Currently PharmaSophia is actively developing one injectable product. PharmaSophia and Nava are parties to a research and development agreement pursuant to which Nava provides research and development
32


services to PharmaSophia. Nava subcontracted this obligation to Amneal, entering into a subcontract research and development services agreement pursuant to which Amneal provides research and development services to Nava in connection with the products being developed by PharmaSophia. The total amount of income earned from these agreements for the three months ended March 31, 2021 and 2020 was $0.3 million and $0.2 million, respectively. At March 31, 2021 and December 31, 2020 receivables of $1 million and $0.8 million, respectively, were due from the related party.
Fosun International Limited
Fosun International Limited (“Fosun”) is a Chinese international conglomerate and investment company that is a shareholder of the Company. On June 6, 2019, the Company entered into a license and supply agreement with a subsidiary of Fosun, which is a Chinese pharmaceutical company. Under the terms of the agreement, the Company will hold the imported drug license required for pharmaceutical products manufactured outside of China and will supply Fosun with finished, packaged products for Fosun to then sell in the China market. Fosun will be responsible for obtaining regulatory approval in China and for shipping the product from Amneal’s facility to Fosun’s customers in China. In consideration for access to the Company's U.S. regulatory filings to support its China regulatory filings and for the supply of product, Fosun paid the Company a $1 million non-refundable fee, net of tax, in July 2019 and will be required to pay the Company $0.3 million for each of 8 products upon the first commercial sale of each in China in addition to a supply price and a profit share. The Company has not recognized any revenue from this agreement.
Apace KY, LLC d/b/a Apace Packaging LLC
Apace KY, LLC d/b/a Apace Packaging LLC (“Apace”) provides packaging solutions pursuant to an exclusive packaging agreement. Apace markets its services which include bottling and blistering for the pharmaceutical industry. A member of Company management beneficially owns outstanding equity securities of Apace. The total amount of expenses from this arrangement for each of the three months ended March 31, 2021 and 2020 was $2 million. At both March 31, 2021 and December 31, 2020, payables of $1.0 million were due to the related party for packaging services. Additionally, at March 31, 2021 and December 31, 2020, receivables of $0.1 million and $0.5 million, respectively, was due from the related party for a product recall.
Tracy Properties LLC
R&S leases operating facilities, office and warehouse space from Tracy Properties LLC ("Tracy"). A member of Company management beneficially owns outstanding equity securities of Tracy. The total amount of expenses from this arrangement for both of the three months ended March 31, 2021 and 2020 was $0.1 million.
AzaTech Pharma LLC
R&S purchases inventory from AzaTech Pharma LLC ("AzaTech") for resale. A member of Company management beneficially owns outstanding equity securities of AzaTech. The total amount of purchases from this arrangement for the three months ended March 31, 2021 and 2020 was $1 million and $0.8 million, respectively. At March 31, 2021 and December 31, 2020, payables of approximately $0.7 million and $1 million, respectively, were due to AzaTech for inventory purchases.
AvPROP, LLC
AvKARE LLC leases its operating facilities from AvPROP, LLC ("AvPROP"). A member of Company management beneficially owns outstanding equity securities of AvPROP. Rent expense from this arrangement for both of the three months ended March 31, 2021 and 2020 was $0.1 million.
Tarsadia Investments, LLC
Tarsadia Investments, LLC (“Tarsadia”) is a private investment firm that provides financial services and is a significant shareholder of the Company. A member of Amneal Group, and an observer to the Board, is the Chairman and Founder of Tarsadia Investments. Another member of the Amneal Group, and a member of the Board, is a Managing Director of Tarsadia Investments. Tarsadia offers capital and strategic support for companies with substantial growth potential primarily in the healthcare, financial services, real estate, and clean technology sectors.  The Company entered into an agreement in which Tarsadia will provide financial consulting services. The services are not expected to have a material impact to the Company’s financial statements.
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Avtar Investments, LLCThe following table summarizes the amounts due to or from the Company for related party transactions (in thousands):
March 31, 2022December 31, 2021
Kashiv - deferred consideration associated with the KSP Acquisition (1)
$500 $30,500 
Kashiv - various agreements(2)
5,050 314 
Sellers of Puniska - consideration for acquisition (3)
— 14,225 
Apace Packaging LLC - packaging agreement1,148 560 
AzaTech Pharma LLC - supply agreement919 1,783 
Avtar Investments LLC - consulting services59 37 
Sellers of AvKARE LLC and R&S - accrued interest on Sellers Notes (4)
442 442 
Amneal non-controlling interests - tax distributions (5)
6,460 — 
Rondo Class B unit holders - tax distributions (5)
1,375 — 
R&S Solutions— 
Related party payables - short term$15,960 $47,861 
PharmaSophia, LLC - research and development agreement$1,096 $1,081 
Sellers of AvKARE LLC and R&S - state tax indemnification52 68 
Kashiv - various agreements21 14 
Apace Packaging, LLC - packaging agreement16 
Related party receivables - short term$1,175 $1,179 
Kashiv - contingent consideration (6)
$6,100 $5,900 
Sellers of AvKARE LLC and R&S - accrued interest on Sellers Notes (4)
4,271 3,719 
Related party payables - long term$10,371 $9,619 
Avtar Investments, LLC ("Avtar") is a private investment firm. Members of Company management beneficially own, directly and through certain revocable or irrevocable trusts(1) As discussed in Note 3. Acquisitions, the purchase price for the benefitKSP Acquisition included a contractually stated amount of their immediate families, outstanding equity securitiesdeferred consideration of Avtar. During April 2020,$30.5 million. The deferred consideration consisted of $30.0 million, which the Company entered into an agreement inpaid during January 2022, and $0.5 million, which Avtar will provide consulting services. The total amountthe Company expects to pay during the second quarter of consulting expense incurred for the three months ended March 31, 2021 was $0.1 million (NaN in the 2022.
(2)three months ended March 31, 2020). As of both March 31, 2021 and December 31, 2020, less than $0.1 $5.0 million was duepayable to Avtar.
Zep Inc.
Zep Inc. ("Zep") is a producer, and distributor of maintenance and cleaning solutions for retail, food & beverage, industrial & institutional, and vehicle care customers. An executive officer of the Company serves as a director of Zep. During May 2020, AvKARE entered into an agreement to supply cleaning products to Zep. There was no revenue derived from this related party agreement for three months ended March 31, 2021 or 2020. As of December 31, 2020, $0.1 million was recorded in related party receivables (0 related party receivableKashiv as of March 31, 2021).
Tax Distributions2022 for regulatory approval of Filgrastim.
Under (3) As discussed in Note 3. Acquisitions, the termspurchase price for the Puniska Acquisition included $14.2 million due to the sellers for the satisfaction of its limiteda preexisting payable upon approval of the transaction by the government of India. The Company satisfied this liability company agreement, Amneal is obligated to make tax distributions to its members, which are also holders of non-controlling interestsin March 2022.
(4) Represents accrued interest on the Sellers Notes associated with the Rondo Acquisitions, as defined and discussed in Note 3. Acquisitions and Divestitures and Note 17. Debt in the Company. For further details, referCompany’s 2021 Annual Report on Form 10-K.
(5)    Refer to Note 17. Stockholders'16. Stockholders’ Equity and Redeemable Non-Controlling Interests.
Additionally, under(6)     The contingent consideration liability was associated with the terms of the limited liability company agreement between the Company and the holders of the Rondo Class B Units, Rondo is obligated to make tax distributions to those holders, subject to certain limitations as defined in the Rondo Credit Facility. For further details, referKSP Acquisition. Refer to Note 17. Stockholders' Equity and3. Acquisitions for additional information.
Puniska Acquisition - Redeemable Non-Controlling Interests.
Notes Payable – Related Party
The sellers of AvKARE, LLC and R&S holdCompany paid $1.7 million for the remaining 34.9%26% equity interest of Puniska (included in Rondo (“Rondo Class B Units”redeemable non-controlling interests in the Company’s consolidated balance sheet as of December 31, 2021).  Certain holders upon approval of the Rondo Class B Units are also holdersPuniska Acquisition by the government of the Sellers Notes and the Short-Term Sellers Note.  For additional information, refer to Note 3.Acquisitions and Divestitures.India in March 2022.
17.16. Stockholders’ Equity and Redeemable Non-Controlling Interests
Non-Controlling Interests
The Company consolidates the financial statements of Amneal and its subsidiaries and records non-controlling interests for the portion of Amneal’s economic interests that is not held by the Company. Non-controlling interests are adjusted for capital transactions that impact the non-publicly held economic interests in Amneal.
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Under the terms of Amneal's limited liability company agreement, as amended, Amneal is obligated to make tax distributions to its members. ForDuring the three months ended March 31, 2022 and 2021, athe Company recorded net tax distributiondistributions of $9$4.4 million was recordedand $9.2 million, respectively, as a reduction of non-controlling interests (NaN for the three months ended March 31, 2020), and included as related-party payables as of March 31, 2021, which was paid in full during April 2021.interests.

As discussed in
Note 3. Acquisitions, the Company acquired a 98% interest in KSP on April 2, 2021. The sellers of KSP, a related party, hold the remaining interest. The Company will attribute 2% of the net income or loss of KSP to the non-controlling interests.
Redeemable Non-Controlling Interests
As discussed in Note 31. Acquisitions and DivestituresNature of Operations, the Company acquired a 65.1% controlling interest in Rondo on January 31,both AvKARE, LLC and R&S in 2020.  The sellers of AvKARE, LLC and R&S hold the remaining 34.9% interest as (“Rondo Class B Units.Units”) in the holding company that directly owns the acquired companies (“Rondo”).  Beginning on January 1, 2026, the holders of the Rondo Class B Units have the right (“Put Right”) to require the Company to acquire the Rondo Class B Units for a purchase price that is based on a multiple of Rondo’s earnings before income taxes, depreciation, and amortization (EBITDA) if certain financial targets and other conditions are met.  Additionally, beginning on January 31, 2020, the Company has the right to acquire the Rondo Class B Units based on the same value and conditions as the Put Right.  The Rondo Class B Units are also redeemable by the holders upon a change in control.
Since the redemption of the Rondo Class B Units is outside of the Company's control, the units have been presented outside of stockholders'stockholders’ equity as redeemable non-controlling interests. Upon closing of the Rondo Acquisitions, on January 31, 2020, the redeemable non-controlling interests were recorded as a component of the fair value of consideration transferred at an estimated preliminary fair value of $11$11.0 million. The fair value of the redeemable non-controlling interests was estimated using the Monte-Carlo simulation approach under the option pricing framework, which considers the redemption rights of both the Company and the holders of the Rondo Class B Units.

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The Company will attributeattributes 34.9% of the net income ofor loss associated with Rondo to the redeemable non-controlling interests. The Company will also accrete the redeemable non-controlling interests to redemption value upon an event that makes redemption probable. For the three months ended March 31, 2022 and 2021, athe Company recorded tax distributiondistributions of $2.0 million and $0.5 million was recorded as a reduction of redeemable non-controlling interests, (NaNrespectively.

Redeemable Non-Controlling Interests - Puniska

As discussed in Note 3. Acquisitions, the Company acquired 74% of the equity interests in Puniska on November 2, 2021. Amneal was required pursuant to the purchase agreement to acquire the remaining 26% of Puniska upon approval of the transaction by the government of India.Since approval of the government of India was outside of the Company’s control, upon closing of the Puniska Acquisition, the equity interests of Puniska that the Company did not own were presented outside of stockholders' equity as redeemable non-controlling interests. The Company attributed 26% of the net losses of Puniska to the redeemable non-controlling interests.
Upon approval of the transaction by the government of India in March 2022, the Company paid the $1.7 million redemption value for the remaining 26% of the equity interests of Puniska. For the three months ended March 31, 2020) and included as a related-party payable as2022, the Company recorded accretion of March 31, 2021.$0.9 million to increase the redeemable non-controlling interests to redemption value.













35


Changes in Accumulated Other Comprehensive Loss by Component (in thousands):
Foreign
currency
translation
adjustment
Unrealized
gain (loss) on cash
flow hedge, net
of tax
Accumulated
other
comprehensive
loss
Foreign
currency
translation
adjustment
Unrealized (loss) gain on cash
flow hedge, net
of tax
Accumulated
other
comprehensive
loss
Balance December 31, 2019$(7,832)$7,764 $(68)
Other comprehensive loss before reclassification(6,643)(34,560)(41,203)
Reallocation of ownership interests(22)(25)(47)
Balance December 31, 2020Balance December 31, 2020(14,497)(26,821)(41,318)Balance December 31, 2020$(14,497)$(26,821)$(41,318)
Other comprehensive loss before reclassificationOther comprehensive loss before reclassification(3,139)10,243 7,104 Other comprehensive loss before reclassification(4,255)20,972 16,717 
Reallocation of ownership interestsReallocation of ownership interests(52)(95)(147)Reallocation of ownership interests(93)(133)(226)
Balance March 31, 2021$(17,688)$(16,673)$(34,361)
Balance December 31, 2021Balance December 31, 2021(18,845)(5,982)(24,827)
Other comprehensive loss before reclassificationOther comprehensive loss before reclassification(2,024)26,614 24,590 
Reallocation of ownership interestsReallocation of ownership interests(86)(26)(112)
Balance March 31, 2022Balance March 31, 2022$(20,955)$20,606 $(349)
18. Subsequent Events17. Prepaid Expenses and Other Current Assets
Kashiv Specialty Pharmaceuticals AcquisitionPrepaid expenses and other current assets are comprised of the following (in thousands):
March 31,
2022
December 31,
2021
Deposits and advances$1,595 $1,174 
Prepaid insurance4,841 7,962 
Prepaid regulatory fees2,539 3,710 
Income and other tax receivables10,466 8,850 
Prepaid taxes18,255 16,085 
Other current receivables (1)
47,213 42,770 
Other prepaid assets23,562 17,309 
Chargebacks receivable (2)
12,937 12,358 
Total prepaid expenses and other current assets$121,408 $110,218 
On January 11,(1)As discussed in Note 13. Commitments and Contingencies, the Company recorded receivables from insurers of $37.0 million and $33.0 million as of March 31, 2022 and December 31, 2021, respectively, associated with insured securities class action lawsuits.
(2)When a sale occurs on a contract item, the difference between the cost paid to the manufacturer by the Company and Kashiv (athe contract cost that the end customer has with the manufacturer is rebated back to the Company by the manufacturer. The Company establishes a chargeback (rebate) receivable and a reduction to cost of goods sold in the same period as the related party, see Note 16. Related Party Transactions) entered into a definitive agreement for Amneal to acquire a 98% interest in KSP, a subsidiary of Kashiv focused on the development of innovative drug delivery platforms, novel 505(b)(2) drugs, and complex generics. Refer to Note 3. Acquisitions and Divestitures for additional information.sale.

Class B-1 Common Stock
On May 5,18. Other Assets

Other assets were comprised of the following (in thousands):

March 31,
2022
December 31,
2021
Interest rate swap (1)
$42,151 $— 
Security deposits4,245 3,895 
Long-term prepaid expenses6,886 5,896 
Deferred revolving credit facility costs1,345 1,603 
Other long term assets9,316 9,220 
Total$63,943 $20,614 
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(1)Refer to Note 10. Fair Value Measurements and Note 11. Financial Instruments for information about the Company’s interest rate swap.

19. Government Grants

In November 2021, the shareholdersAmneal Pharmaceuticals Private Limited, a subsidiary of the Company approved an amendedin India, was selected as one of 55 companies to participate in the Production Linked Incentive Scheme for the Pharmaceutical Sector (“PLI Scheme”). The government of India established the PLI Scheme to make India’s domestic manufacturing more globally competitive and restated certificateto create global champions within the pharmaceutical sector by encouraging investment and product diversification with a focus on manufacturing complex and high value goods.

Under the PLI Scheme, the Company is eligible to receive up to 10 billion Indian rupees, or approximately $132.3 million (based on conversion rates as of incorporation which retired sharesMarch 31, 2022), over a maximum six-year period, starting in 2022. To be eligible to receive the cash incentives, Amneal must achieve (i) minimum cumulative expenditures towards developmental and/or capital investments and (ii) a minimum percentage growth in sales of class B-1 common stock.eligible products. The Company will recognize the related grant incentives in the consolidated statements of operations on a systematic basis over the term of the grant starting in the second quarter of 2022.
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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
Amneal Pharmaceuticals, Inc. (the "Company," "we," "us,"“Company,” “we,” “us,” or "our"“our”) is a pharmaceutical company specializing in developing, manufacturing, marketing and distributing high-value generic pharmaceutical products across a broad array of dosage forms and therapeutic areas, as well as branded products. We operate principally in the United States, India, and Ireland, and sellssell to wholesalers, distributors, hospitals, chain pharmacies and individual pharmacies, either directly or indirectly.
The Company is a holding company, whose principal assets are common units (“Amneal Common Units”) of Amneal Pharmaceuticals, LLC (“Amneal”). In 2018, Amneal completed the acquisition of Impax Laboratories, Inc. (“Impax”), a generic and specialty pharmaceutical company.
The group of investors, together with their affiliates and certain assignees, who owned Amneal when it was a private company (the “Members”) held 50.2% of Amneal Common Units and the Company held the remaining 49.8% as of March 31, 2022.
The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under Item 1A. Risk Factors in our 20202021 Annual Report on Form 10-K and under the heading Cautionary Note Regarding Forward-Looking Statements included elsewhere in this Quarterly Report on Form 10-Q.
The following discussion and analysis for the three months ended March 31, 20212022 should also be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements for the year ended December 31, 20202021 included in our 20202021 Annual Report on Form 10-K.
Overview
We have three reportable segments: Generics, Specialty, and AvKARE.  
Generics
Our Generics segment includes approximately 250 product families covering an extensive range of dosage forms and delivery systems, including both immediate and extended release oral solids, powders, liquids, sterile injectables, nasal sprays, inhalation and respiratory products, ophthalmics (which are sterile pharmaceutical preparations administered for ocular conditions), films, transdermal patches and topicals (which are creams or gels designed to administer pharmaceuticals locally through the skin). We focus on developing products with substantial barriers-to-entry resulting from complex drug formulations or manufacturing, or legal or regulatory challenges. Generic products, particularly in the U.S., generally contribute most significantly to revenues and gross margins at the time of their launch, and even more so in periods of market exclusivity, or in periods of limited generic competition. As such, the timing of new product introductions can have a significant impact on the Company’s financial results. The entrance into the market of additional competition generally has a negative impact on the volume and / or pricing of the affected products. Additionally, pricing is determined by market place dynamics and is often affected by factors outside of the Company’s control.
Specialty
Our Specialty segment is engaged in the development, promotion, sale and distribution of proprietary branded pharmaceutical products, with a focus on products addressing central nervous system ("CNS"(“CNS”) disorders, including migraine and Parkinson’s disease. Our portfolio of products includes Rytary®, an extended release oral capsule formulation of carbidopa-levodopa for the treatment of Parkinson’s disease, post-encephalitic parkinsonism, and parkinsonism that may follow carbon monoxide intoxication or manganese intoxication. In addition to Rytary®, our promoted Specialty portfolio includes Unithroid® (levothyroxine sodium), for the treatment of hypothyroidism, which is sold under a license and distribution agreement with Jerome Stevens Pharmaceuticals, Inc., and Emverm® (mebendazole) 100 mg chewable tablets, for the treatment of pinworm, whipworm, common roundworm, common hookworm and American hookworm in single or mixed infections, and Zomig® (zolmitriptan) products, for the treatment of migraine headaches, which is sold under a license agreement with AstraZeneca U.K. Limited. We believe that we have the research, development and formulation expertise to develop branded products that will deliver significant improvements over existing therapies.infections.
For Specialty products, the majority of the product’s commercial value is usually realized during the period in which the product has market exclusivity. In the U.S. when market exclusivity expires and generic versions of a product are approved and marketed, there can often be very substantial and rapid declines in the branded product’s sales. We expectFor example, the pediatric exclusivity of the AstraZeneca patent licensed to loseImpax for Zomig® Nasal Spray expired in May 2021, and we lost market exclusivity on Zomig® Spray on May 29, 2021 due to patent expiration.in the fourth quarter of 2021.
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AvKARE
Our AvKARE segment provides pharmaceuticals, medical and surgical products, and services primarily to governmental agencies, primarily focused on serving the Department of Defense and the Department of Veterans Affairs.agencies. AvKARE is a wholesale distributorre-packager of bottle and unit dose pharmaceuticals under the registered names of AvKARE and AvPAK, which service the Department of Defense and Department of Veterans Affairs as well as medical and surgical products.institutional customers. AvKARE is also a packager and wholesale distributor of pharmaceuticals, over the counter products and vitaminsmedical supplies to its
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retail and institutional customers whowhich are located throughout the United States of America focused primarily on offering 340b-qualified entities products to provide consistency in care and pricing.
The Pharmaceutical Industry
The pharmaceutical industry is highly competitive and highly regulated. As a result, we face a number of industry-specific factors and challenges, which can significantly impact our results. For a more detailed explanation of our business and its risks, refer to our 20202021 Annual Report on Form 10-K, as supplemented by Part II, Item 1A Risk Factors of our subsequent Quarterly Reports on Form 10-Q.
COVID-19 Pandemic
OnIn March 11, 2020, the World Health Organization designated the outbreak of a novel strain of coronavirus (“COVID-19”) as a global pandemic. Governments and businesses around the world have takentook unprecedented actions to mitigate the spread of COVID-19, including imposing restrictions on movement and travel such as quarantines and shelter-in-place requirements, and restricting or prohibiting outright some or all commercial and business activity, including the manufacture and distribution of certain goods and the provision of non-essential services. These measures, though currently temporary in nature, may become more severe and continue indefinitely depending on the evolution of the outbreak.
We observed lost sales and some supply interruptions during the year ended December 31, 2020 in our New York, New Jersey and India manufacturing plants. Additionally, decreased influenza activity during the three months ended March 31, 2021, drove significantly lower sales volume and increased returns related to Oseltamivir as compared to the prior period.
While manufacturing has resumed to around pre-COVID-19 levels, we may again experience supply chain constraints at our New York, New Jersey, India or other facilities during subsequent waves of COVID-19 infections. These potential supply chain disruptions may significantly impact our 2021 results of operations and cash flows. Several of our key domestic manufacturing, packaging, and facilities are located in New York and New Jersey, two states with a high number of confirmed cases of COVID-19. Additionally, we have key international manufacturing and research and development facilities in India, a country with a high number of confirmed cases of COVID-19.
To the extent that the COVID-19 pandemic continues or worsens, national, state, local and international governments may impose additional restrictions or extend the restrictions already in place. The worsening of the pandemic and the related safety and business operating restrictions could result in a number of adverse impacts to our business, including, but not limited to, additional disruption to the economy and our customers, additional work restrictions, and supply chains being interrupted or slowed.slowed, and rising supply prices. Also, governments may impose other laws, regulations, or taxes that could adversely impact our business, financial condition, or results of operations. Further, depending on the extent to which our customers are affected, they could delay or reduce purchases of products we provide. The potential effects of the COVID-19 pandemic also could impact us in a number of other ways including, but not limited to, reductions to our profitability, fluctuations in foreign currency markets, the availability of future borrowings, the cost of borrowings, credit risks of our customers and counterparties, and potential impairment of the carrying amount of goodwill or other definite-lived assets.

Although not currently expected, any supply chain disruptions may significantly impact our 2022 results of operations and cash flows. Increasing infection rates and the introduction of new and more easily transmitted variants of COVID-19, such as the Delta and Omicron variants, could cause material disruptions to our global supply chains and cause labor shortages, as well as reduce the number of physician visits in general.

We will continue to actively monitor the situation and may take further precautionary and preemptive actions as may be required by national, state, or local authorities or that we determine are in the best interests of our employees, customers, partners, suppliers, and shareholders. Until the ultimate extent and duration of the pandemic is known, we cannot predict the ultimate effects the pandemic may have on our business, in particular with respect to demand for our products, our strategy, and our prospects, the effects on our customers, or the impact on our financial results.
Inflation

While it is difficult to accurately measure the impact of inflation, we currently expect an inflationary impact of approximately $20 million for the year ending December 31, 2022. However, rising inflationary pressures due to higher input costs, including higher material, transportation, labor and other costs, could exceed our expectations, which would further adversely impact our operating results in future periods.



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Results of Operations
Consolidated Results
The following table sets forth our summarized, consolidated results of operations for the three months ended March 31, 20212022 and 20202021 (in thousands):
37


Three Months Ended
March 31,
Three Months Ended
March 31,
2021202020222021
Net revenueNet revenue$493,105 $498,533 Net revenue$497,633 $493,105 
Cost of goods soldCost of goods sold301,543 313,578 Cost of goods sold323,062 301,543 
Cost of goods sold impairment charges— 1,456 
Gross profitGross profit191,562 183,499 Gross profit174,571 191,562 
Selling, general and administrativeSelling, general and administrative90,726 77,976 Selling, general and administrative98,665 90,726 
Research and developmentResearch and development48,182 36,379 Research and development52,798 48,182 
In-process research and development impairment charges— 960 
Intellectual property legal development expensesIntellectual property legal development expenses3,582 1,270 Intellectual property legal development expenses764 3,582 
Acquisition, transaction-related and integration expensesAcquisition, transaction-related and integration expenses2,802 2,575 Acquisition, transaction-related and integration expenses434 2,802 
Charges related to legal matters, net— 4,500 
Credit related to legal matters, netCredit related to legal matters, net(2,326)— 
Restructuring and other chargesRestructuring and other charges363 2,048 Restructuring and other charges731 363 
Change in fair value of contingent considerationChange in fair value of contingent consideration200 — 
Operating incomeOperating income45,907 57,791 Operating income23,305 45,907 
Total other expense, netTotal other expense, net(31,003)(44,447)Total other expense, net(33,226)(31,003)
Income before income taxes14,904 13,344 
Provision for (benefit from) income taxes359 (108,173)
Net income$14,545 $121,517 
(Loss) income before income taxes(Loss) income before income taxes(9,921)14,904 
(Benefit from) provision for income taxes(Benefit from) provision for income taxes(3,461)359 
Net (loss) incomeNet (loss) income$(6,460)$14,545 
Net Revenue

Net revenue for the three months ended March 31, 2021 decreased by2022 was $497.6 million, an increase of 1%, or $5 million, to $493 million as compared to $499$493.1 million for the three months ended March 31 2020.2021. The decreaseincrease from the prior year period was attributable to growth in our Generics and AvKARE segments, partially offset by a decline in our Specialty segment as follows:

Net revenue growth in our Generics segment of $40$5.2 million which was primarily due to a $23 million decline in Oseltamivir (generic Tamiflu®) sales from lower demand and increased returns activity above historical levels due to decreased influenza activity during the COVID-19 pandemic and an increase in customer purchases for the three months ended March 31, 2020 at2022 compared to the onset of the COVID-19 pandemic. Newprior year period was primarily due to new products launched in 20202022 and 2021 that contributed revenue growth of $36 million, which more than offset erosion in our base business. Offsetting the decline in Generic revenues was growth in AvKARE segment of $27$14.0 million, as well as volume growth. This increase was partially offset by continued price erosion.
Specialty segment net revenue decreased $10.8 million during the first quarter of 2021 included threethee months of salesended March 31, 2022 as compared to two months in the prior year and growthperiod, driven by the loss of exclusivity of Zomig® nasal spray as well as a decline in our Specialtyother non-promoted products. Net revenue for our promoted products, including Rytary® and Unithroid®, declined 6% and increased 13%, respectively, due to the timing of shipments as prescription growth remained strong for both products.
AvKARE net segment of $8revenue grew $10.1 million primarilyduring the thee months ended March 31, 2022 as compared to the prior year period due to growth in demand for Rytary® and Unithroid®.our distribution channel.
Cost of Goods Sold and Gross Profit

Cost of goods sold including impairment charges, decreased 4%, or $13 million, to $302 million for the three months ended March 31, 20212022 increased 7%, or $21.5 million, to $323.1 million as compared to $315$301.5 million forin the three months ended March 31, 2020.prior year period. The decreaseincrease in cost of goods sold was primarily attributable to a decrease in revenue as noted above, a $1.5 million decrease in intangible asset impairments, and gross margin improvement due to reduced material costs, better plant utilization as well as the impact of 2020increased volume within Generics and 2021 new product introductions.AvKARE and a reduction in operating efficiency benefits realized period-over-period.
Gross profit for the three months ended March 31, 20212022 was $192$174.6 million (39%(35% of total net revenue) as compared to gross profit of $183$191.6 million (37%(39% of total net revenue) for the three months ended March 31, 2020. Our gross profit as a percentage of net revenue increased compared to the prior year primarily as a result of the factors noted above.period.
Selling, General, and Administrative
Selling, general, and administrative (“SG&A”) expenses for the three months ended March 31, 20212022 were $91$98.7 million, as compared to $78$90.7 million for the three months ended March 31, 2020.prior year period. The $13$7.9 million increase from the prior year period was primarily due to the AvKARE segment, as the first quarter of 2021 included three months’ of expenditures as compared to two months in the prior year, an increase in employee compensation and an increase in indirect taxes. The increases were partially offset by a decrease in expenditures$5 million expense associated with in-person meetings and related expenses due to the COVID-19 pandemic.

a biosimilar regulatory approval.

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Research and Development
Research and development (“R&D”) expenses for the three months ended March 31, 20212022 were $48$52.8 million, as compared to $36$48.2 million for the three months ended March 31, 2020.2021. The $12$4.6 million increase compared to the prior year period was primarily attributable to an increased in-licensing and upfront milestone paymentscharges of $9$6 million to grow our Specialty and Generics pipelines, and increasedassociated with acquired businesses in 2021 offset in part by a decrease in project spend for ongoingof $3 million as the IPX-203 project costs associated with IPX203 and complex generic product candidates.neared completion.
Intellectual Property Legal Development Expense
Intellectual property legal development expenses include, but are not limited to, costs associated with formulation assessments, patent challenge opinions and strategy, and litigation expenses to defend our intellectual property. Intellectual property legal development expenses for the three months ended March 31, 2022 and 2021 were $4$0.8 million as comparedand $3.6 million, respectively. The period-over-period decrease of $2.8 million was due to $1the timing of specific cases. Expenses may vary based on the number of individual cases and corresponding litigation outstanding in a particular period.
Acquisition, Transaction-Related and Integration Expenses
Acquisition, transaction-related and integration expenses were $0.4 million for the three months ended March 31, 2020. The increase in expenses from2022 as compared to $2.8 million for the prior year related to an increase in the number of individual cases and corresponding litigation.
Acquisition, Transaction-Related and Integration Expensesthree months ended March 31, 2021.
Acquisition, transaction-related and integration expenses for the three months ended March 31, 2022 were $3 million for bothprimarily related to the Saol Acquisition, which closed on February 9, 2022. For the three months ended March 31, 2021, acquisition, transaction-related and March 31, 2020. Expenses for the three months ended March 31, 2021integration expenses were primarily related to the acquisition of Kashiv Specialty Pharmaceuticals, LLC,KSP Acquisition, which closed on April 2, 2021, and integration expenses related to the businesses that comprise our AvKARE segment. Refer to Note 3. Acquisitions for additional information.
Credit Related to Legal Matters, Net
For the three months ended March 31, 2020, acquisition, transaction-related and integration expenses were primarily related to2022, we recorded a net credit of $2.3 million for an insurance recovery of $4.0 million, partially offset by charges for legal proceedings. For the acquisition of the businesses that comprise our AvKARE segment. Refer to Note 3. Acquisitions and Divestitures, for additional information on these acquisitions.
Charges Related to Legal Matters, Net
Therethree months ended March 31, 2021, there were no charges related to legal mattersmatters.
Total Other Expense, Net
Total other expense, net was $33.2 million for the three months ended March 31, 2022 as compared to $31.0 million for the three months ended March 31, 2021. Overall, the increase from the prior year period was driven by a $4.1 million unfavorable period-over-period impact of net foreign exchange gains and losses, partially offset by lower interest expense and a benefit related to a previously outstanding contingent liability.
(Benefit From) Provision For Income Taxes
For the three months ended March 31, 2020, we recorded a net charge of $52022 and 2021, our (benefit from) provision for income taxes and effective tax rates were $(3.5) million approximately $3 million of which was recorded in our Generics segment and $2 million in our Specialty segment.
Restructuring34.9% and Other Charges
On July 10, 2019, we announced a plan to restructure our operations that is intended to reduce costs and optimize our organizational and manufacturing infrastructure. Pursuant to the restructuring plan as revised, we expect to reduce our headcount by approximately 300 to 350 by December 31, 2021, primarily by closing our manufacturing facility located in Hauppauge, NY. Through March 31, 2021, the Company reduced headcount by 280 employees under this plan.
Restructuring and other charges were $0.4 million and $2 million during2.4%, respectively.
The period-over-period change in the (benefit from) provision for income taxes was related to an Internal Revenue Service examination and Joint Committee review of our 2012-2018 federal income tax returns, which enabled us to recognize previously unrecognized tax benefits.
Net (Loss) Income
We recognized a net loss for the three months ended March 31, 2021 and 2020, respectively. These charges primarily consisted2022 of the cost$6.5 million as compared to net income of benefits provided pursuant to our severance programs for former senior executives and management employees.
Other Expense, Net
Other expense, net was $31$14.5 million for the three months ended March 31, 2021, as compared to $44 million for the three months ended March 31, 2020.2021. The decrease of $13 millionperiod-over-period change was primarily due to a $6 million decline in interest expense due to a reduction in interest rates, as well as a $7 million favorable period over period impact of net foreign exchange gains and losses. The favorable net foreign exchange impact was primarily associated with the weakening of the Swiss franc relativeattributable to the U.S. dollar.factors listed above.
Provision For (Benefit From) Income Taxes
For the three months ended March 31, 2021 and 2020, our provision (benefit) for income taxes and effective tax rates were $0.4 million and 2.4% and $(108) million and (810.6)%, respectively. The income tax benefit for the three months ended March 31, 2020 was primarily impacted by a $110 million carryback of U.S. Federal net operating losses under the
Coronavirus Aid, Relief and Economic Security Act ("CARES Act"). The CARES Act was an emergency economic stimulus package in response to the COVID-19 pandemic which, among other things, includes provisions relating to income and non-income-based tax laws.  For further details, refer to Note 8. Income Taxes.
3941


Net Income
We recognized net income for the three months ended March 31, 2021 of $15 million as compared to net income of $122 million for the three months ended March 31, 2020. The year-over-year decrease in net income of $107 million was attributable to the factors listed above, most notably the tax benefit from a $110 million carryback of U.S. Federal net operating losses under the CARES Act in the prior year.
Generics
The following table sets forth results of operations for our Generics segment for the three months ended March 31, 20212022 and 20202021 (in thousands):
Three Months Ended
March 31,
Three Months Ended
March 31,
2021202020222021
Net revenueNet revenue$312,508 $352,586 Net revenue$317,747 $312,508 
Cost of goods soldCost of goods sold185,298 218,865 Cost of goods sold199,030 185,298 
Cost of goods sold impairment charges— 1,456 
Gross profitGross profit127,210 132,265 Gross profit118,717 127,210 
Selling, general and administrativeSelling, general and administrative18,762 16,623 Selling, general and administrative27,593 18,762 
Research and developmentResearch and development36,117 29,034 Research and development43,221 36,117 
In-process research and development impairment charges— 960 
Intellectual property legal development expensesIntellectual property legal development expenses3,582 1,265 Intellectual property legal development expenses772 3,582 
Charges related to legal matters, netCharges related to legal matters, net— 2,500 Charges related to legal matters, net1,674 — 
Restructuring and other charges80 46 
Restructuring and other (credit) chargesRestructuring and other (credit) charges206 80 
Operating incomeOperating income$68,669 $81,837 Operating income$45,251 $68,669 
Net Revenue

Generics net revenue was $313$317.7 million for the three months ended March 31, 2021, a decrease2022, an increase of $40$5.2 million or 11% when2% as compared withto the same period in 2020.prior year period. The year-over-year decrease wasincrease primarily duerelated to a $23 million decline in Oseltamivir (generic Tamiflu®) sales from lower demand and increased returns activity above historical levels due to decreased influenza activity during the COVID-19 pandemic and an increase in customer purchases for the three months ended March 31, 2020 at the onset of the COVID-19 pandemic. Additionally,new products launched in 20202022 and 2021 that contributed revenue growth of $36$14 million, which more thanas well as volume growth, offset erosion in our base business.
part by continued price eros
ion.
Cost of Goods Sold and Gross Profit
Generics cost of goods sold including impairment charges, for the three months ended March 31, 20212022 was $185$199.0 million, a decreasean increase of 16%7% or $35$13.7 million compared to the three months ended March 31, 2020.2021. The decreaseincrease in cost of goods sold was primarily attributable to increased volume and a decreasereduction in sales as noted above, a $1.5 million decrease in intangible asset impairments, and gross margin improvement. The increase in gross margin was primarily related to 2020 and 2021 new product launches, the impact of reducing material cost components by $12 million versus the prior year period, and better plant utilization and product mix.operating efficiency benefits realized period-over-period.
Generics gross profit for the three months ended March 31, 20212022 was $127$118.7 million (41%(37% of net revenue) as compared to gross profit of $132$127.2 million (38%(41% of net revenue) for the three months ended March 31, 20202021 as a result of the factors described above.
Selling, General, and Administrative
Generics SG&A expense for the three months ended March 31, 20212022 was $19$27.6 million, as compared to $17$18.8 million for the three months ended March 31, 2020.2021. The $2$8.8 million, or 13% year-over-year47%, increase from the prior year period was primarily attributedattributable to increased employee compensation and an increase in indirect taxes. The overall increase was partially offset by a decrease in expenditures$5 million expense associated with in-person meetings and related expenses due to the COVID-19 pandemic.
40


a biosimilar regulatory approval.
Research and Development
Generics R&D expenses for the three months ended March 31, 20212022 was $36$43.2 million, an increase of 24%20% or $7$7.1 million compared to the three months ended March 31, 2020.2021.  The year-over-year increase from the prior year period was primarily associated with increased project spend oninflationary pressures and the costs associated with acquired businesses in 2021 of $3.0 million relating to complex generics and success-based milestone achievements on certain projects.generics.
Intellectual Property Legal Development Expenses
Intellectual property legal development expenses include, but are not limited to, costs associated with formulation assessments, patent challenge opinions and strategy, and litigation expenses to defend our intellectual property. Intellectual property legal development expenses for the three months ended March 31, 2022 and 2021 were $4$0.8 million as comparedand $3.6 million, respectively. The period-over-period decrease of $2.8 million was due to $1the timing of specific cases. Expenses may vary based on the number of individual cases and corresponding litigation outstanding in a particular period.

42


Charges Related to Legal Matters, Net
For the three months ended March 31, 2022, we recorded charges of $1.7 million for legal proceedings. (None for the three months ended March 31, 2020. The increase in expenses from the prior year relates to the number of individual cases and corresponding litigation.
Charges Related to Legal Matters, Net
There were no charges related to legal matters for the three months ended March 31, 2021. For the three months ended March 31, 2020, we recorded a net charge of $3 million for commercial legal claims.2021).
Specialty
The following table sets forth results of operations for our Specialty segment for the three months ended March 31, 20212022 and 20202021 (in thousands):
Three Months Ended
March 31,
Three Months Ended
March 31,
2021202020222021
Net revenueNet revenue$95,931 $87,977 Net revenue$85,086 $95,931 
Cost of goods soldCost of goods sold48,198 47,818 Cost of goods sold43,853 48,198 
Gross profitGross profit47,733 40,159 Gross profit41,233 47,733 
Selling, general and administrativeSelling, general and administrative19,881 20,942 Selling, general and administrative24,400 19,881 
Research and developmentResearch and development12,065 7,345 Research and development9,577 12,065 
Intellectual property legal development expensesIntellectual property legal development expenses— Intellectual property legal development expenses(8)— 
Charges related to legal matters, net— 2,000 
Change in fair value of contingent considerationChange in fair value of contingent consideration200 — 
Operating incomeOperating income$15,787 $9,867 Operating income$7,064 $15,787 
Net Revenue

Specialty net revenue for the three months ended March 31, 20212022 was $96$85.1 million, an increasea decrease of $8$10.8 million, or 9%11%, compared to the three months ended March 31, 20202021, driven by the loss of exclusivity of Zomig® nasal spray as well as a decline in our other non-promoted products. Our promoted products including Rytary® and Unithroid® declined 6% and increased 13%, respectively, due to the timing of shipments as prescription growth in demandremained strong for Rytary® and Unithroid®.both products.
Cost of Goods Sold and Gross Profit
Specialty cost of goods sold for of both the three months ended March 31, 2021 and 20202022 was $48 million.
$43.9 million as compared to $48.2 million for the three months ended March 31, 2021. Specialty gross profit for the three months ended March 31, 20212022 was $48$41.2 million (50%(48% of net revenue) as compared to gross profit of $40$47.7 million (46%(50% of net revenue) for the three months ended March 31, 2020.2021. The increasedecrease in gross profit primarily related to the mix ofdecrease in revenues, including the impact of non-promoted products. The increaseAdditionally, the decrease in gross margin was due to growth in higher margin products offsetting declines in Zomig® nasal spray, which has a higher cost structure than the overall Specialty portfolio.product mix.
Selling, General, and Administrative
Specialty SG&A expense was $20$24.4 million for the three months ended March 31, 2021, a decrease2022, an increase of $1$4.5 million or 5%23% compared to the three months ended March 31, 2020.2021. The decreaseincrease was primarily driven by a decline associated with in-person
41


meetings and marketing expenses due to the COVID-19 pandemic, which was partially offset by an increase in indirect taxesin-person sales and payroll-related expenses, including expenses associated with the expansion of our sales force.marketing efforts and increased compensation.
Research and Development
Specialty R&D expenses for the three months ended March 31, 20212022 were $12$9.6 million, as compared to $7$12.1 million for the three months ended March 31, 2020.2021. The $5$2.5 million increasedecrease from the prior year period was primarily dueattributable to licensinga decrease in in-licensing and upfront milestones incurred to grow our Specialty pipeline.
Charges Related to Legal Matters, Net
There were no charges related to legal matters formilestone payments of $5.0 million and a reduction in IPX-203 spend as the three months ended March 31, 2021. Forproject neared completion, partially offset by increased spend of $3.0 million associated with the three months ended March 31, 2020, Specialty recorded a charge of $2 million for commercial legal proceedings.KSP Acquisition.
AvKARE
The following table sets forth results of operations for our AvKARE segment for the three months ended March 31, 20212022 and 20202021 (in thousands):
Three Months Ended
March 31,
20212020
Net revenue$84,666 $57,970 
Cost of goods sold68,047 46,895 
Gross profit16,619 11,075 
Selling, general and administrative13,704 10,788 
Acquisition, transaction-related and integration expenses931 — 
Operating income$1,984 $287 
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Three Months Ended
March 31,
20222021
Net revenue$94,800 $84,666 
Cost of goods sold80,179 68,047 
Gross profit14,621 16,619 
Selling, general and administrative13,410 13,704 
Acquisition, transaction-related and integration expenses— 931 
Operating income$1,211 $1,984 
Net Revenue
We completed the acquisitions of the businesses that comprise our
AvKARE segment on on January 31, 2020. As a result, the increase in results of operationsnet revenue for the AvKARE segment are primarily due to three months ended March 31, 2022 was $94.8 million, an increase of activity in 2021$10.1 million, or 12%, as compared to twothe three months ended March 31, 2021, driven by growth in our distribution channel.
Cost of activityGoods Sold and Gross Profit
AvKARE cost of goods sold for the three months ended March 31, 2022 was $80.2 million as compared to $68.0 million for the three months ended March 31, 2021. AvKARE gross profit for the three months ended March 31, 2022 was $14.6 million (15% of net revenue) as compared to gross profit of $16.6 million (20% of net revenue) for the three months ended March 31, 2021. The decrease in 2020. Refergross profit percentage primarily related to Note 3. Acquisitionsan increase in sales through our lower margin distribution channel.
Selling, General, and Divestitures,Administrative
AvKARE SG&A expense was essentially flat period-over-period with $13.4 million of expense for additional information on the acquisitions.three months ended March 31, 2022 as compared to $13.7 million for the three months ended March 31, 2021.
Liquidity and Capital Resources
Our primary source of liquidity is cash generated from operations, available cash on hand and borrowings under debt financing arrangements, including $435$446.9 million of available capacity on our revolving credit facility as of March 31, 2021.2022. Refer to Note 17. Debt in our 20202021 Annual Report on Form 10-K for additional information. We believe these sources are sufficient to fund our planned operations, meet our interest and contractual obligations, including acquisitions, and provide sufficient liquidity over the next 12 months from the date of filing of this Form 10-Q. However, our ability to satisfy our working capital requirements and debt obligations will depend upon economic conditions, the impact of the COVID-19 pandemic, and demand for our products, which are factors that may be out of our control.
Our primary uses of capital resources are to fund operating activities, including research and development expenses associated with new product filings, and pharmaceutical product manufacturing expenses, license payments, spending on production facility expansions and capital equipment, items, and acquisitions. As the impact of the COVID-19 pandemic on the economy and our operations evolves, we will continue to assess our liquidity needs. A continued worldwide disruption could materially affect our future access to sources of liquidity, particularly our cash flows from operations, and financial condition. In the event of a sustained market deterioration, we may need additional liquidity, which would require us to evaluate available alternatives and take appropriate actions.
We estimate that we will invest approximately $60$75.0 million to $70$85.0 million during 20212022 for capital expenditures to support and grow our existing operations, primarily related to investments in manufacturing equipment, information technology and facilities. In addition, we closed on our acquisition of 98% of KSP on April 2, 2021. Under
Over the terms of the acquisition, we paid an upfront purchase price of $70 million with cash on hand at the closing andnext 12 months, we expect to make substantial payments, including a cash$10 million milestone payment of $30 million on January 11, 2022. Seeto Mabxience S.L. (refer to Note. 3 AcquisitionsNote 5. Alliance and DivestituresCollaboration), monthly interest and quarterly principal amounts due for additional information.
42


our debt instruments, including our Term Loan and Rondo Term Loan, as well as contractual payments for leased premises. Refer to Note 17. Debt and Note 12. Leasesin our 20202021 Annual Report on Form 10-K for detailed information, including definitions, of our loans.  We will make substantial payments for monthly interest and quarterly principal amounts due on our Term Loan and Rondo Term Loan. Related to our Term Loan, we were required to calculate the amount of excess cash flows based on our results for the year ended December 31, 2020. As a result, we made a payment of $14 million in March 2021 to satisfy the excess cash flow requirements, in addition to our normal principal payments. Accordingly, we expect to make $41 million in principal payments and make interest payment payments totaling $112 million during 2021 related to our Term Loan. Related to our Rondo Term Loan, we expect to make $9 million in principal payments and make interest payments totaling $6 million during 2021. Additionally, we fully repaid the Short-Term Sellers Note of $1 million during February 2021.information.
We are party to a tax receivable agreement ("TRA"(“TRA”) that requires us to make cash payments to APHC Holdings LLC (formerly known as Amneal Holdings LLC) ("Holdings")the Members other than the Company, in respect of certain tax benefits that we may realize or may be deemed to realize as a result of sales or exchanges of Amneal common unitsCommon Units by Holdings.the Members (refer to Note 1. Nature of Operations). The timing and amount of any payments under the TRA will also vary, depending upon a number of factors including the timing and number of Amneal common unitsCommon Units sold or exchanged for our class A Common Stock,common stock, the price of our class A Common Stockcommon stock on the date of sale or exchange, the timing
44


and amount of our taxable income, and the tax rate in effect at the time of realization of our taxable income. The tax receivable agreement also requires that we make an accelerated payment to Holdingsthe Members equal to the present value of all future payments due under the agreement upon certain change of control and similar transactions. Further sales or exchanges occurring subsequent to March 31, 20212022 could result in future Amneal tax deductions and obligations to pay 85% of such benefits to the holders of Amneal common units.Common Units. These obligations could be incremental to and substantially larger than the approximate $206$206.3 million contingent liability as of March 31, 20212022 (refer to Note 8.7. Income Taxes). As a result of the foregoing, our obligations under the tax receivable agreement could have a substantial negative impact on our liquidity. For further details, refer to Item 1A. Risk Factors and Note 8. Income Taxesin our 20202021 Annual Report on Form 10-K.
In addition, pursuant to the limited liability operating agreement of Amneal, as amended, in connection with any tax period, we will be required to make distributions to Amneal's members, on a pro rata basis in proportion to the number of Amneal Common Units held by each member, of cash until each member (other than Amneal) has received an amount at least equal to its assumed tax liability and Amneal has received an amount sufficient to enable it to timely satisfy all of its U.S. federal, state and local and non-U.S. tax liabilities, and meet its obligations pursuant to the tax receivable agreement. We did not make any tax cash distributions duringTRA. During the three months ended March 31, 2021. During April2022 and March 31, 2021, we made a tax distributiondistributions of $9 $4.4 million (net) and $9.2 million, respectively, to Amneal's members.the Members.
AtAs of March 31, 2021,2022, our cash and cash equivalents consist of cash on deposit and highly liquid investments. A portion of our cash flows are derived outside the United States. As a result, we are subject to market risk associated with changes in foreign exchange rates. We maintain cash balances at both U.S. based and foreign country based commercial banks. At various times during the year, our cash balances held in the United States may exceed amounts that are insured by the Federal Deposit Insurance Corporation (FDIC). We make our investments in accordance with our investment policy. The primary objectives of our investment policy are liquidity and safety of principal.
Cash Flows
(in thousands)
Three Months Ended
March 31,
Three Months Ended
March 31,
2021202020222021
Cash provided by (used in):Cash provided by (used in):Cash provided by (used in):
Operating activitiesOperating activities$148,128 $49,026 Operating activities$120,343 $148,128 
Investing activitiesInvesting activities(12,693)(262,042)Investing activities(97,395)(12,693)
Financing activitiesFinancing activities(26,149)467,979 Financing activities(61,570)(26,149)
Effect of exchange rate changes on cashEffect of exchange rate changes on cash(593)(860)Effect of exchange rate changes on cash(1,572)(593)
Net increase in cash, cash equivalents, and restricted cash$108,693 $254,103 
Net (decrease) increase in cash, cash equivalents, and restricted cashNet (decrease) increase in cash, cash equivalents, and restricted cash$(40,194)$108,693 
Cash Flows from Operating Activities

Net cash provided by operating activities was $148$120.3 million for the three months ended March 31, 20212022 as compared to $49$148.1 million for the three months ended March 31, 2020.2021.  The improvement overdecrease in operating cash flows was primarily driven by net income in the prior year was primarily attributedperiod as compared to favorable cash collections on trade accounts receivable and a favorable impact from prepaid expenses and othernet loss in the current assets, partially offset by an unfavorable impact from payments of accounts payable and accrued expenses, and inventories.
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period.
Cash Flows from Investing Activities
Net cash used in investing activities for the three months ended March 31, 20212022 was $13$97.4 million as compared to $262$12.7 million in the prior year. The change in cash used in investing activities for the three months endedended March 31, 2021 compared to the three months ended March 31, 20202021. The period-over-period increase of $84.7 million in net cash used was primarily relateddue to payments madecash paid for the acquisitions of the businesses comprising our AvKARE segment in the prior year, which was partially offset by an increase in cash payments for purchases of property, plant and equipment. Refer to Note 3. Acquisitions and Divestitures, for additional information on the acquisitions.Saol Acquisition.
Cash Flows from Financing Activities
Net cash used in financing activities was $26$61.6 million for the three months ended March 31, 20212022 as compared to net cash provided byused in financing activities of $468$26.1 million for the three months ended March 31, 2020.2021. The changeperiod-over-period increase of $35.4 million in net cash used was primarily attributable to a $300 million borrowing on our Revolving Credit Facility to mitigate the uncertainty surrounding overall market liquidity due to the COVID-19 pandemic and net proceeds from a $180$44.0 million term loanpaid for deferred consideration associated with the acquisitionsKSP Acquisition and the Puniska Acquisition (refer to Note 3. Acquisitions), net of the businesses comprising our AvKARE segment, botha decrease in debt payments of $14.0 million related to an excess cash flow payment made in the prior year which were partially offset by an increase in principal payments related to debt and financing leases. Refer to Note 3. Acquisitions and Divestitures, for additional informationperiod on the acquisitions. Refer to Note 17. Debt in our 2020 Annual Report on Form 10-K for detailed information about our indebtedness, including definitions of terms.Term Loan.
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Commitments and Contractual Obligations
The contractual obligations of the Company are set forth in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Company’s 20202021 Annual Report on Form 10-K. Other than the contractual obligations noted below,As of March 31, 2022, there have been no material changes to the disclosure presented in our 20202021 Annual Report on Form 10-K.
 Payments Due by Period
Contractual ObligationsTotalLess
Than 1
Year
1-3
Years
3-5
Years
More
Than 5
Years
Kashiv Specialty Pharmaceuticals, LLC acquisition$100,000 $70,000 $30,000 $— $— 
Refer to Note 3. Acquisitions and Divestitures for additional information.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of March 31, 2021.2022.
Critical Accounting Policies and Estimates
For a discussion of the Company’s critical accounting policies and estimates, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 20202021 Annual Report on Form 10-K. There have been no material changes to the disclosures presented in our 20202021 Annual Report on Form 10-K.
Recently Issued Accounting Standards
Recently issued accounting standards are discussed in Note 2. Summary of Significant Accounting Policies.
Item 3.    Quantitative and Qualitative Disclosures About Market Risk
There has not been any material change in our assessment of market risk as set forth in Item 7A. Quantitative and Qualitative Disclosures About Market Risk, in our 20202021 Annual Report on Form 10-K. 
Item 4.    Controls and Procedures
Disclosure Controls and Procedures
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We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"“Exchange Act”)) that are designed to ensure information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Co-Chief Executive Officers and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management, with the participation of our Co-Chief Executive Officers and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our Co-Chief Executive Officers and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2021.2022.

Changes in Internal Control over Financial Reporting

During the quarterthree months ended March 31, 2021,2022, there were no changes in our internal control over financial reporting which materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Limitations on the Effectiveness of Controls

Management, including our Co-Chief Executive Officers and Chief Financial Officer, does not expect that our disclosure controls and procedures or our system of internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed or operated, can provide only reasonable, but not absolute, assurance that the objectives of the system of internal control are met. The design of our control system reflects the fact that there are resource constraints, and that the benefits of such control system must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control failures and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the intentional acts of individuals, by collusion of two or more people, or by management override of the controls. The design of any system of controls is also based in part on certain assumptions about the likelihood of future events, and there can be no assurance that the design of any particular control will always succeed in achieving its objective under all potential future conditions.

Part II – OTHER INFORMATION
Item 1.    Legal Proceedings
Information pertaining to legal proceedings can be found in Note 14.13. Commitments and Contingencies and is incorporated by reference herein.
Item 1A.    Risk Factors
There have been no material changes to the disclosures presented in our 20202021 Annual Report on Form 10-K under Item 1A. Risk Factors.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3.    Defaults Upon Senior Securities
None.
Item 4.    Mine Safety Disclosures
Not applicable.
Item 5.    Other Information
None.
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Item 6.    Exhibits
Exhibit No.Description of Document
101The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 20212022 formatted in inlineInline XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for each of the three months ended March 31, 20212022 and 2020,2021, (ii) Consolidated Statements of Comprehensive Income for each of the three months ended March 31, 20212022 and 2020,2021, (iii) Consolidated Balance Sheets as of March 31, 20212022 and December 31, 2020,2021, (iv) Consolidated Statements of Cash Flows for the threenine months ended March 31, 20212022 and 2020,2021, (v) Consolidated Statements of Changes in Stockholders' Equity for each of the three months ended March 31, 20212022 and 20202021 and (vi) Notes to Consolidated Financial Statements.*
104
Cover Page Interactive Data File – The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 20212022 is formatted in Inline XBRL (included as Exhibit 101).
*Filed herewith
**This certificate is being furnished solely to accompany the report pursuant to 18 U.S.C. 1350 and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Denotes management compensatory plan or arrangement.
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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.
Date: May 7, 20216, 2022Amneal Pharmaceuticals, Inc.
(Registrant)
By:/s/ Anastasios Konidaris
Anastasios Konidaris
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
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