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 ~~September 30, 2021~~March 31, 2022


☐			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)


Delaware			32-0546926
(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 class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.01 per share	AMRX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of ~~October 29, 2021,~~April 25, 2022, there were ~~149,371,355~~150,807,252 shares of Class A common stock outstanding and 152,116,890 shares of Class B common stock outstanding, both with a par value of $0.01.

Amneal Pharmaceuticals, Inc.

Table of Contents


Cautionary Note Regarding Forward-Looking Statements			2

PART I - FINANCIAL INFORMATION
	Item 1.	Financial Statements (Unaudited)	4
		Consolidated Statements of Operations	4
		Consolidated Statements of Comprehensive ~~(Loss)~~ Income	5
		Consolidated Balance Sheets	6
		Consolidated Statements of Cash Flows	7
		Consolidated Statements of Changes in Stockholders' Equity	8
		Notes to Consolidated Financial Statements	109
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4438
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5646
	Item 4.	Controls and Procedures	5646

PART II - OTHER INFORMATION
	Item 1.	Legal Proceedings	5747
	Item 1A.	Risk Factors	5747
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5747
	Item 3.	Defaults Upon Senior Securities	5747
	Item 4.	Mine Safety Disclosures	5747
	Item 5.	Other Information	5747
	Item 6.	Exhibits	5848

Signatures			5949

Cautionary Note Regarding Forward-Looking Statements

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

Because forward-looking statements are based on current beliefs, expectations and assumptions regarding future events, they are subject to uncertainties, risks and changes that are difficult to predict and many of which are outside of ~~the Company's~~our 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’s~~our actual results and financial condition could vary materially from expectations and projections expressed or implied in ~~its~~our forward-looking statements. Investors are therefore cautioned not to rely on these forward-looking statements.

Summary of Material Risks

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

•~~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 ~~FDA~~Food 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;

•~~the impact of severe weather;~~our obligations under a tax receivable agreement may be significant;

•the high concentration of ownership of our Class A ~~Common Stock~~common stock and the fact that we are controlled by ~~the~~a group of stockholders, together with their affiliates and certain assignees, who owned Amneal ~~Group;~~Pharmaceuticals, LLC when it was a private company; and

•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.

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.

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 September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Net revenue	Net revenue	$	528,593	$	519,294	$	1,556,773	$	1,482,489	Net revenue	$	497,633	$	493,105
Cost of goods sold	Cost of goods sold	329,394		353,345		953,514		986,589		Cost of goods sold	323,062		301,543
Cost of goods sold impairment charges		688		32,364		688		34,579
Gross profit	Gross profit	198,511		133,585		602,571		461,321		Gross profit	174,571		191,562
Selling, general and administrative	Selling, general and administrative	91,397		83,120		268,280		242,040		Selling, general and administrative	98,665		90,726
Research and development	Research and development	48,927		44,519		149,973		126,470		Research and development	52,798		48,182
In-process research and development impairment charges		—		—		710		960
Intellectual property legal development expenses	Intellectual property legal development expenses	1,627		2,134		6,574		6,954		Intellectual property legal development expenses	764		3,582
Acquisition, transaction-related and integration expenses	Acquisition, transaction-related and integration expenses	134		1,041		7,219		5,403		Acquisition, transaction-related and integration expenses	434		2,802
Charges related to legal matters, net		19,000		60		19,000		5,860
Credit related to legal matters, net										Credit related to legal matters, net	(2,326)		—
Restructuring and other charges	Restructuring and other charges	425		276		788		2,657		Restructuring and other charges	731		363
Change in fair value of contingent consideration	Change in fair value of contingent consideration	300		—		300		—		Change in fair value of contingent consideration	200		—
Property losses and associated expenses		8,186		—		8,186		—
Operating income	Operating income	28,515		2,435		141,541		70,977		Operating income	23,305		45,907
Other (expense) income:	Other (expense) income:									Other (expense) income:
Interest expense, net	Interest expense, net	(34,400)		(34,895)		(102,368)		(111,463)		Interest expense, net	(33,335)		(33,885)
Foreign exchange (loss) gain, net	Foreign exchange (loss) gain, net	(29)		9,673		(185)		7,958		Foreign exchange (loss) gain, net	(2,013)		2,088
Gain on sale of international businesses, net		—		—		—		123
Other income, net	Other income, net	3,871		898		8,697		2,102		Other income, net	2,122		794
Total other expense, net	Total other expense, net	(30,558)		(24,324)		(93,856)		(101,280)		Total other expense, net	(33,226)		(31,003)
(Loss) income before income taxes	(Loss) income before income taxes	(2,043)		(21,889)		47,685		(30,303)		(Loss) income before income taxes	(9,921)		14,904
Provision for (benefit from) income taxes		4,049		144		7,056		(105,843)
(Benefit from) provision for income taxes										(Benefit from) provision for income taxes	(3,461)		359
Net (loss) income	Net (loss) income	(6,092)		(22,033)		40,629		75,540		Net (loss) income	(6,460)		14,545
Less: Net loss (income) attributable to non-controlling interests	Less: Net loss (income) attributable to non-controlling interests	1,855		13,058		(23,628)		18,556		Less: Net loss (income) attributable to non-controlling interests	4,742		(7,839)
Net (loss) income attributable to Amneal Pharmaceuticals, Inc. before accretion of redeemable non-controlling interest										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										Accretion of redeemable non-controlling interest	(438)		—
Net (loss) income attributable to Amneal Pharmaceuticals, Inc.	Net (loss) income attributable to Amneal Pharmaceuticals, Inc.	$	(4,237)	$	(8,975)	$	17,001	$	94,096	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:									Net (loss) income per share attributable to Amneal Pharmaceuticals, Inc.'s class A common stockholders:
Basic	Basic	$	(0.03)	$	(0.06)	$	0.11	$	0.64	Basic	$	(0.01)	$	0.05
Diluted	Diluted	$	(0.03)	$	(0.06)	$	0.11	$	0.63	Diluted	$	(0.01)	$	0.04
Weighted-average common shares outstanding:	Weighted-average common shares outstanding:									Weighted-average common shares outstanding:
Basic	Basic	149,290		147,558		148,771		147,377		Basic	149,892		148,013
Diluted	Diluted	149,290		147,558		151,655		148,622		Diluted	149,892		151,220

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

Amneal Pharmaceuticals, Inc.

Consolidated Statements of Comprehensive ~~(Loss)~~ Income

(unaudited; in thousands)

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Net (loss) income $ (6,092) $ (22,033) $ 40,629 $ 75,540
Less: Net loss (income) attributable to non-controlling interests 1,855 13,058 (23,628) 18,556
Net (loss) income attributable to Amneal Pharmaceuticals, Inc. (4,237) (8,975) 17,001 94,096
Other comprehensive income (loss):
Foreign currency translation adjustments arising during the period (1,164) (1,646) (7,348) (9,748)
Unrealized gain (loss) on cash flow hedge, net of tax 2,711 (1,599) 24,187 (74,031)
Less: Other comprehensive (income) loss attributable to non-controlling interests (781) 1,648 (8,531) 42,575
Other comprehensive income (loss) attributable to Amneal Pharmaceuticals, Inc. 766 (1,597) 8,308 (41,204)
Comprehensive (loss) income attributable to Amneal Pharmaceuticals, Inc. $ (3,471) $ (10,572) $ 25,309 $ 52,892


	Three Months Ended March 31,
	2022		2021
Net (loss) income	$	(6,460)	$	14,545
Less: Net loss (income) attributable to non-controlling interests	4,742		(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 tax	53,624		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.

Amneal Pharmaceuticals, Inc.

Consolidated Balance Sheets

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


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	302,655	$	341,378	Cash and cash equivalents	$	210,477	$	247,790
Restricted cash	Restricted cash	7,964		5,743		Restricted cash	6,068		8,949
Trade accounts receivable, net	Trade accounts receivable, net	627,954		638,895		Trade accounts receivable, net	538,309		662,583
Inventories	Inventories	520,245		490,649		Inventories	512,241		489,389
Prepaid expenses and other current assets	Prepaid expenses and other current assets	110,212		73,467		Prepaid expenses and other current assets	121,408		110,218
Related party receivables	Related party receivables	1,307		1,407		Related party receivables	1,175		1,179
Total current assets	Total current assets	1,570,337		1,551,539		Total current assets	1,389,678		1,520,108
Property, plant and equipment, net	Property, plant and equipment, net	459,651		477,754		Property, plant and equipment, net	500,911		514,158
Goodwill	Goodwill	566,406		522,814		Goodwill	602,893		593,017
Intangible assets, net	Intangible assets, net	1,232,727		1,304,626		Intangible assets, net	1,209,818		1,166,922
Operating lease right-of-use assets	Operating lease right-of-use assets	38,993		33,947		Operating lease right-of-use assets	37,675		39,899
Operating lease right-of-use assets - related party	Operating lease right-of-use assets - related party	21,085		24,792		Operating lease right-of-use assets - related party	19,846		20,471
Financing lease right-of-use assets	Financing lease right-of-use assets	65,682		9,541		Financing lease right-of-use assets	64,204		64,475
Financing lease right-of-use assets - related party		—		58,676
Other assets	Other assets	19,528		22,344		Other assets	63,943		20,614
Total assets	Total assets	$	3,974,409	$	4,006,033	Total assets	$	3,888,968	$	3,939,664
Liabilities and Stockholders' Equity	Liabilities and Stockholders' Equity					Liabilities and Stockholders' Equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable and accrued expenses	Accounts payable and accrued expenses	$	589,412	$	611,867	Accounts payable and accrued expenses	$	539,734	$	583,345
Current portion of long-term debt, net	Current portion of long-term debt, net	30,471		44,228		Current portion of long-term debt, net	30,523		30,614
Current portion of operating lease liabilities	Current portion of operating lease liabilities	9,180		6,474		Current portion of operating lease liabilities	9,901		9,686
Current portion of operating and financing lease liabilities - related party	Current portion of operating and financing lease liabilities - related party	2,580		3,978		Current portion of operating and financing lease liabilities - related party	2,692		2,636
Current portion of financing lease liabilities	Current portion of financing lease liabilities	3,218		1,794		Current portion of financing lease liabilities	3,233		3,101
Current portion of note payable - related party		—		1,000
Related party payable - short term		32,474		7,561
Related party payables - short term						Related party payables - short term	15,960		47,861
Total current liabilities	Total current liabilities	667,335		676,902		Total current liabilities	602,043		677,243
Long-term debt, net	Long-term debt, net	2,687,668		2,735,264		Long-term debt, net	2,672,661		2,680,053
Note payable - related party	Note payable - related party	37,629		36,440		Note payable - related party	38,443		38,038
Operating lease liabilities	Operating lease liabilities	32,562		30,182		Operating lease liabilities	30,378		32,894
Operating lease liabilities - related party	Operating lease liabilities - related party	19,462		23,049		Operating lease liabilities - related party	18,093		18,783
Financing lease liabilities	Financing lease liabilities	60,966		2,318		Financing lease liabilities	60,286		60,251
Financing lease liabilities - related party		—		60,193
Related party payable - long term		9,566		1,584
Related party payables - long term						Related party payables - long term	10,371		9,619
Other long-term liabilities	Other long-term liabilities	60,795		83,365		Other long-term liabilities	32,866		38,903
Total long-term liabilities	Total long-term liabilities	2,908,648		2,972,395		Total long-term liabilities	2,863,098		2,878,541
Commitments and contingencies (Notes 5 and 13)	Commitments and contingencies (Notes 5 and 13)	0		0		Commitments and contingencies (Notes 5 and 13)	0		0
Redeemable non-controlling interests	Redeemable non-controlling interests	15,260		11,804		Redeemable non-controlling interests	16,420		16,907
Stockholders' Equity	Stockholders' Equity					Stockholders' Equity
Preferred stock, $0.01 par value, 2,000 shares authorized; none issued at both September 30, 2021 and December 31, 2020		—		—
Class A common stock, $0.01 par value, 900,000 shares authorized at both September 30, 2021 and December 31, 2020; 149,332 and 147,674 shares issued at September 30, 2021 and December 31, 2020, respectively		1,492		1,475
Class B common stock, $0.01 par value, 300,000 shares authorized at both September 30, 2021 and December 31, 2020; 152,117 shares issued at both September 30, 2021 and December 31, 2020		1,522		1,522
Preferred stock, $0.01 par value, 2,000 shares authorized, none issued at both March 31, 2022 and December 31, 2021						Preferred stock, $0.01 par value, 2,000 shares authorized, none issued at both March 31, 2022 and December 31, 2021	—		—
Class A common stock, $0.01 par value, 900,000 shares authorized at both March 31, 2022 and December 31, 2021; 150,775 and 149,413 shares issued at March 31, 2022 and December 31, 2021, respectively						Class A common stock, $0.01 par value, 900,000 shares authorized at both March 31, 2022 and December 31, 2021; 150,775 and 149,413 shares issued at March 31, 2022 and December 31, 2021, respectively	1,506		1,492
Class B common stock, $0.01 par value, 300,000 shares authorized at March 31, 2022 and December 31, 2021; 152,117 shares issued at both March 31, 2022 and December 31, 2021						Class B common stock, $0.01 par value, 300,000 shares authorized at March 31, 2022 and December 31, 2021; 152,117 shares issued at both March 31, 2022 and December 31, 2021	1,522		1,522
Additional paid-in capital	Additional paid-in capital	650,539		628,413		Additional paid-in capital	666,799		658,350
Stockholders' accumulated deficit	Stockholders' accumulated deficit	(269,820)		(286,821)		Stockholders' accumulated deficit	(278,353)		(276,197)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(33,227)		(41,318)		Accumulated other comprehensive loss	(349)		(24,827)
Total Amneal Pharmaceuticals, Inc. stockholders' equity	Total Amneal Pharmaceuticals, Inc. stockholders' equity	350,506		303,271		Total Amneal Pharmaceuticals, Inc. stockholders' equity	391,125		360,340
Non-controlling interests	Non-controlling interests	32,660		41,661		Non-controlling interests	16,282		6,633
Total stockholders' equity	Total stockholders' equity	383,166		344,932		Total stockholders' equity	407,407		366,973
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	3,974,409	$	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.

Amneal Pharmaceuticals, Inc.

Consolidated Statements of Cash Flows

(unaudited; in thousands)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income		$	40,629	$	75,540
Adjustments to reconcile net income to net cash provided by operating activities:
Net (loss) income						Net (loss) income	$	(6,460)	$	14,545
Adjustments to reconcile net (loss) income to net cash provided by operating activities:						Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	172,223		175,514		Depreciation and amortization	57,815		55,549
Unrealized foreign currency loss		(94)		(7,779)
Unrealized foreign currency loss (gain)						Unrealized foreign currency loss (gain)	3,140		(1,970)
Amortization of debt issuance costs and discount	Amortization of debt issuance costs and discount	6,873		6,449		Amortization of debt issuance costs and discount	2,195		2,183
Gain on sale of international businesses, net		—		(123)
Intangible asset impairment charges		1,398		35,539
Asset-related credit		—		(536)
Change in fair value of contingent consideration		300		—
Stock-based compensation	Stock-based compensation	20,670		15,617		Stock-based compensation	8,065		5,330
Inventory provision	Inventory provision	39,290		56,198		Inventory provision	3,578		16,021
Non-cash property losses		5,152		—
Change in fair value of contingent consideration						Change in fair value of contingent consideration	200		—
Other operating charges and credits, net	Other operating charges and credits, net	3,965		6,248		Other operating charges and credits, net	1,155		1,431
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Trade accounts receivable, net	Trade accounts receivable, net	10,894		(50,748)		Trade accounts receivable, net	124,268		108,385
Inventories	Inventories	(65,643)		(80,722)		Inventories	(25,549)		(20,283)

Prepaid expenses, other current assets and other assets	Prepaid expenses, other current assets and other assets	(27,493)		17,638		Prepaid expenses, other current assets and other assets	(4,423)		602
Related party receivables	Related party receivables	7,201		870		Related party receivables	4		301
Accounts payable, accrued expenses and other liabilities	Accounts payable, accrued expenses and other liabilities	(32,819)		21,737		Accounts payable, accrued expenses and other liabilities	(48,777)		(37,226)
Related party payables	Related party payables	(3,987)		1,601		Related party payables	5,132		3,260
Net cash provided by operating activities	Net cash provided by operating activities	178,559		273,043		Net cash provided by operating activities	120,343		148,128
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(30,230)		(26,912)		Purchases of property, plant and equipment	(10,793)		(11,776)
Deposits for future acquisition of property, plant, and equipment	Deposits for future acquisition of property, plant, and equipment	(2,655)		(4,229)		Deposits for future acquisition of property, plant, and equipment	(1,888)		(917)
Acquisition of intangible assets		(500)		(3,250)
Acquisitions, net of cash acquired		(73,828)		(251,360)

Acquisition of business						Acquisition of business	(84,714)		—
Net cash used in investing activities	Net cash used in investing activities	(107,213)		(285,751)		Net cash used in investing activities	(97,395)		(12,693)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from issuance of debt		—		180,000
Payments of principal on debt, financing leases and other	Payments of principal on debt, financing leases and other	(68,240)		(26,500)		Payments of principal on debt, financing leases and other	(9,796)		(23,630)

Payments of deferred financing costs		—		(4,102)
Proceeds from exercise of stock options	Proceeds from exercise of stock options	834		216		Proceeds from exercise of stock options	111		676
Employee payroll tax withholding on restricted stock unit vesting	Employee payroll tax withholding on restricted stock unit vesting	(2,595)		(795)		Employee payroll tax withholding on restricted stock unit vesting	(3,001)		(2,102)
Tax distributions to non-controlling interests	Tax distributions to non-controlling interests	(36,678)		(1,628)		Tax distributions to non-controlling interests	(3,164)		—
Distribution of earnings to and acquisition of non-controlling interests		—		(3,300)
Acquisition of redeemable non-controlling interest						Acquisition of redeemable non-controlling interest	(1,722)		—
Payments of deferred consideration for acquisitions - related party						Payments of deferred consideration for acquisitions - related party	(43,998)		—
Payments of principal on financing lease - related party	Payments of principal on financing lease - related party	(93)		(802)		Payments of principal on financing lease - related party	—		(93)
Repayment of related party note	Repayment of related party note	(1,000)		—		Repayment of related party note	—		(1,000)
Net cash (used in) provided by financing activities		(107,772)		143,089
Net cash used in financing activities						Net cash used in financing activities	(61,570)		(26,149)
Effect of foreign exchange rate on cash	Effect of foreign exchange rate on cash	(76)		447		Effect of foreign exchange rate on cash	(1,572)		(593)
Net (decrease) increase in cash, cash equivalents, and restricted cash	Net (decrease) increase in cash, cash equivalents, and restricted cash	(36,502)		130,828		Net (decrease) increase in cash, cash equivalents, and restricted cash	(40,194)		108,693
Cash, cash equivalents, and restricted cash - beginning of period	Cash, cash equivalents, and restricted cash - beginning of period	347,121		152,822		Cash, cash equivalents, and restricted cash - beginning of period	256,739		347,121
Cash, cash equivalents, and restricted cash - end of period	Cash, cash equivalents, and restricted cash - end of period	$	310,619	$	283,650	Cash, cash equivalents, and restricted cash - end of period	$	216,545	$	455,814
Cash and cash equivalents - end of period	Cash and cash equivalents - end of period	$	302,655	$	281,278	Cash and cash equivalents - end of period	$	210,477	$	452,097
Restricted cash - end of period	Restricted cash - end of period	7,964		2,372		Restricted cash - end of period	6,068		3,717
Cash, cash equivalents, and restricted cash - end of period	Cash, cash equivalents, and restricted cash - end of period	$	310,619	$	283,650	Cash, cash equivalents, and restricted cash - end of period	$	216,545	$	455,814
Supplemental disclosure of cash flow information:	Supplemental disclosure of cash flow information:					Supplemental disclosure of cash flow information:
Cash paid for interest	Cash paid for interest	$	91,678	$	99,207	Cash paid for interest	$	27,289	$	29,917
Cash (paid) received for income taxes, net		$	(11,583)	$	109,444
Cash paid for income taxes, net						Cash paid for income taxes, net	$	4,387	$	733
Supplemental disclosure of non-cash investing and financing activity:	Supplemental disclosure of non-cash investing and financing activity:					Supplemental disclosure of non-cash investing and financing activity:
Notes payable for acquisitions - related party		$	—	$	36,033

Deferred consideration for acquisition - related party		$	30,099	$	—
Contingent consideration for acquisition - related party		$	6,100	$	—
Payments for restricted stock unit tax vesting		$	9	$	6
Payable for acquisition of product rights and licenses		$	1,500	$	—
Tax distributions to non-controlling interests						Tax distributions to non-controlling interests	$	3,284	$	9,757
Contingent consideration for acquisition						Contingent consideration for acquisition	$	8,796	$	—

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

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 Equity				Redeemable Non-Controlling Interests				Class A Common Stock						Class B Common Stock			Additional Paid-in Capital				Stockholders' Accumulated Deficit				Accumulated Other Comprehensive Loss				Non- Controlling Interests				Total Equity				Redeemable Non-Controlling Interests
		Shares	Amount		Shares	Amount												Shares								Amount			Shares			Amount
Balance at July 1, 2021		149,209	$	1,490	152,117	$	1,522			$	642,657			$	(265,583)	$	(33,979)				$	44,165			$	390,272		$	14,112
Balance at January 1, 2022																										Balance at January 1, 2022	149,413			$	1,492		152,117	$	1,522			$	658,350			$	(276,197)			$	(24,827)			$	6,633			$	366,973			$	16,907
Net (loss) income	Net (loss) income	—	—		—	—		—				(4,237)		—		(3,546)			(7,783)				1,691			Net (loss) income	—			—			—	—		—				(1,718)				—				(7,099)				(8,817)				2,357
Foreign currency translation adjustment		—	—		—	—		—				—		(577)		(587)			(1,164)				—
Foreign currency translation adjustments																										Foreign currency translation adjustments	—			—			—	—		—				—				(2,024)				(2,055)				(4,079)				—
Stock-based compensation	Stock-based compensation	—	—		—	—		7,708				—		—		—			7,708				—			Stock-based compensation	—			—			—	—		8,065				—				—				—				8,065				—
Exercise of stock options	Exercise of stock options	53	1		—	—		149				—		(6)		9			153				—			Exercise of stock options	7			—			—	—		65				—				—				46				111				—
Restricted stock unit vesting, net of shares withheld to cover payroll taxes	Restricted stock unit vesting, net of shares withheld to cover payroll taxes	70	1		—	—		25				—		(8)		(165)			(147)				—			Restricted stock unit vesting, net of shares withheld to cover payroll taxes	1,355			14			—	—		319				—				(112)				(3,365)				(3,144)				—
Unrealized gain on cash flow hedge, net of tax	Unrealized gain on cash flow hedge, net of tax	—	—		—	—		—				—		1,343		1,368			2,711				—			Unrealized gain on cash flow hedge, net of tax	—			—			—	—		—				—				26,614				27,010				53,624				—
Tax distributions		—	—		—	—		—				—		—		(8,584)			(8,584)				(543)

Balance at September 30, 2021		149,332	$	1,492	152,117	$	1,522	$	650,539			$	(269,820)	$	(33,227)	$	32,660		$	383,166			$	15,260
Tax distributions, net																										Tax distributions, net	—			—			—	—		—				—				—				(4,443)				(4,443)				(2,005)
Reclassification of redeemable non-controlling interest																										Reclassification of redeemable non-controlling interest	—			—			—	—		—				(438)				—				(445)				(883)				883
Acquisition of redeemable non-controlling interest																										Acquisition of redeemable non-controlling interest	—			—			—	—		—				—				—				—				—				(1,722)
Balance at March 31, 2022																										Balance at March 31, 2022	150,775			$	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 Equity				Redeemable Non-Controlling Interests				Class A Common Stock							Class B Common Stock						Additional Paid-in Capital					Stockholders' Accumulated Deficit					Accumulated Other Comprehensive Loss					Non- Controlling Interests					Total Equity					Redeemable Non-Controlling Interests
		Shares	Amount		Shares	Amount												Shares								Amount			Shares				Amount
Balance at January 1, 2021	Balance at January 1, 2021	147,674	$	1,475	152,117	$	1,522			$	628,413			$	(286,821)	$	(41,318)				$	41,661			$	344,932		$	11,804	Balance at January 1, 2021		147,674			$	1,475			152,117				$	1,522				$	628,413				$	(286,821)				$	(41,318)				$	41,661				$	344,932	$	11,804
Net income	Net income	—	—		—	—		—				17,001		—		17,958			34,959				5,670			Net income	—			—				—			—					—					6,706					—					6,043					12,749					1,796
Foreign currency translation adjustment		—	—		—	—		—				—		(3,626)		(3,722)			(7,348)				—
Foreign currency translation adjustments																										Foreign currency translation adjustments	—			—				—			—			—					—					(3,139)					(3,227)					(6,366)					—
Stock-based compensation	Stock-based compensation	—	—		—	—		20,670				—		—		—			20,670				—			Stock-based compensation	—			—				—			—			5,330					—					—					—					5,330					—
Exercise of stock options	Exercise of stock options	302	3		—	—		835				—		(40)		36			834				—			Exercise of stock options	244			2				—			—			677					—					(34)					31					676					—
Restricted stock unit vesting, net of shares withheld to cover payroll taxes	Restricted stock unit vesting, net of shares withheld to cover payroll taxes	1,356	14		—	—		621				—		(177)		(3,062)			(2,604)				—			Restricted stock unit vesting, net of shares withheld to cover payroll taxes	797			8				—			—			64					—					(113)					(2,108)					(2,149)					—
Unrealized gain on cash flow hedge, net of tax	Unrealized gain on cash flow hedge, net of tax	—	—		—	—		—				—		11,934		12,253			24,187				—			Unrealized gain on cash flow hedge, net of tax	—			—				—			—			—					—					10,243					10,529					20,772					—
Tax distributions	Tax distributions	—	—		—	—		—				—		—		(34,464)			(34,464)				(2,214)			Tax distributions	—			—				—			—			—					—					—					(9,236)					(9,236)					(521)
Non-controlling interests from the KSP Acquisition		—	—		—	—		—				—		—		2,000			2,000				—
Balance at September 30, 2021		149,332	$	1,492	152,117	$	1,522	$	650,539			$	(269,820)	$	(33,227)	$	32,660		$	383,166			$	15,260
Balance at March 31, 2021																										Balance at March 31, 2021	148,715			$	1,485			152,117			$	1,522		$	634,484				$	(280,115)				$	(34,361)				$	43,693				$	366,708				$	13,079

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

~~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 Equity Redeemable Non-Controlling Interests
Shares Amount Shares Amount
Balance at July 1, 2020 147,493 $ 1,474 152,117 $ 1,522 $ 617,504 $ (274,809) $ (39,696) $ 65,021 $ 371,016 $ 12,380
Net loss — — — — — (8,975) — (12,665) (21,640) (393)
Foreign currency translation
      adjustment — — — — — — (810) (836) (1,646) —
Stock-based compensation — — — — 5,415 — — — 5,415 —
Exercise of stock options 21 — — — 59 — (3) 2 58 —
Restricted stock unit vesting,
     net of shares withheld to
     cover payroll taxes 73 1 — — 49 — (10) (148) (108) —
Unrealized loss on cash flow
     hedge, net of tax — — — — — — (787) (812) (1,599) —
Tax distribution — — — — — — — — — (55)
Distribution of earnings to and acquisition of non-controlling interests — — — — 106 — — (3,406) (3,300) —
Balance at September 30, 2020 147,587 $ 1,475 152,117 $ 1,522 $ 623,133 $ (283,784) $ (41,306) $ 47,156 $ 348,196 $ 11,932

Class A Common
Stock Class B Common
Stock Additional
Paid-in
Capital Stockholders'
Accumulated
Deficit Accumulated
Other
Comprehensive
Loss Non-
Controlling
Interests Total
Equity Redeemable Non-Controlling Interests
Shares Amount Shares Amount
Balance at January 1, 2020 147,070 $ 1,470 152,117 $ 1,522 $ 606,966 $ (377,880) $ (68) $ 114,778 $ 346,788 $ —
Net income (loss) — — — — — 94,096 — (19,471) 74,625 915
Foreign currency translation
adjustment
— — — — — — (4,795) (4,953) (9,748) —
Stock-based compensation — — — — 15,617 — — — 15,617 —
Exercise of stock options 79 1 — — 217 — (9) 7 216 —
Restricted stock unit vesting, net of shares withheld to cover payroll taxes 438 4 — — 227 — (25) (1,007) (801) —
Unrealized loss on cash flow hedge, net of tax — — — — — — (36,409) (37,622) (74,031) —
Tax distributions — — — — — — — (1,170) (1,170) (458)
Non-controlling interests from Rondo transaction — — — — — — — — — 11,475
Distribution of earnings to and acquisition of non-controlling interests — — — — 106 — — (3,406) (3,300) —
Balance at September 30, 2020 147,587 $ 1,475 152,117 $ 1,522 $ 623,133 $ (283,784) $ (41,306) $ 47,156 $ 348,196 $ 11,932

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

Amneal Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements

(unaudited)

1. Nature of Operations

Amneal Pharmaceuticals, Inc. (the “Company”) is a pharmaceutical company specializing in developing, manufacturing, marketing and distributing high-value generic and branded specialty pharmaceutical products across a broad array of dosage forms and therapeutic areas. The Company operates principally in the United States, India, and Ireland, and sells to wholesalers, distributors, hospitals, chain pharmacies and individual pharmacies, either directly or indirectly. The Company is a holding company, whose principal assets are common units (“Amneal Common Units”) of Amneal Pharmaceuticals, LLC (“Amneal”).

In 2018, Amneal completed the acquisition of Impax Laboratories, Inc. (“Impax”), a generic and specialty pharmaceutical company. In 2020, Amneal acquired a 65.1% controlling interest in both AvKARE Inc., a Tennessee corporation now a limited liability company (“AvKARE, LLC”), and Dixon-Shane, LLC d/b/a R&S Northeast LLC, a Kentucky limited liability company (“R&S”) (collectively, the “Rondo Acquisitions”). AvKARE, LLC is one of the largest private label providers of generic pharmaceuticals in the U.S. federal agency sector, primarily focused on serving the Department of Defense and the Department of Veterans Affairs. R&S is a national pharmaceutical wholesaler focused primarily on offering 340b-qualified entities products to provide consistency in care and pricing.

The group of investors, together with their affiliates and certain assignees, who owned Amneal when it was a private company (the ~~“Amneal Group”~~“Members”) held ~~50.5%~~50.2% of Amneal Common Units and the Company held the remaining ~~49.5%~~49.8% as of September 30, 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.March 31, 2022.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements, which are prepared in accordance with generally accepted accounting principles in the United States of America, should be read in conjunction with Amneal’s annual audited financial statements for the year ended December 31, ~~2020~~2021 included in the Company’s ~~2020~~2021 Annual Report on Form 10-K. Certain information and footnote disclosures normally included in annual financial statements have been omitted from the accompanying unaudited consolidated financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the Company's financial position as of ~~September 30, 2021,~~March 31, 2022, cash flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ and the results of its operations, its comprehensive income ~~(loss)~~ and its changes in ~~stockholders'~~stockholders’ equity for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021. The consolidated balance sheet data at December 31, ~~2020~~2021 was derived from the ~~Company's~~Company’s audited annual financial statements, but does not include all disclosures required by generally accepted accounting principles in the United States of America.

Except for the updates included in this Note, the accounting policies of the Company are set forth in Note 2. Summary of Significant Accounting Policies contained in the Company’s ~~2020~~2021 Annual Report on Form 10-K.

~~Contingent consideration~~

Business acquisitions may include future payments that are contingent upon the occurrence of certain pharmaceutical regulatory milestones or net sales of pharmaceutical products. For acquisitions that are accounted for as a business combination, the obligations for such contingent consideration payments are recorded at fair value on the acquisition date. For contingent milestone payments, the Company uses a probability-weighted income approach utilizing an appropriate discount rate. For contingent tiered royalties on net sales, the Company uses a Monte Carlo simulation model. Contingent consideration liabilities are revalued to fair value at the end of each reporting period. Changes in the fair value of contingent consideration, other than changes due to payments, are recognized as a gain or loss and recorded within change in fair value of contingent consideration in the consolidated statements of operations. Refer to ~~Note 3. Acquisitions~~ ~~and~~ ~~Note 10. Fair Value Measurements~~ ~~for additional information.~~

~~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 expected cash flows used in evaluating goodwill and other long-lived assets for impairment. Actual results could differ from those estimates.

Recently Issued Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides elective amendments for entities that have contracts, hedging relationships and other transactions that reference

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.

~~Reclassification~~Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. The update will generally result in an entity recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value. The new standard is effective on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements.

Government Assistance (Topic 832): Disclosures by Business Entities About Government Assistance

~~Prior period balances~~In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832), Disclosures by Business Entities About Government Assistance, which requires entities to provide disclosures on material government assistance transactions for annual reporting periods. The disclosures include information around the nature of the assistance, the related accounting policies used to ~~(i) financing lease right-of-use~~account for government assistance, the effect of government assistance on the entity’s financial statements, and any significant terms and conditions of the agreements, including commitments and contingencies. The new standard is effective for the Company on January 1, 2022 and only impacts annual financial statement footnote disclosures. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements.

3. Acquisitions

Saol Baclofen Franchise Acquisition

On December 30, 2021, the Company entered into an asset purchase agreement with certain entities affiliated with Saol International Limited (collectively, “Saol”), a private specialty pharmaceutical company, pursuant to which it agreed to acquire Saol’s baclofen franchise, including Lioresal®, LYVISPAH™, and a pipeline product under development (the “Saol Acquisition”). The Saol Acquisition expands the Company’s commercial institutional and specialty portfolio in neurology while adding commercial infrastructure in advance of its entry into the biosimilar institutional market. The transaction closed on February 9, 2022.

Consideration for the Saol Acquisition included $84.7 million, paid at closing with cash on hand, and contingent royalty payments based on annual net sales for certain acquired assets, beginning in 2023. Cash paid at closing included $1.1 million for inventory acquired in excess of ~~$10~~the normalized level, as defined in the asset purchase agreement (working capital adjustment).

For the three months ended March 31, 2022, the Company incurred $0.1 million ~~formerly~~in transaction costs associated with the Saol Acquisition, which was recorded in acquisition, transaction-related and integration expenses.

The Saol Acquisition was accounted for under the acquisition method of accounting, with Amneal as the accounting acquirer. The preliminary purchase price was calculated as follows (in thousands):


Cash	$	84,714
Contingent consideration (royalties) (1)	8,796
Fair value of consideration transferred	$	93,510

(1)The estimated fair value of contingent consideration on the acquisition date was $8.8 million and was based on significant Level 3 inputs that were not observable in the market. Key assumptions included the discount rate, projected year of payments and expected net product sales. Refer to Note 10. Fair Value Measurements, for additional information on the methodology and determination of this liability.

The following is a summary of the preliminary purchase price allocation for the Saol Acquisition (in thousands):


	Preliminary Fair Values as of February 9, 2022
Inventory	$	2,162
Prepaid expenses and other current assets	98
Goodwill	7,553
Intangible assets	83,815
Total assets acquired	93,628
Accounts payable and accrued expenses	118
Fair value of consideration transferred	$	93,510

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


	Fair Value		Weighted-Average Useful Life (in years)
Marketed product rights	$	83,815	11.6

The estimated fair value of the identifiable intangible assets was determined using the “income approach,” which is a valuation technique that provides an estimate of the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. The assumptions, including the expected projected cash flows, utilized in the purchase price allocation and in determining the purchase price were based on management's best estimates as of the closing date of the Saol Acquisition on February 9, 2022.

Some of the more significant assumptions inherent in the development of those asset valuations included the estimated net cash flows for each year for each asset (including net revenues, cost of sales, selling and marketing costs and working capital / contributory asset charges), the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, the potential regulatory and commercial success risks, competitive trends impacting the asset and each cash flow stream, as well as other factors. The underlying assumptions used to prepare the discounted cash flow analysis may change; accordingly, for these and other reasons, actual results may vary significantly from estimated results.

Goodwill is calculated as the excess of the consideration transferred over the net assets ~~(ii) current portion~~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 ~~financing lease liabilities~~February 9, 2022 to March 31, 2022, the Saol Acquisition contributed net revenues and an operating loss of $2$2.9 million ~~formerly included~~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 ~~accounts payable~~India, and ~~accrued expenses, and (iii) long-term lease liabilities~~land in a transaction valued at $93.0 million (the “Puniska Acquisition”). Upon execution of $2the agreement, the Company paid $72.9 million ~~formerly included~~with cash on hand for approximately 74% of the equity interests of Puniska. Upon approval of the transaction by the government of India in ~~other long-term liabilities~~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, ~~2020 have been reclassified~~2021) and $14.2 million for the satisfaction of a preexisting payable to ~~their respective~~the sellers (included in related party payables-short term in the Company’s consolidated balance sheet ~~captions to conform~~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.

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 ~~current period presentation~~short-term nature of that payable to the sellers, the principal amount approximates fair value.

The following is a summary of the preliminary purchase price allocation for the Puniska Acquisition (in thousands):


	Fair Values as of November 2, 2021
Cash	$	165
Trade accounts receivable, net	232
Inventories	1,092
Prepaid expenses and other current assets	4,473
Property, plant and equipment	53,423
Goodwill	30,091
Operating lease-right-of-use assets	234
Other assets	1,303
Total assets acquired	91,013
Accounts payable and accrued expenses	1,732
Operating lease liabilities	234
Other long-term liabilities	263
Total liabilities assumed	2,229
Redeemable non-controlling interests	1,742
Fair value of consideration transferred	$	87,042

Goodwill is calculated as the excess of the consideration transferred and fair value of the redeemable non-controlling interests over the net assets recognized. All of the goodwill acquired in connection with the ~~consolidated balance sheets.~~

~~3. Acquisitions~~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~~$104.5 million, comprised of a purchase price of ~~$100~~$100.1 million (including initial and deferred consideration) and a working capital adjustment of $4$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.

For the nine months ended September 30, 2021, the Company incurred $3 million in transaction costs associated with the KSP Acquisition, which is recorded in acquisition, transaction-related and integration expenses. Transaction costs associated with the KSP Acquisition were ~~immaterial~~ $1.2 million for the three months ended ~~September 30,~~March 31, 2021 ~~and~~(none for ~~both of~~ the three ~~and nine~~ months ended ~~September 30, 2020.~~

March 31, 2022).

The KSP Acquisition was accounted for under the acquisition method of accounting, with Amneal as the accounting acquirer.

1112

The ~~preliminary~~ 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)	~~5,600~~5,200
Settlement of Amneal trade accounts payable due to KSP (3)	(7,117)
Fair value consideration transferred	$	~~103,522~~103,122

(1)The deferred consideration iswas stated at the ~~preliminary~~ 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 ~~consists~~consisted of ~~$30~~$30.0 million, ~~due on~~which the Company paid in January ~~11,~~ 2022 and $0.5 million, ~~due on March 10,~~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~~$30.1 million on the date of acquisition. This discount ~~will be~~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$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 $65.7 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)~~Represents~~Represented trade accounts payable due to KSP that were effectively settled upon closing of the KSP Acquisition.

The following is a summary of the ~~preliminary~~ purchase price allocation for the KSP Acquisition (in thousands):


	~~Preliminary~~Final Fair Values as of April 2, 2021
Cash	$	112
Restricted cash	500
Prepaid expenses and other current assets	381
Property, plant and equipment	5,375
Goodwill	~~43,830~~43,530
Intangible assets	~~56,500~~56,400
Operating lease right-of-use assets	9,367
Total assets acquired	~~116,065~~115,665
Accounts payable and accrued expenses	1,239
Operating lease liability	9,177
Related party payable	127
Total liabilities assumed	10,543
Non-controlling interests	2,000
Fair value of consideration transferred	$	~~103,522~~103,122

Total acquired intangible assets of ~~$56.5~~$56.4 million were comprised of marketed product rights of $29.4 million and in-process research and development (“IPR&D”) of ~~$27.1~~$27.0 million.

1213

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,"~~“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~~management’s best estimates as of the closing date of the KSP Acquisition on April 2, 2021.

Some of the more significant assumptions inherent in the development of those asset valuations included the estimated net cash flows for each year for each asset or product (including net revenues, cost of sales, R&D, selling and marketing costs and working capital / contributory asset charges), the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, the potential regulatory and commercial success risks, competitive trends impacting the asset and each cash flow stream, as well as other factors. The underlying assumptions used to prepare the discounted cash flow analysis may change; accordingly, for these and other reasons, actual results may vary significantly from estimated results.

Goodwill is calculated as the excess of the consideration transferred and fair value of the non-controlling interests over the net assets recognized. Of the total goodwill acquired in connection with the KSP Acquisition, ~~$41~~$40.8 million was allocated to the Company’s Generics segment and $3$2.7 million was allocated to the Specialty ~~segment, based on the probability weighted cash flows of the assets acquired as of the date of acquisition.~~segment.

For the three and nine months ended September 30, 2021, the KSP Acquisition contributed operating loss of $8 million and $14 million, respectively, which included approximately $2 million and $4 million of amortization expense from intangible assets acquired in the KSP Acquisition, to the Company’s consolidated results of operations in the corresponding periods. Offsetting the operating loss was a reduction of third-party consulting services and the elimination of royalties due to KSP.

~~AvKARE and R&S Acquisitions~~

On December 10, 2019, the Company, through its investment in Rondo Partners, LLC (“Rondo”), entered into an equity purchase agreement (“Rondo Equity Purchase Agreement”) and an operating agreement 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 “Rondo Acquisitions”). Prior to closing, AvKARE, Inc. converted to a limited liability company, AvKARE, LLC. AvKARE, LLC is one of the largest private label providers of generic pharmaceuticals in the U.S. federal agency sector, primarily focused on serving the Department of Defense and the Department of Veterans Affairs. R&S is a national pharmaceutical wholesaler focused primarily on offering 340b-qualified entities products to provide consistency in care and pricing.

On January 31, 2020, the Company completed the Rondo Acquisitions. The 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 $178 million of proceeds from a $180 million term loan. The remaining $2 million consisted of working capital costs. The Company is not party to or a guarantor of the term loan, Sellers Notes or Short-Term Sellers Note. For further detail of the purchase price, refer to the table below.

For the nine months ended September 30, 2020, there were $1 million of transaction costs associated with the Rondo Acquisitions recorded in acquisition, transaction-related and integration expenses (none for the three and nine months ended September 30, 2021 or three months ended September 30, 2020).

~~The Rondo Acquisitions were accounted for under the acquisition method of accounting, with Amneal as the accounting acquirer of AvKARE, LLC and R&S.~~

~~The purchase price was calculated as follows (in thousands):~~


~~Cash~~	$	~~254,000~~
~~Sellers Notes~~ ~~(1)~~	~~35,033~~
~~Settlement of Amneal trade accounts receivable from R&S~~ ~~(2)~~	~~6,855~~
~~Short-Term Seller Note~~ ~~(3)~~	~~1,000~~
~~Working capital adjustment~~ ~~(4)~~	~~(2,640)~~
~~Fair value consideration transferred~~	$	~~294,248~~

~~(1)In accordance with ASC 805,~~ ~~Business Combinations,~~ all consideration transferred was measured at its acquisition-date fair value. The Sellers Notes are stated at the fair value estimate of $35 million, which is the $44 million aggregate principal amount less a $9 million discount. The fair value of the Sellers Notes was estimated using the Monte-Carlo simulation approach under the option pricing framework.

~~(2)Represents trade accounts receivable from R&S that were effectively settled upon closing of the Rondo Acquisitions.~~

~~(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 purchase price allocation for the Rondo Acquisitions (in thousands):~~


	Final Fair Values as of January 31, 2020

~~Trade accounts receivable, net~~	$	~~46,702~~
~~Inventories~~	~~71,908~~
~~Prepaid expenses and other current assets~~	~~11,316~~
~~Related party receivables~~	61
~~Property, plant and equipment~~	~~5,278~~
~~Goodwill~~	~~103,679~~
~~Intangible assets, net~~	~~130,800~~
~~Operating lease right-of-use assets - related party~~	~~5,544~~
~~Total assets acquired~~	~~375,288~~
~~Accounts payable and accrued expenses~~	~~62,489~~
~~Related party payables~~	~~1,532~~
~~Operating lease liabilities - related party~~	~~5,544~~
~~Total liabilities assumed~~	~~69,565~~
~~Redeemable non-controlling interests~~	~~11,475~~
~~Fair value of consideration transferred~~	$	~~294,248~~

~~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 contracts~~	~~22,000~~		~~4 years~~
~~National contracts~~	~~28,600~~		~~5 years~~
~~Customer relationships~~	~~13,000~~		~~10 years~~
~~Trade name~~	~~500~~		~~6 years~~
	$	~~130,800~~

The estimated fair value of the government licenses was determined using the “with-and-without method,” which is a valuation technique that provides an estimate of the fair value of an intangible asset that is equal to the difference between the present value of the prospective revenues and expenses for the business with and without the subject intangible asset in place. The estimated fair values of the government contracts, national contracts, and customer relationships were determined using the “income approach,” which is a valuation technique that provides an estimate of the fair value of an intangible asset based on market participant expectations of the cash flows that an intangible asset would generate over its remaining useful life. The estimated fair value of the trade name was determined using the “relief from royalty method,” which is a valuation technique that provides an estimate of the fair value of an intangible asset equal to the present value of the after-tax royalty savings attributable to owning the intangible asset. The assumptions, including the expected projected cash flows, utilized in the purchase price allocation and in determining the purchase price were based on management's best estimates as of the closing date of the Rondo Acquisitions on January 31, 2020.

Some of the more significant assumptions inherent in the development of those asset valuations included the estimated net cash flows for each year for each asset (including net revenues, cost of sales, selling and marketing costs and working capital / contributory asset charges), the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, competitive trends impacting the asset and each cash flow stream, as well as other factors. The underlying assumptions used to prepare the discounted cash flow analysis may change; accordingly, for these and other reasons, actual results may vary significantly from estimated results.

The Sellers Notes and redeemable non-controlling interests were estimated using the Monte-Carlo simulation approach under the option pricing framework. The non-controlling interests are redeemable at the option of either the non-controlling interest holder or 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 Rondo Acquisitions, approximately $70 million was allocated to the Company’s AvKARE segment 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 Rondo Acquisitions is reflected in Generics’ segment results. Goodwill is calculated as the excess of the fair value of the consideration transferred and the fair value of the redeemable non-controlling interests over the fair value of the net assets recognized. Factors that contributed to the recognition of goodwill include Amneal’s intent to diversify its business and open growth opportunities in the large, complex and growing federal healthcare market.

~~Unaudited Pro Forma Information~~

The unaudited pro forma combined results of operations for the three and nine months ended September 30, 2021 and 2020 (assuming the closing of the Rondo Acquisitions occurred on January 1, 2019 and the closing of the KSP Acquisition occurred on January 1, 2020) are as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Net revenue $ 528,593 $ 519,349 $ 1,556,773 $ 1,513,505
Net (loss) income $ (5,964) $ (24,736) $ 42,852 $ 60,923
Net (loss) income attributable to Amneal Pharmaceuticals, Inc. $ (4,174) $ (11,358) $ 18,115 $ 84,828

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 Rondo Acquisitions taken place on January 1, 2019 and the closing of the KSP Acquisition taken place on January 1, 2020. Furthermore, the pro forma results do not purport to project the future results of operations of the Company.

Adjustments to arrive at the unaudited pro forma information primarily related to increases in cost of goods sold and selling, general and administrative expenses for amortization of acquired intangible assets, net of the applicable tax impact.

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 following table summarizes revenues from each of our customers which individually accounted for 10% or more of our total ~~gross~~net revenues:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Customer A	Customer A	27	%	32	%	30	%	34	%	Customer A	19	%	20	%
Customer B	Customer B	26	%	26	%	26	%	26	%	Customer B	18	%	19	%
Customer C	Customer C	27	%	26	%	26	%	24	%	Customer C	23	%	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 ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ are set forth below (in thousands):

1614


			Three Months Ended September 30,				Nine Months Ended September 30,						Three Months Ended March 31,
			2021		2020		2021		2020				2022		2021
Generics	Generics										Generics
		Anti-Infective	$	9,406	$	9,813	$	24,996	$	32,589		Anti-Infective	$	6,245	$	5,913
		Hormonal	107,614		93,580		325,971		271,499			Hormonal/ Allergy	96,368		106,703
		Antiviral (1)	9,762		9,236		1,560		26,015			Antiviral (1)	10,571		(7,941)
		Central Nervous System	91,263		107,139		294,182		302,949			Central Nervous System	81,125		96,291
		Cardiovascular System	35,692		28,517		107,137		82,876			Cardiovascular System	23,453		35,311
		Gastroenterology	17,172		21,371		56,333		59,249			Gastroenterology	16,620		19,458
		Oncology	21,203		13,927		73,683		45,349			Oncology	17,208		19,030
		Metabolic Disease/Endocrine	12,893		9,987		26,331		33,395			Metabolic Disease/Endocrine	11,233		6,557
		Respiratory	8,233		10,875		26,874		28,203			Respiratory	5,665		8,178
		Dermatology	14,860		14,818		42,556		42,402			Dermatology	13,477		12,878
		Other therapeutic classes	18,983		22,657		39,857		74,592			Other therapeutic classes	35,360		9,731
		International and other	46		—		592		1,947			International and other	422		399
		Total Generics net revenue	347,127		341,920		1,020,072		1,001,065			Total Generics net revenue	317,747		312,508
Specialty	Specialty										Specialty
		Hormonal/Metabolic	16,422		12,934		49,230		41,033			Hormonal/ Allergy	19,419		16,796
		Central Nervous System	68,869		68,061		201,710		210,428			Central Nervous System	58,168		67,711
												Gastroenterology	70		—
												Other therapeutic classes	7,429		11,424
		Other therapeutic classes	7,454		6,873		26,371		18,640			Total Specialty net revenue	85,086		95,931
		Total Specialty net revenue	92,745		87,868		277,311		270,101
AvKARE (2)
AvKARE											AvKARE
		Distribution	48,048		53,399		141,863		116,824			Distribution	60,263		45,499
		Government Label	29,898		28,902		90,142		75,353			Government Label	24,459		31,072
		Institutional	7,873		4,890		18,832		12,814			Institutional	6,315		5,179
		Other	2,902		2,315		8,553		6,332			Other	3,763		2,916
		Total AvKARE net revenue	88,721		89,506		259,390		211,323			Total AvKARE net revenue	94,800		84,666
		Total net revenue	$	528,593	$	519,294	$	1,556,773	$	1,482,489		Total net revenue	$	497,633	$	493,105

(1) Antiviral net revenue for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 ~~decreased from the prior year period, primarily due to a decline in Oseltamivir (generic Tamiflu®) sales from~~reflected 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 Rondo Acquisitions on January 31, 2020. Net revenue for the nine months ended September 30, 2020 represents eight months of activity.~~

A rollforward of the major categories of sales-related deductions for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 is as follows (in thousands):


		Contract Charge - Backs and Sales Volume Allowances		Cash Discount Allowances		Accrued Returns Allowance		Accrued Medicaid and Commercial Rebates			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, 2021										Balance at December 31, 2021	$	503,902	$	23,642	$	161,978	$	85,737
Provision related to sales recorded in the period	Provision related to sales recorded in the period	2,315,814		79,229		72,052		94,421		Provision related to sales recorded in the period	728,830		24,852		19,207		18,452
Credits/payments issued during the period	Credits/payments issued during the period	(2,503,722)		(79,526)		(64,709)		(130,990)		Credits/payments issued during the period	(861,717)		(25,920)		(25,629)		(35,313)
Balance at September 30, 2021		$	440,896	$	22,393	$	182,327	$	94,519
Balance at March 31, 2022										Balance at March 31, 2022	$	371,015	$	22,574	$	155,556	$	68,876

1715

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 provided for the total royalty payments payable by Impax to AstraZeneca on net sales of Zomig® products under the AZ Agreement to be reduced by an aggregate amount of $30 million to be received in quarterly amounts specified in the AZ Amendment beginning from the quarter ended June 30, 2016 and through the quarter ended December 31, 2020. In the event the royalty reduction amounts exceed the royalty payments payable by Impax to AstraZeneca pursuant to the AZ Agreement in any given quarter, AstraZeneca was 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 could have been 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 was 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 $9 million for the three and nine months ended September 30, 2021, respectively, and $3 million and $12 million for the three and nine months ended September 30, 2020, respectively.

Biosimilar Licensing and Supply Agreement

On May 7, 2018, the Company entered into a licensing and supply agreement with Mabxience S.L. for its biosimilar candidate for Avastin® (bevacizumab). The supply agreement was subsequently amended on March 2, 2021 and the licensing agreement was amended on March 4, 2021. The Company will be the exclusive partner in the U.S. market. The Company will pay development and regulatory milestone payments as well as commercial milestone payments on reaching pre-agreed sales targets in the market to Mabxience, up to ~~$78~~$78.0 million. For the ~~nine~~three months ended ~~September 30,~~March 31, 2021, the Company ~~recognized $10~~expensed a milestone of $2.0 million ofto research and development expense ~~related to the~~under this agreement (none for the three months ended ~~September 30, 2021)~~March 31, 2022).

On April 13, 2022, the Food and Drug Administration (“FDA”) approved the Company’s biologics license application for bevacizumab-maly, a biosimilar referencing Avastin®. ~~For the nine months ended September 30, 2020,~~In connection with this regulatory approval, the Company ~~expensed~~incurred a milestone payment of $5$10 million in ~~research and development expense related to~~ the ~~agreement (none for the three months ended September 30, 2020).~~second quarter of 2022.

Agreements with Kashiv Biosciences, LLC

For detail on the Company’s related party agreements with Kashiv Biosciences, LLC, refer to Note 15. Related Party Transactions.in this Form 10-Q and the Company’s 2021 Annual Report on Form 10-K

6. (Loss) Earnings per Share

Basic (loss) earnings per share of the Company’s class A common stock is computed by dividing net (loss) income attributable to Amneal Pharmaceuticals, Inc. by the weighted-average number of shares of class A common stock outstanding during the period. Diluted (loss) earnings per share of class A common stock is computed by dividing net (loss) income attributable to Amneal Pharmaceuticals, Inc. by the weighted-average number of shares of class A common stock outstanding, adjusted to give effect to potentially dilutive securities.

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted (loss) earnings per share of class A common stock (in thousands, except per share amounts):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Numerator:	Numerator:									Numerator:
Net (loss) income attributable to Amneal Pharmaceuticals, Inc.	Net (loss) income attributable to Amneal Pharmaceuticals, Inc.	$	(4,237)	$	(8,975)	$	17,001	$	94,096	Net (loss) income attributable to Amneal Pharmaceuticals, Inc.	$	(2,156)	$	6,706
Denominator:	Denominator:									Denominator:
Weighted-average shares outstanding - basic	Weighted-average shares outstanding - basic	149,290		147,558		148,771		147,377		Weighted-average shares outstanding - basic	149,892		148,013
Effect of dilutive securities:	Effect of dilutive securities:									Effect of dilutive securities:
Stock options	Stock options	—		—		785		320		Stock options	—		792
Restricted stock units	Restricted stock units	—		—		2,099		925		Restricted stock units	—		2,415
Weighted-average shares outstanding - diluted	Weighted-average shares outstanding - diluted	149,290		147,558		151,655		148,622		Weighted-average shares outstanding - diluted	149,892		151,220
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:									Net (loss) earnings per share attributable to Amneal Pharmaceuticals, Inc.'s class A common stockholders:
Basic	Basic	$	(0.03)	$	(0.06)	$	0.11	$	0.64	Basic	$	(0.01)	$	0.05
Diluted	Diluted	$	(0.03)	$	(0.06)	$	0.11	$	0.63	Diluted	$	(0.01)	$	0.04

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 September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Stock options	Stock options	3,102	(4)	3,923	(4)	347	(1)	671	(1)	Stock options	3,035	(1)	347	(3)
Restricted stock units	Restricted stock units	8,171	(4)	9,266	(4)	—		—		Restricted stock units	11,430	(1)	—
Performance stock units	Performance stock units	5,184	(4)	3,001	(4)	5,184	(2)	3,001	(2)	Performance stock units	7,947	(1)	5,124	(4)
Shares of class B common stock	Shares of class B common stock	152,117	(3)	152,117	(3)	152,117	(3)	152,117	(3)	Shares of class B common stock	152,117	(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 ~~met for the nine months ended September 30, 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 from the computations of diluted earnings per common share because the effect of their inclusion would have been anti-dilutive under the if-converted method.

~~(4)~~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 both the three months ended September 30, 2021 and 2020.met.

7. Income Taxes

For the three months ended ~~September 30, 2021,~~March 31, 2022, the ~~Company's~~Company’s (benefit from) provision for income taxes and effective tax rates were $4$(3.5) million and ~~(198.2)%~~34.9%, respectively, compared to ~~$0.1~~$0.4 million and ~~(0.7)%~~2.4%, respectively, for the three months ended ~~September 30, 2020.~~

~~For~~March 31, 2021. The period-over-period change in the ~~nine months ended September 30, 2021, the Company’s provision for~~ (benefit from) income taxes and effective tax rates were $7 million and 14.8%, respectively, compared to $(106) million and 349.3%, respectively, for the nine months ended September 30, 2020. The year-over-year change in provision for ~~(benefit from)~~ income taxes was primarily related to ~~a $110 million discrete~~an Internal Revenue Service examination and Joint Committee review of the 2012-2018 federal income tax ~~benefit from~~returns, which enabled the ~~carryback of U.S. Federal Net Operating Loss (“NOL”) deferred~~Company 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, ~~2020~~2021 analyses, the Company determined that it remained more likely than not that it would not realize the benefits of its gross ~~DTAs~~deferred 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 ~~September 30, 2021,~~March 31, 2022, based on its evaluation of available positive and negative evidence, the Company ~~had~~ maintained its position with respect to the valuation allowance.

On March 27, 2020, the CARES Act was signed into law. 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. 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 in 2020, the Company carried back approximately $345 million in NOLs generated in 2018 to prior taxable income years.

~~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 nine months ended September 30, 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. The remainder of the NOL carryback is expected to be received in the next twelve months.

The Company entered into a tax receivable agreement (“TRA”) for which it is generally required to pay the other holders of Amneal Common Units 85% of the applicable tax savings, if any, in U.S. federal and state income tax that it is deemed to realize as a result of certain tax attributes of their Amneal Common Units sold to the Company (or exchanged in a taxable sale) and that are created as a result of (i) the sales of their Amneal Common Units for shares of class A ~~Common Stock~~common stock and (ii) tax benefits attributable to payments made under the TRA. In conjunction with the valuation allowance recorded on the DTAs at September 30, 2019, the Company reversed the TRA liability.

The projection of future taxable income involves significant judgment. Actual taxable income may differ from the Company’s estimates, which could significantly impact the timing of the recognition of the contingent liability under the TRA. As noted

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 ~~September 30, 2021,~~March 31, 2022, the Company has not recognized the contingent liability under the TRA related to the tax savings it may realize from common units sold or exchanged. If utilization of these DTAs becomes more likely than not in the future, at such time, Amneal will recognize a liability under the TRA as a result of basis adjustments under Internal Revenue Code Section 754. As of ~~both September 30, 2021 and December~~March 31, ~~2020,~~2022, the contingent liability ~~if recognized, amounts to~~associated with the TRA was approximately ~~$206~~$206.3 million.

The timing and amount of any payments under the TRA may vary depending upon a number of factors, including the timing and number of Amneal ~~common units~~Common Units sold or exchanged for the Company's class A ~~Common Stock,~~common stock, the price of the Company's class A ~~Common Stock~~common stock on the date of sale or exchange, the timing and amount of the Company's taxable income, and the tax rate in effect at the time of realization of the Company's taxable income (the TRA liability is determined based on a percentage of the corporate tax savings from the use of the TRA's attributes). Further sales or exchanges occurring subsequent to ~~September 30, 2021~~March 31, 2022 could result in future Amneal tax deductions and obligations to pay 85% of such benefits to the holders of Amneal ~~common units.~~Common Units. These obligations could be incremental to and substantially larger than the approximate ~~$206~~$206.3 million contingent liability as of ~~September 30, 2021~~March 31, 2022 described above. Under certain conditions, such as a change of control or other early termination event, the Company could be obligated to make TRA payments in advance of tax benefits being realized. Payments could also be in excess of the tax savings that the Company may ultimately realize.

Any future recognition of these TRA liabilities will be recorded through charges in the Company’s consolidated statements of operations. However, if the tax attributes are not utilized in future years, it is reasonably possible no amounts would be paid under the TRA. Should the Company determine that a DTA with a valuation allowance is realizable in a subsequent period, the related valuation allowance will be ~~released~~reversed and if a resulting TRA payment is determined to be probable, a corresponding TRA liability will be recorded.

8. Trade Accounts Receivable, Net

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


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Gross accounts receivable	Gross accounts receivable	$	1,092,767	$	1,291,785	Gross accounts receivable	$	933,577	$	1,191,792
Allowance for credit losses	Allowance for credit losses	(1,524)		(1,396)		Allowance for credit losses	(1,679)		(1,665)
Contract charge-backs and sales volume allowances	Contract charge-backs and sales volume allowances	(440,896)		(628,804)		Contract charge-backs and sales volume allowances	(371,015)		(503,902)
Cash discount allowances	Cash discount allowances	(22,393)		(22,690)		Cash discount allowances	(22,574)		(23,642)
Subtotal	Subtotal	(464,813)		(652,890)		Subtotal	(395,268)		(529,209)
Trade accounts receivable, net	Trade accounts receivable, net	$	627,954	$	638,895	Trade accounts receivable, net	$	538,309	$	662,583

Concentration of Receivables

~~The following table summarizes receivables~~Trade accounts receivable from ~~each of our~~ customers representing 10% or more of the Company’s ~~gross~~total trade ~~receivables:~~accounts receivable were as follows:


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Customer A	Customer A	31	%	39	%	Customer A	31	%	37	%
Customer B	Customer B	24	%	20	%	Customer B	21	%	24	%
Customer C	Customer C	28	%	26	%	Customer C	31	%	25	%

9. Inventories

Inventories ~~are~~were comprised of the following (in thousands):


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Raw materials	Raw materials	$	214,284	$	209,180	Raw materials	$	212,849	$	214,508
Work in process	Work in process	42,851		40,937		Work in process	64,519		47,802
Finished goods	Finished goods	263,110		240,532		Finished goods	234,873		227,079
Total inventories	Total inventories	$	520,245	$	490,649	Total inventories	$	512,241	$	489,389

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 ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 (in thousands):


				Fair Value Measurement Based on									Fair Value Measurement Based on
September 30, 2021		Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2022										March 31, 2022	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets and Liabilities										Assets 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, 2021										December 31, 2021
Liabilities	Liabilities									Liabilities
Interest rate swap (1)		$	29,716	$	—	$	29,716	$	—
Interest rate swap liability (1)										Interest rate swap liability (1)	$	11,473	$	—	$	11,473	$	—
Deferred compensation plan liabilities (2)	Deferred compensation plan liabilities (2)	$	13,686	$	—	$	13,686	$	—	Deferred compensation plan liabilities (2)	$	13,883	$	—	$	13,883	$	—
Contingent consideration liability (3)	Contingent consideration liability (3)	$	6,400	$	—	$	—	$	6,400	Contingent consideration liability (3)	$	5,900	$	—	$	—	$	5,900

December 31, 2020
Liabilities
Interest rate swap (1)		$	53,903	$	—	$	53,903	$	—
Deferred compensation plan liabilities (2)		$	14,007	$	—	$	14,007	$	—

(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

certain financial information and certain assumptions regarding past, present, and future market conditions. Refer to Note 11. Financial Instruments for information on the Company's interest rate swap.

(2)~~As of both September 30, 2021 and 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 ~~liability~~liabilities has been classified as a Level 3 recurring ~~liability~~liabilities as ~~its valuation requires~~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 ~~value~~values could be higher or lower than what the Company

determined. As of ~~September 30,~~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 $6$5.9 million associated with the KSP Acquisition was recorded within related party ~~payable-long~~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 ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022.

Contingent consideration

On April 2, 2021, the Company completed the KSP Acquisition, which ~~provided~~provides for contingent milestone payments of up to an aggregate of $8$8.0 million (undiscounted) upon the achievement of certain regulatory milestones, as well as contingent royalty payments that are tiered depending on the ~~net sales amount of~~ 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) ~~through September 30, 2021~~ (in thousands):

~~Nine~~Three Months Ended
~~September 30, 2021~~March 31, 2022

Balance, beginning of period

—5,900

Addition due to the ~~KSP~~Saol Acquisition

~~6,100~~8,796

Change in fair value during the period

~~300~~200

Balance, end of period

~~6,400~~14,896

The fair value measurement of the contingent consideration liabilities ~~was~~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 ~~liability is~~liabilities were estimated by applying a probability-weighted expected payment model for contingent milestone payments and a Monte Carlo simulation ~~model~~models for contingent royalty payments, which ~~are~~were then discounted to present value. Changes to the fair ~~value~~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.

The following table summarizes the significant unobservable inputs used in the fair value measurement of our contingent consideration liabilities as of ~~September 30, 2021:~~March 31, 2022:


Contingent Consideration Liability	Fair Value as of March 31, 2022 (in thousands)	Unobservable input	Range			Weighted Average(1)
Regulatory Milestones (KSP Acquisition)	$500	Discount rate	4.3%	-	6.0%	4.5%
		Probability of payment	1.8%	-	20.0%	16.7%
		Projected year of payment	2023	-	2027	2023
Royalties (KSP Acquisition)	$5,600	Discount rate	11.5%	-	11.5%	11.5%
		Probability of payment	1.8%	-	20.0%	18.0%
		Projected year of payment	2023	-	2032	2029
Royalties (Saol Acquisition)	$8,796	Discount rate	16.9%		16.9%	16.9%
		Projected year of payment	2023		2037	2027

Contingent Consideration Liability
Fair Value as of
September 30, 2021
(in thousands)
Unobservable input Range
Weighted Average(1)
Regulatory Milestones $500 Discount rate 2.8 % - 4.6% 3.0%
Probability of payment 1.8 % - 20.0% 16.7%
Projected year of payment 2023 - 2027 2023
Royalties $5,900 Discount rate 11.0 % - 11.0% 11.0%
Probability of payment 1.8 % - 20.0% 18.0%
Projected year of payment 2023 - 2032 2029

(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 into~~as 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 of~~at both ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 was approximately $2.6 billion.

The Rondo Term Loan, ~~entered into~~as defined in Note 17. Debt in the Company’s 2021 Annual Report on ~~January 31, 2020 falls into~~Form 10-K, is in the Level 2 category within the fair value level hierarchy. ~~During the three months ended September 30, 2021, the Company prepaid $25 million towards the outstanding principal of the Rondo Term Loan.~~ The fair value of the Rondo Term Loan at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 was ~~$141~~$136.7 million and ~~$172~~$139.0 million, respectively.

The Sellers Notes ~~fall into~~are in the Level 2 category within the fair value level hierarchy. The carrying value of the Sellers Notes at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 was ~~$38~~$38.3 million and ~~$36~~$38.0 million, respectively, ~~which approximate~~approximated their fair values.

Refer to Note 17. Debt in our ~~2020~~2021 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 ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.

11. Financial Instruments

The Company uses an interest rate swap to manage its exposure to market risks for changes in interest rates.

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~~ 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

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 ~~its~~the Term Loan.

As of ~~September 30, 2021,~~March 31, 2022, the total ~~loss,~~gain, net of income taxes, related to the Company’s cash flow hedge was ~~$30~~$42.2 million, of which ~~$15~~$20.8 million was recognized in accumulated other comprehensive loss and ~~$15~~$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):

September 30, 2021

December 31, 2020

March 31, 2022

December 31, 2021

Derivatives Designated as Hedging Instruments

Balance Sheet
Classification

Fair Value

Balance Sheet
Classification

Fair Value

Derivatives Designated as Hedging Instruments

Balance Sheet
Classification

Fair Value

Balance Sheet
Classification

Fair Value

Variable-to-fixed interest rate swap

Other long-term liabilities

29,716

Other long-term liabilities

53,903

Variable-to-fixed interest rate swap

Other Assets

42,151

Other long-term liabilities

11,473

12. Goodwill and Other Intangible Assets

The changes in goodwill for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and for the year ended December 31, ~~2020~~2021 were as follows (in thousands):


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Balance, beginning of period	Balance, beginning of period	$	522,814	$	419,504	Balance, beginning of period	$	593,017	$	522,814

Goodwill acquired during the period	Goodwill acquired during the period	43,830		103,679		Goodwill acquired during the period	7,553		70,584

Adjustment during the period for Puniska Acquisition						Adjustment during the period for Puniska Acquisition	3,075		—
Currency translation	Currency translation	(238)		(369)		Currency translation	(752)		(381)
Balance, end of period	Balance, end of period	$	566,406	$	522,814	Balance, end of period	$	602,893	$	593,017

As of ~~September 30, 2021, $364~~March 31, 2022, $366.3 million, ~~$133~~$167.1 million, and ~~$70~~$69.5 million of goodwill was allocated to the Specialty, Generics, and AvKARE segments, respectively. As of December 31, ~~2020, $361~~2021, $363.9 million, ~~$92~~$159.6 million, and ~~$70~~$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 for additional ~~information related to goodwill acquired during the respective periods.~~information.

Intangible assets at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 were comprised of the following (in thousands):

September 30, 2021 December 31, 2020
Weighted-Average
Amortization Period
(in years) Cost Accumulated
Amortization Net Cost Accumulated
Amortization Net
Amortizing intangible assets:
Product rights 8.3 $ 1,180,005 $ (434,824) $ 745,181 $ 1,153,096 $ (328,587) $ 824,509
Other intangible assets 5.1 133,800 (51,779) 82,021 133,800 (33,078) 100,722
Subtotal $ 1,313,805 $ (486,603) $ 827,202 $ 1,286,896 $ (361,665) $ 925,231
In-process research and development 405,525 — 405,525 379,395 — 379,395
Total intangible assets $ 1,719,330 $ (486,603) $ 1,232,727 $ 1,666,291 $ (361,665) $ 1,304,626


	March 31, 2022							December 31, 2021
	Weighted-Average Amortization Period (in years)	Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net
Amortizing intangible assets:
Product rights	8.3	$	1,205,374	$	(471,785)	$	733,589	$	1,122,612	$	(436,902)	$	685,710
Other intangible assets	4.7	133,800		(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 development		405,425		—		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 ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, the Company recognized ~~$57~~$83.8 million of product rights intangible assets associated with the ~~KSP Acquisition, consisting of $29 million of product rights and $27 million of IPR&D.~~Saol Acquisition. Product rights are amortized to cost of goods sold over their estimated useful lives. During the nine months ended September 30, 2020, the Company recognized $131 million of intangible assets associated with the Rondo 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 and are amortized to selling, general, and administrative over their estimated useful lives. Refer to Note 3. Acquisitions ~~Acquisitions~~for additional information.

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

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Amortization $ 43,809 $ 44,548 $ 129,001 $ 131,100


	Three Months Ended March 31,
	2022		2021
Amortization	$	40,919	$	41,672

The following table presents future amortization expense for the next five years and thereafter, excluding ~~$406~~$405.4 million of IPR&D intangible assets (in thousands):

Future
Amortization
Remainder of 2021 $ 43,701
2022 164,385
2023 150,681
2024 140,269
2025 100,177
Thereafter 227,989
Total $ 827,202


	Future Amortization
Remainder of 2022	$	126,846
2023	156,567
2024	148,179
2025	110,773
2026	64,159
Thereafter	197,869
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, and reviews indefinite-lived~~recoverable. Indefinite-lived intangible assets, including IPR&D, are tested for impairment if impairment indicators arise and, at a minimum, annually.

For the three months ended September 30, 2021, the Company recognized a $0.7 million intangible asset impairment, which was recognized in cost of goods sold impairment charges. For the nine months ended September 30, 2021, the Company recognized $1.4 million of intangible asset impairments, of which $0.7 million was recognized in cost of goods sold impairment charges and $0.7 million was recognized in in-process research and development impairment charges.

The impairment charges for the three months ended September 30, 2021 was related to 2 marketed products which experienced significant price erosion during 2021. The impairment charges for the nine months ended September 30, 2021 related to the 2 aforementioned marketed products, and 1 IPR&D product, which experienced a delay in its estimated launch date.

For the three months ended September 30, 2020, the Company recognized a $32 million intangible asset impairment, which was recognized in cost of goods sold impairment charges. For the nine months ended September 30, 2020, the Company recognized $36 million of intangible asset impairments, of which $35 million was recognized in cost of goods sold impairment charges and $1 million was recognized in in-process research and development impairment charges.

~~The impairment charge for the three months ended September 30, 2020 was related to 1 marketed product for which the supply agreement ended under an early termination due to market conditions.~~

The impairment charges for the nine months ended September 30, 2020 were primarily related to 6 marketed products and 2 IPR&D products. For the marketed products, 4 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, while 1 product had its contract terminated, and 1 product’s supply agreement ended under an early termination due to market conditions. The IPR&D charges were 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.

13. Commitments and Contingencies

Commitments

Commercial Manufacturing, Collaboration, License, and Distribution Agreements

The Company continues to seek to enhance its product line and develop a balanced portfolio of differentiated products through product acquisitions and in-licensing. Accordingly, the Company, in certain instances, may be contractually obligated to make potential future development, regulatory, and commercial milestone, royalty and/or ~~profit sharing~~profit-sharing payments in conjunction with collaborative agreements or acquisitions that the Company has entered ~~into~~ with third parties. The Company has also licensed certain technologies or intellectual property from various third parties. The Company is generally required to make upfront payments as well as other payments upon successful completion of regulatory or sales milestones. The agreements generally permit the Company to terminate the agreement with no significant continuing obligation. The Company could be required to make significant payments pursuant to these arrangements. These payments are contingent upon the occurrence of certain future

events and, given the nature of these events, it is unclear when, if ever, the Company may be required to pay such amounts. Further, the timing of any future payment is not reasonably estimable. Refer to Note 5. Alliance and Collaboration for additional information.Certain of these arrangements are with related ~~parties (refer~~parties. Refer to Note 15. Related Party ~~Transactions)~~Transactions for additional information.

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 ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, the Company recorded a ~~charge~~net credit of ~~$19~~$2.3 million ~~for a commercial legal proceeding. For the nine months ended September 30, 2020, the Company recorded net~~consisting of an insurance recovery of $4 million, partially offset by charges ~~of $6 million~~ for ~~commercial~~ legal proceedings ~~(charges~~(none for the three months ended ~~September 30, 2020 were immaterial)~~March 31, 2021). As of ~~September 30, 2021~~March 31, 2022, and December 31, ~~2020,~~2021, the Company recorded total liabilities for legal proceedings of ~~$57~~$59.7 million and ~~$11~~$58.0 million, respectively, of which ~~$33~~$37.0 million and $6$33.0 million, respectively, were recorded for a securities class ~~action~~actions covered by insurance (refer to Securities Class Actions below and Note 17. Prepaid Expenses and Other Current Assets for additional information). ~~Insurance recoveries are~~An insurance recovery will be recorded in the ~~periods when~~period in which it is probable ~~they~~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 reports concerning pricing information. Liabilities are periodically established by the Company for any potential claims or settlements of overpayment. The Company intends to vigorously defend against any such claims. The ultimate settlement of any potential liability for such claims may be higher or lower than estimated.

Patent Litigation

There is substantial litigation in the pharmaceutical, biological, and biotechnology industries with respect to the manufacture, use, and sale of new products which are the subject of conflicting patent and intellectual property claims. One or more patents

often cover the brand name products for which the Company is developing generic versions and the Company typically has patent rights covering the Company’s branded products.

Under federal law, when a drug developer files an Abbreviated New Drug Application (“ANDA”) for a generic drug seeking approval before expiration of a patent which has been listed with the FDA as covering the brand name product, the developer

must certify its product will not infringe the listed patent(s) and/or the listed patent is invalid or unenforceable (commonly referred to as a “Paragraph IV” certification). Notices of such certification must be provided to the patent holder, who may file a suit for patent infringement within 45 days of the patent holder’s receipt of such notice. If the patent holder files suit within the 45-day period, the FDA can review and tentatively approve the ANDA, but generally is prevented from granting final marketing approval of the product until a final judgment in the action has been rendered in favor of the generic drug developer, or 30 months from the date the notice was received, whichever is sooner. The Company’s Generics segment is typically subject to patent infringement litigation brought by branded pharmaceutical manufacturers in connection with the Company’s Paragraph IV certifications seeking an order delaying the approval of the Company’s ANDA until expiration of the patent(s) at issue in the litigation.

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 on~~court. Biogen appealed the ~~result of~~ D. Del. Order (“the ~~appeal of~~Amneal 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 ~~before~~that 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.

2825

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”), 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. FTC 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. 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, 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; the~~ Court, ~~has not yet decided whether it will take the case.~~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. In April 2021, the Company filed a motion to dismiss the FTC’s complaint, ~~and that motion~~which the District Court granted on March 24, 2022. The District Court’s decision is ~~currently pending.~~still subject to appeal. The Company believes it has strong defenses to the FTC’s allegations and intends to vigorously defend the 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 of~~several 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.

In December 2014, the United States Judicial Panel on Multidistrict Litigation (the “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 April 15, 2020, defendants filed motions for summary judgment and each side moved to exclude certain opposing experts. On 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

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 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 subpoena in 2014 and 2015. However, no assurance can be given as to the timing or outcome of this investigation.

United States Department of Justice Investigations

On November 6, 2014, Impax disclosed that 1 of its sales representatives received a grand jury subpoena from the Antitrust Division of the United States Department of Justice (the “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”). 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 ~~nine~~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

Company, without prejudice. These lawsuits have been incorporated into MDL No. 2724. Fact and document discovery in MDL No. 2724 are proceeding. In May 2021, the ~~Court~~court issued a revised order designating certain plaintiffs’ complaints regarding 2 generic drug products to proceed as bellwether cases, along with the Plaintiff States’ June 10, 2020, ~~complaint.~~complaint involving the Company. 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 ~~890~~914 cases in the MDL in which the Company or its affiliates have been named as defendants. The Company also is named in approximately ~~120~~115 state court cases pending in 11 states. The Company has filed motions to dismiss in many of these cases. No firm trial dates have been set except ~~one case~~ in New Mexico (September 2022) and ~~one in~~ Alabama ~~(July 2022)~~(January 2023). Following a decision by the West Virginia Supreme 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 a defendant in the manufacturer trial and itthere is ~~unclear if~~no current information indicating that the Company will be involved in the ~~trial of any case currently selected by the court.~~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 competitor~~competitors 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 Court~~June 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 denied~~a plaintiff in the ~~motions,~~case) and on April 1, 2021, the case was remanded to the District Court. On April 19, 2021, the Company filed a motion to dismiss the remaining claims and an opposition to Sheet Metal Workers’ renewed motion to intervene. In June 2021, the Companydefendants reached a tentative agreement to settle all claims in the case for ~~$33~~$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 settlement on November 22, 2021, and held a fairness hearing on March 31, 2022. An order on the motion 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. Plaintiffs filed a motion for class certification on October 30, 2020, and in April 2021 filed a second amended complaint including similar allegations ~~with regard to~~regarding a November 2017 registration statement and prospectus issued in connection with the Amneal/ Impax business combination. The Company’s motion to dismiss and Plaintiff’s motion for class certification are currently pending. In February 2022, the 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

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”) 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,~~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 Assistant~~the 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 ~~intends~~has 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 ~~its~~the 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 at this time.~~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 ~~290~~316 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 in February 2021, and Defendants 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. 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.

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. Defendants removed the case to federal court and on April 1, 2021, the case was remanded to state court. On August 23, 2021, the Company filed a motion to dismiss, which ~~is currently pending.~~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 25NaN other defendants, including brand-name manufacturers, generic manufacturers, and 1 Pennsylvania-based pharmacy. The Complaint ~~largely~~ tracks the dismissed master personal injury complaint from the ~~MDL.~~MDL and was removed and subsequently transferred to the MDL on November 9, 2021. Although it has not occurred yet, the case will be remanded to Pennsylvania state court.

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. On May 20, 2021, the Court granted Defendants’ motion to dismiss the economic loss complaint, and Plaintiffs filed an amended complaint on June 21, 2021. ~~On August 5, 2021,~~ Defendants again moved to dismiss, and the ~~amended complaint.~~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” 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.

32On 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) 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 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 ~~District~~ Court granted in part and denied in part Defendants’ motion, dismissing the federal damages claims and ~~a number of~~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, ~~has not yet responded~~along with the other defendants, moved to dismiss for failure to state a claim, and on December 28, 2021, the ~~allegations.~~Court granted the motion in full, with leave to amend. On January 18, 2022, Plaintiff filed its amended complaint,

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 ~~but it has notified~~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 ~~it intends~~the Company’s January 2021 acquisition of a 98% interest in KSP, then a wholly owned subsidiary of Kashiv, was unfair to ~~file~~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 ~~motion to dismiss~~financial interest in Kashiv. The suit, which is allegedly brought on the ~~claims.~~

Company’s behalf, seeks among other remedies rescission of the transaction and unspecified monetary damages.

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 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 makers 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 makers. Additionally, general and administrative expenses, certain selling expenses, certain litigation settlements, and non-operating income and expenses are

included in “Corporate and Other.” The Company does not report balance sheet information by segment since it is not reviewed by the Company’s chief operating decision 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 September 30, 2021		Generics (1)		Specialty		AvKARE (1)		Corporate and Other		Total Company
Three Months Ended March 31, 2022												Three Months Ended March 31, 2022	Generics (1)		Specialty		AvKARE (1)		Corporate and Other		Total Company
Net revenue	Net revenue	$	347,127	$	92,745	$	88,721	$	—	$	528,593	Net revenue	$	317,747	$	85,086	$	94,800	$	—	$	497,633
Cost of goods sold	Cost of goods sold	208,670		47,303		73,421		—		329,394		Cost of goods sold	199,030		43,853		80,179		—		323,062
Cost of goods sold impairment charges		688		—		—		—		688
Gross profit	Gross profit	137,769		45,442		15,300		—		198,511		Gross profit	118,717		41,233		14,621		—		174,571
Selling, general and administrative	Selling, general and administrative	15,941		22,211		14,683		38,562		91,397		Selling, general and administrative	27,593		24,400		13,410		33,262		98,665
Research and development	Research and development	34,999		13,928		—		—		48,927		Research and development	43,221		9,577		—		—		52,798

Intellectual property legal development expenses		1,584		43		—		—		1,627
Intellectual property legal development expenses (credit)												Intellectual property legal development expenses (credit)	772		(8)		—		—		764
Acquisition, transaction-related and integration expenses	Acquisition, transaction-related and integration expenses	—		—		—		134		134		Acquisition, transaction-related and integration expenses	—		—		—		434		434
Charges related to legal matters, net		—		—		—		19,000		19,000
Charges (credit) related to legal matters, net												Charges (credit) related to legal matters, net	1,674		—		—		(4,000)		(2,326)
Restructuring and other charges	Restructuring and other charges	—		—		—		425		425		Restructuring and other charges	206		0		—		525		731
Change in fair value of contingent consideration	Change in fair value of contingent consideration	—		300		—		—		300		Change in fair value of contingent consideration	—		200		—		—		200
Property losses and associated expenses		8,186		—		—		—		8,186
Operating income (loss)	Operating income (loss)	$	77,059	$	8,960	$	617	$	(58,121)	$	28,515	Operating income (loss)	$	45,251	$	7,064	$	1,211	$	(30,221)	$	23,305

Nine Months Ended September 30, 2021
Generics (1)
Specialty
AvKARE (1)
Corporate
and Other Total
Company
Net revenue $ 1,020,072 $ 277,311 $ 259,390 $ — $ 1,556,773
Cost of goods sold 598,122 144,184 211,208 — 953,514
Cost of goods sold impairment charges 688 — — — 688
Gross profit 421,262 133,127 48,182 — 602,571
Selling, general and administrative 46,500 62,748 41,986 117,046 268,280
Research and development 114,547 35,426 — — 149,973
In-process research and development impairment charges 710 — — — 710
Intellectual property legal development expenses 6,506 68 — — 6,574
Acquisition, transaction-related and integration expenses — 16 1,422 5,781 7,219
Charges related to legal matters, net — — — 19,000 19,000
Restructuring and other charges 80 — — 708 788
Change in fair value of contingent consideration — 300 — — 300
Property losses and associated expenses 8,186 — — — 8,186
Operating income (loss) $ 244,733 $ 34,569 $ 4,774 $ (142,535) $ 141,541


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 sold	185,298		48,198		68,047		—		301,543
Gross profit	127,210		47,733		16,619		—		191,562
Selling, general and administrative	18,762		19,881		13,704		38,379		90,726
Research and development	36,117		12,065		—		—		48,182
Intellectual property legal development expenses	3,582		—		—		—		3,582
Acquisition, transaction-related and integration expenses	—		—		931		1,871		2,802
Restructuring and other charges	80		—		—		283		363
Operating income (loss)	$	68,669	$	15,787	$	1,984	$	(40,533)	$	45,907

Three Months Ended September 30, 2020
Generics (1)
Specialty
AvKARE (1,2)
Corporate
and Other Total
Company
Net revenue $ 341,920 $ 87,868 $ 89,506 $ — $ 519,294
Cost of goods sold 229,067 47,735 76,543 — 353,345
Cost of goods sold impairment charges 32,364 — — — 32,364
Gross profit 80,489 40,133 12,963 — 133,585
Selling, general and administrative 13,153 19,181 15,374 35,412 83,120
Research and development 39,232 5,287 — — 44,519
Intellectual property legal development expenses 2,132 2 — — 2,134
Acquisition, transaction-related and integration expenses — 1 — 1,040 1,041
Charges related to legal matters, net 60 — — — 60
Restructuring and other (credit) charges (536) — — 812 276
Operating income (loss) $ 26,448 $ 15,662 $ (2,411) $ (37,264) $ 2,435

Nine Months Ended September 30, 2020
Generics (1)
Specialty
AvKARE (1,2)
Corporate
and Other Total
Company
Net revenue $ 1,001,065 $ 270,101 $ 211,323 $ — $ 1,482,489
Cost of goods sold 666,841 145,782 173,966 — 986,589
Cost of goods sold impairment charges 34,579 — — — 34,579
Gross profit 299,645 124,319 37,357 — 461,321
Selling, general and administrative 42,578 56,993 41,809 100,660 242,040
Research and development 108,582 17,888 — — 126,470
In-process research and development impairment charges 960 — — — 960
Intellectual property legal development expenses 6,947 7 — — 6,954
Acquisition, transaction-related and integration expenses 325 83 — 4,995 5,403
Charges related to legal matters, net 5,610 250 — — 5,860
Restructuring and other (credit) charges (158) — — 2,815 2,657
Operating income (loss) $ 134,801 $ 49,098 $ (4,452) $ (108,470) $ 70,977

(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 Rondo Acquisitions on January 31, 2020. Operating results for the nine months ended September 30, 2021 represent eight months of activity.

15. Related Party Transactions

The Company has various business agreements with certain ~~third-party companies~~parties in which there is some common ~~ownership and/or management between those entities, on the one hand, and~~ownership. However, the Company ~~on the other hand. The Company has no direct ownership~~does not directly own or ~~management in~~manage of any of such related ~~party companies. The~~parties. 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 expense~~described 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 ~~Company~~following table summarizes the Company’s related party transactions (in thousands):


		Three Months Ended March 31,
Related Party and Nature of Transaction	Caption in Balance Sheet and Statement of Operations	2022		2021
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 administrative	5,000		—
Development and commercialization agreement - Ganirelix Acetate and Cetrorelix Acetate (1)	Research and development	17		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 Acquisition	Selling, general and administrative	—		300
Total		$	5,042	$	7,810

LAX Hotel, LLC (3)
Financing lease	Inventory and cost of goods sold	$	—	$	362
Interest component of financing lease	Interest expense	—		217
Total		$	—	$	579

Other Related Parties
Kanan, LLC - operating lease	Inventory and cost of goods sold	$	526	$	526
Sutaria Family Realty, LLC - operating lease	Inventory and cost of goods sold	$	296	$	287
PharmaSophia, LLC - research and development services income	Research and development	$	(15)	$	(257)
Fosun International Limited - license and supply agreement	Net revenue	$	—	$	—
Apace KY, LLC d/b/a Apace Packaging LLC - packaging agreement	Inventory and cost of goods sold	$	458	$	2,101
Tracy Properties LLC - operating lease	Selling, general and administrative	$	135	$	131
AzaTech Pharma LLC - supply agreement	Inventory and cost of goods sold	$	1,221	$	1,143
AvPROP, LLC - operating lease	Selling, general and administrative	$	40	$	39
Tarsadia Investments, LLC - financial consulting services	Selling, general and administrative	$	—	$	—
Avtar Investments, LLC consulting services	Selling, general and administrative	$	84	$	—
TPG Operations, LLC consulting services	Selling, 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 for~~transaction 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. LAX Hotel, LLC had been controlled by a member of~~disclosure 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 for~~historical 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 September 30, 2021 to reflect this change. For the nine months ended September 30, 2021, related party lease costs and interest expense associated with this lease were $0.2 million and $0.4 million, respectively (none for the three months ended September 30, 2021). For the three and nine months ended September 30, 2020, related party lease costs and interest expense were approximately $1 million and $4 million, respectively.

~~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 September 30, 2021 and 2020 was $0.5 million. Rent expense paid to Kanan for both the nine months ended September 30, 2021 and 2020 was $1.6 million.

~~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 the three months ended September 30, 2021 and 2020 was $0.3 million and $0.4 million, respectively. Rent paid to the related parties for both of the nine months ended September 30, 2021 and 2020 was approximately $1 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 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 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~~ that date.~~Note 3. Acquisitions~~ ~~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 next to the Company’s manufacturing site in Piscataway, NJ. The total amount of expense paid to Kashiv pursuant to this agreement for each of the three and nine months ended September 30, 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 nine months ended September 30, 2021 was $0.5 million (none for the three months ended September 30, 2021).

~~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 the three months
ended September 30 For the nine months
ended September 30
Products Agreement Date 2021 2020 2021 2020
Filgrastim and PEG-Filgrastim (1)
October 2017 $ — $ 1 $ — $ 1
Ganirelix Acetate and Cetrorelix Acetate (2)
August 2020 $ — $ 1 $ 1 $ 1

~~(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 April 2, 2021. Additionally, there were no related expenses for any of these agreements during the three months ended September 30, 2021.

Amneal had various development and commercialization arrangements with Kashiv to collaborate on the development and commercialization of certain generic pharmaceutical products. For the nine months ended September 30, 2021 and 2020, total reimbursable expenses associated with these arrangements was $0.3 million and $0.2 million, respectively (none for either of the three months ended September 30, 2021 and 2020). Kashiv received a percentage of net profits with respect to Amneal’s sales of these products. The total profit share paid to Kashiv for the nine months ended September 30, 2021 was $3 million. For the three and nine months ended September 30, 2020, total profit share paid to Kashiv was $3 million and $8 million, respectively.

On February 20, 2020, the Company and Kashiv entered into a master services agreement covering certain services that Kashiv provided the Company for commercial product support related to EluRyng and other products, including Ranitidine and Nitrofurantoin. For the nine months ended September 30, 2021, the Company recorded $1 million to cost of goods sold to compensate Kashiv for services performed. For the three and nine months ended September 30, 2020, the Company recorded $2 million and $5 million, respectively, to cost of goods sold to compensate Kashiv for services performed.

3733

The following table ~~includes~~summarizes the ~~expenses recognized~~amounts due to or from the Company for ~~each of the product specific contracts with Kashiv prior to the acquisition of these contracts as part of the KSP Acquisition.~~related party transactions (in thousands):

(Amounts in millions) Research and development expenses
For the three months
ended September 30 For the nine months
ended September 30
Products Agreement Date 2021 2020 2021 2020
Levothyroxine Sodium(1)
June 2019 $ — $ — $ — $ 2
K127 (2)
November 2019 $ — $ — $ 3 $ 2
Posaconazole (3)
May 2020 $ — $ — $ — $ —


	March 31, 2022		December 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 agreement	1,148		560
AzaTech Pharma LLC - supply agreement	919		1,783
Avtar Investments LLC - consulting services	59		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	7		—
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 indemnification	52		68
Kashiv - various agreements	21		14
Apace Packaging, LLC - packaging agreement	6		16
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

(1) 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 received a profit share for all sales of the product made by Amneal. Amneal was 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 had 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 was responsible for all development and clinical work required to secure Food and Drug Administration approval, and Amneal was 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 was eligible to receive development and regulatory milestones totaling approximately $17 million. Kashiv was also eligible to receive tiered royalties from the low double-digits to mid-teens on net sales of K127.

~~(3)~~ Amneal and Kashiv had 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 provided 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 were subject to certain performance conditions which may or may not be achieved, including FDA filing, FDA approval and commercial sales volume objectives.

As of September 30, 2021 and December 31, 2020, payables of approximately $0.1 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.

As discussed in Note 3. Acquisitions,, the purchase price for the KSP Acquisition included ~~payment~~a contractually stated amount of ~~cash on hand, deferred consideration, and contingent consideration. As of September 30, 2021,~~ deferred consideration of ~~$30~~$30.5 million. The deferred consideration consisted of $30.0 million, which the Company paid during January 2022, and $0.5 million, which the Company expects to pay during the second quarter of 2022.

(2) $5.0 million was ~~recorded within related party payable-short term. Additionally,~~payable to Kashiv as of ~~September 30, 2021, contingent consideration liability~~March 31, 2022 for regulatory approval of ~~$6 million was recorded within related party payable-long term.~~Filgrastim.

~~PharmaSophia, LLC~~

~~PharmaSophia, LLC (“PharmaSophia”) is a joint venture formed by Nava Pharma, LLC (“Nava”) and Oakwood Laboratories, LLC~~(3) As discussed in Note 3. Acquisitions, the purchase price 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 as managers 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 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 both the three months ended September 30, 2021

~~and 2020 was less than $0.1 million. The total amount of income earned from these agreements for the nine months ended September 30, 2021 and 2020 was $0.3~~Puniska Acquisition included $14.2 million ~~and $0.4 million, respectively. At September 30, 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.

On August 12, 2021, the Company entered into an active pharmaceutical ingredient (“API”) co-development agreement with a subsidiary of Fosun. Under the terms of the agreement, the Company provided Fosun a license to manufacture and sell 2 pharmaceutical products outside of the United States. Fosun will be responsible for obtaining regulatory approval outside the United States. Fosun paid the Company a $0.2 million non-refundable fee in October 2021 and will be required to pay the Company $0.1 million for each of the 2 products upon the first commercial sale of each in China in addition to a profit share.

~~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 the three months ended September 30, 2021 and 2020 was $3 million and $2 million, respectively. The total amount of expenses from this arrangement for both the nine months ended September 30, 2021 and 2020 was $8 million. At September 30, 2021 and December 31, 2020, payables of approximately $0.7 million and $1 million respectively, were due to the ~~related party~~sellers for ~~packaging services. Additionally, at December 31, 2020, receivables~~the satisfaction of ~~$0.5 million was due from the related party for~~ a ~~product recall (none at September 30, 2021).~~

~~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 bothpreexisting payable upon approval of the ~~three months ended September 30, 2021~~transaction by the government of India. The Company satisfied this liability in March 2022.

(4) Represents accrued interest on the Sellers Notes associated with the Rondo Acquisitions, as defined and ~~2020 was $0.2 million. The total amount of expenses from this arrangement for both of the nine months ended September 30, 2021~~discussed in Note 3. Acquisitions and ~~2020 was $0.4 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 both of the three months ended September 30, 2021 Divestitures and 2020 was approximately $1 million. The total amount of purchases from this arrangement for both of the nine months ended September 30, 2021 and 2020 was approximately $3 million. At September 30, 2021 and December 31, 2020, payables of approximately $0.8 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 September 30, 2021 and 2020 was less than $0.1 million. Rent expense from this arrangement for both of the nine months ended September 30, 2021 and 2020 was $0.1 million.

Note 17. Debt

~~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.~~

~~Avtar Investments, LLC~~

Avtar Investments, LLC (“Avtar”) is a private investment firm. Members of Company management beneficially own, directly and through certain revocable or irrevocable trusts for the benefit of their immediate families, outstanding equity securities of Avtar. During April 2020, the Company entered into an agreement in which Avtar will provide consulting services. The total amount of consulting expense incurred for the three and nine months ended September 30, 2021 ~~was $0.1 million and $0.3 million, respectively. The total amount of consulting expense incurred for the~~ ~~three and nine months ended~~ ~~September 30, 2020 was $0.1 million and $0.9 million, respectively. As of both September 30, 2021 and December 31, 2020, less than $0.1 million was due to Avtar.~~Annual Report on Form 10-K.

~~Zep Inc.~~(5)

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. The amount of revenue recorded for the ~~three and nine months ended~~ September 30, 2020 was $0.1 million and $0.5 million, respectively (none for the three and nine months ended September 30, 2021). As of December 31, 2020, $0.1 million was recorded in related party receivables (there was no related party receivable as of September 30, 2021).

~~Tax Distributions~~

Under the terms of its limited liability company agreement, Amneal is obligated to make tax distributions to its members, which are also holders of non-controlling interests in the Company. For further details, refer Refer to Note 16. ~~Stockholders'~~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 ~~16. Stockholders' Equity and~~3. Acquisitions for additional information.

Puniska Acquisition - Redeemable Non-Controlling Interests

The Company paid $1.7 million for the remaining 26% equity interest of Puniska (included in redeemable non-controlling interests in the Company’s consolidated balance sheet as of December 31, 2021.

~~Tax Indemnification – Rondo Acquisitions~~

~~In accordance with~~) upon approval of the ~~Rondo Equity Purchase Agreement, the Company will be indemnified~~Puniska Acquisition by the ~~sellers~~government of AvKARE, LLC and R&S for $0.2 million of state taxes paid on behalf of the sellers for a tax period prior to the closing of the Rondo Acquisition. As a result, the Company recorded $0.2 million of related party receivables as of September 30, 2021.

~~Notes Payable – Related Party~~

~~The sellers of AvKARE, LLC and R&S hold the remaining 34.9% interest~~India in Rondo (“Rondo Class B Units”). Certain holders of the Rondo Class B Units are also holders of the Sellers Notes and were holders of the Short-Term Sellers Note until it was repaid in its entirety in February 2021. For additional information, refer to ~~Note 3.Acquisitions~~.March 2022.

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.

4034

Under the terms of Amneal's limited liability company agreement, as amended, Amneal is obligated to make tax distributions to its ~~members based on the members' taxable income from Amneal.~~members. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, the Company recorded net tax distributions of ~~approximately $9~~$4.4 million and ~~$34~~$9.2 million, respectively, as a reduction of non-controlling ~~interests, respectively, and paid in full.~~ interests.~~For the nine months ended September 30, 2020, a~~ ~~tax distribution of $1 million (none for the three months ended September 30, 2020) was recorded as a reduction of non-controlling interests. As of~~ ~~September 30, 2021, there were no amounts due for tax distributions.~~

During September 2020, the Company made a $3 million payment to the non-controlling interest holders in 1 of Amneal's non-public subsidiaries to distribute earnings of approximately $1 million and acquire their ownership interests in the non-public subsidiary for $2 million.

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. ~~As of September 30, 2021, the non-controlling interest attributable to KSP was approximately $2 million.~~

Redeemable Non-Controlling Interests

As discussed in Note 31. ~~Acquisitions~~Nature 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 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.

The Company ~~will attribute~~attributes 34.9% of the net income or loss ofassociated 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 ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, the Company recorded tax distributions of ~~$0.5 million and $2.2 million as a reduction of redeemable non-controlling interests, respectively. For the~~ ~~three and nine~~ ~~months ended September 30, 2020, the Company recorded tax distributions of $0.1~~$2.0 million and $0.5 million as a reduction of redeemable non-controlling interests, respectively.

Redeemable Non-Controlling Interests - Puniska

As ofdiscussed in ~~September 30, 2021~~Note 3. Acquisitions, ~~there~~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 ~~0 amounts due for tax distributions related to~~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, 2022, the Company recorded accretion of $0.9 million to increase the redeemable non-controlling interests to redemption value.

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, 2020	Balance December 31, 2020	(14,497)		(26,821)		(41,318)		Balance December 31, 2020	$	(14,497)	$	(26,821)	$	(41,318)
Other comprehensive loss before reclassification	Other comprehensive loss before reclassification	(3,626)		11,934		8,308		Other comprehensive loss before reclassification	(4,255)		20,972		16,717
Reallocation of ownership interests	Reallocation of ownership interests	(88)		(129)		(217)		Reallocation of ownership interests	(93)		(133)		(226)
Balance September 30, 2021		$	(18,211)	$	(15,016)	$	(33,227)
Balance December 31, 2021								Balance December 31, 2021	(18,845)		(5,982)		(24,827)
Other comprehensive loss before reclassification								Other comprehensive loss before reclassification	(2,024)		26,614		24,590
Reallocation of ownership interests								Reallocation of ownership interests	(86)		(26)		(112)
Balance March 31, 2022								Balance March 31, 2022	$	(20,955)	$	20,606	$	(349)

17. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets are comprised of the following (in thousands):


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Deposits and advances	Deposits and advances	$	2,113	$	1,696	Deposits and advances	$	1,595	$	1,174
Prepaid insurance	Prepaid insurance	10,066		6,916		Prepaid insurance	4,841		7,962
Prepaid regulatory fees	Prepaid regulatory fees	1,707		3,565		Prepaid regulatory fees	2,539		3,710
Income and other tax receivables	Income and other tax receivables	9,062		11,882		Income and other tax receivables	10,466		8,850
Prepaid taxes	Prepaid taxes	8,270		5,542		Prepaid taxes	18,255		16,085
Other current receivables (1)	Other current receivables (1)	45,297		17,117		Other current receivables (1)	47,213		42,770
Other prepaid assets						Other prepaid assets	23,562		17,309
Chargebacks receivable (2)	Chargebacks receivable (2)	12,167		4,913		Chargebacks receivable (2)	12,937		12,358
Other prepaid assets		21,530		21,836
Total prepaid expenses and other current assets	Total prepaid expenses and other current assets	$	110,212	$	73,467	Total prepaid expenses and other current assets	$	121,408	$	110,218

(1)As discussed in Note 13. Commitments and Contingencies, the Company recorded receivables from insurers of ~~$33~~$37.0 million and $6$33.0 million as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, associated with an insured securities class action ~~lawsuit.~~lawsuits.

(2)When a sale occurs on a contract item, the difference between the cost paid to the manufacturer by the Company and the 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 sale.

18. Other Assets

~~18. Property Losses and Associated Expenses~~

~~On September 1, 2021, Tropical Storm Ida brought extreme rainfall and flash flooding to New Jersey that caused damage to 2 of the Company’s facilities in Branchburg. Operations at these facilities~~Other assets were closed for the majority of September in order to assess the damage, make repairs and restore operations. As a result of the significant recovery effort and sufficient safety stock, the Company did not incur a material business disruption for the three and nine months ended September 30, 2021.

The Company nevertheless concluded that all inventory on-hand at the time of the flooding was damaged and unsellable and that a majority of the equipment was damaged beyond repair. In addition, the Company incurred significant costs to repair both facilities. Accordingly, the Company recorded $8 million of charges for property losses and associated expenses for both of the three and nine months ended September 30, 2021, which was comprised of the following (in thousands):


~~Impairment of equipment~~	$	~~4,202~~
~~Impairment of inventory~~	~~950~~
~~Repairs and maintenance expenses~~	~~2,025~~
~~Salaries and benefits for cleaning and repairing facilities~~	~~1,009~~
~~Subtotal~~	$	~~8,186~~

The Company has insurance policies for property damage, inventory losses and business interruption. Insurance recoveries are recorded in the periods when it is probable they will be realized. No insurance recoveries have been recorded for the three or nine months ended September 30, 2021 related to property losses.

~~19. Subsequent Events~~

~~Biotechnology license agreement~~

On October 1, 2021, the Company entered into a license agreement with a clinical-stage biotechnology company for the development and commercialization of injectable products. The Company will pay a profit share in the low double digits on sales of these products. The agreement also contains contingent pre-approval, approval and commercial milestone payments of up to $4 million, $27 million, and $200 million, respectively, payable by the Company. The milestone payments are subject to certain performance conditions, including regulatory approvals and sales, which may not be achieved.


	March 31, 2022		December 31, 2021
Interest rate swap (1)	$	42,151	$	—
Security deposits	4,245		3,895
Long-term prepaid expenses	6,886		5,896
Deferred revolving credit facility costs	1,345		1,603
Other long term assets	9,316		9,220
Total	$	63,943	$	20,614

4236

~~Puniska Healthcare Pvt. Ltd.~~

(1)

~~On November 2, 2021,~~Refer to Note 10. Fair Value Measurements and Note 11. Financial Instruments for information about 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.~~

Under the terms of the transaction, Amneal will pay the sellers of Puniska $93 million. Upon execution of the agreement, the Company paid $73 million for approximately 74% of the equity interests of Puniska. The Company expects to pay an additional $4 million for land held by one of the sellers during November 2021 and $16 million for the remaining 26% of the equity interests upon approval by the government of India. The Company expects to fund the entire purchase price with cash on hand.

The Company is evaluating the accounting for the transaction. 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.

Company’s interest rate swap.

19. Government Grants

In November 2021, Amneal Pharmaceuticals Private Limited, a subsidiary of the Company in 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 to 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 March 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 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.

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

Amneal Pharmaceuticals, Inc. (the “Company,” “we,” “us,” or “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 sell 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 ~~2020~~2021 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 ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 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, ~~2020~~2021 included in our ~~2020~~2021 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”) 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. For example, ~~our~~the pediatric exclusivity of the AstraZeneca patent licensed to Impax for Zomig® Nasal Spray expired in May ~~2021. Although no generic product has been commercially launched in the United States as of September 30,~~ 2021, and we ~~anticipate to lose~~lost market exclusivity 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. AvKARE is a re-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 institutional customers. AvKARE is also a wholesale distributor of pharmaceuticals, over the counter products and medical supplies to institutional customers which 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 ~~2020~~2021 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

In March 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 taken~~took 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 nine months ended September 30, 2021 drove significantly lower sales volume and increased returns related to Oseltamivir as compared to the prior year 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. Although not currently expected, any 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, supply chains being interrupted or 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 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 ~~believe our business has not been materially impacted by~~currently expect an inflationary impact of approximately $20 million for the ~~overall effects of inflation to date.~~year ending December 31, 2022. However, rising inflationary pressures due to higher input costs, including higher material, transportation, labor and other costs, ~~may affect us as well as~~could exceed our ~~vendors and may~~expectations, which would further adversely impact our operating results in future periods.

Results of Operations

Consolidated Results

The following table sets forth our summarized, consolidated results of operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Net revenue	Net revenue	$	528,593	$	519,294	$	1,556,773	$	1,482,489	Net revenue	$	497,633	$	493,105
Cost of goods sold	Cost of goods sold	329,394		353,345		953,514		986,589		Cost of goods sold	323,062		301,543
Cost of goods sold impairment charges		688		32,364		688		34,579
Gross profit	Gross profit	198,511		133,585		602,571		461,321		Gross profit	174,571		191,562
Selling, general and administrative	Selling, general and administrative	91,397		83,120		268,280		242,040		Selling, general and administrative	98,665		90,726
Research and development	Research and development	48,927		44,519		149,973		126,470		Research and development	52,798		48,182
In-process research and development impairment charges		—		—		710		960
Intellectual property legal development expenses	Intellectual property legal development expenses	1,627		2,134		6,574		6,954		Intellectual property legal development expenses	764		3,582
Acquisition, transaction-related and integration expenses	Acquisition, transaction-related and integration expenses	134		1,041		7,219		5,403		Acquisition, transaction-related and integration expenses	434		2,802
Charges related to legal matters, net		19,000		60		19,000		5,860
Credit related to legal matters, net										Credit related to legal matters, net	(2,326)		—
Restructuring and other charges	Restructuring and other charges	425		276		788		2,657		Restructuring and other charges	731		363
Change in fair value of contingent consideration	Change in fair value of contingent consideration	300		—		300		—		Change in fair value of contingent consideration	200		—
Property losses and associated expenses		8,186		—		8,186		—
Operating income	Operating income	28,515		2,435		141,541		70,977		Operating income	23,305		45,907
Total other expense, net	Total other expense, net	(30,558)		(24,324)		(93,856)		(101,280)		Total other expense, net	(33,226)		(31,003)
(Loss) income before income taxes	(Loss) income before income taxes	(2,043)		(21,889)		47,685		(30,303)		(Loss) income before income taxes	(9,921)		14,904
Provision for (benefit from) income taxes		4,049		144		7,056		(105,843)
(Benefit from) provision for income taxes										(Benefit from) provision for income taxes	(3,461)		359
Net (loss) income	Net (loss) income	$	(6,092)	$	(22,033)	$	40,629	$	75,540	Net (loss) income	$	(6,460)	$	14,545

Net Revenue

Net revenue for the three months ended ~~September 30, 2021 increased by 2%, or $9~~March 31, 2022 was $497.6 million, ~~to $529 million~~an increase of 1% as compared to ~~$519~~$493.1 million for the three months ended ~~September 30, 2020. The increase from the prior year period was attributable to the following:~~

•Our Generics segment revenues of $347 million grew $5 million from the prior year period, which was primarily due to new products launched in 2020 and 2021 that contributed revenue growth of $45 million. The overall increase was offset, in part, by price erosion in our base business and the impact of weaker orders of Oseltamivir (generic Tamiflu®).

•Our Specialty segment revenues of $93 million increased $5 million from the prior year period, primarily attributed to a year-over-year increase in revenue for Rytary® and Unithroid® of 11% and 18%, respectively. This increase was partially offset by a decline in non-promoted Specialty brands.

•~~Our AvKARE segment revenues were flat year-over-year as growth in new product introductions offset favorable timing of a discrete item that benefited three months ended September 30, 2020.~~

~~Net revenue for the nine months ended September 30, 2021 increased by 5%, or $74 million, to $1,557 million as compared to $1,482 million for the nine months ended September 30, 2020.~~March 31 2021. The increase from the prior year period was attributable to growth in ~~all three operating~~our Generics and AvKARE segments, partially offset by a decline in our Specialty segment as follows:

•~~Growth~~Net revenue growth in our Generics segment of ~~$19~~$5.2 million during the three months ended March 31, 2022 compared to the prior year period was primarily due to new products launched in ~~2020~~2022 and 2021 that contributed revenue growth of ~~$141~~$14.0 million, as well as volume ~~growth in the base business.~~growth. This increase was partially offset by ~~a $40 million decline in Oseltamivir (generic Tamiflu®) sales from lower demand due to decreased influenza activity during the COVID-19 pandemic, as well as~~continued price ~~erosion in our base business.~~erosion.

•~~Our~~ Specialty segment ~~revenues increased $7~~net revenue decreased $10.8 million ~~from~~during the thee months ended March 31, 2022 as compared to the prior year period, ~~reflecting~~driven by the loss of exclusivity of Zomig® nasal spray as well as a decline in our other non-promoted products. Net revenue ~~growth in~~for our promoted products, including Rytary® and Unithroid® ~~of 7%~~, declined 6% and ~~19%~~increased 13%, ~~respectively. This increase was partially offset by declines in Zomig® nasal spray and other non-promoted products.~~

•~~Our AvKARE segment revenues of $259 million grew $48 million versus the prior year period, in part~~respectively, due to the timing of shipments as prescription growth remained strong for both products.

•AvKARE net segment revenue grew $10.1 million during the ~~acquisition in 2020~~thee months ended March 31, 2022 as ~~well as organic growth~~compared to the prior year period due to ~~better new product introductions.~~

growth in our distribution channel.

Cost of Goods Sold and Gross Profit

Cost of goods sold ~~including impairment charges, decreased 14%, or $56 million, to $330 million~~ for the three months ended ~~September 30, 2021~~March 31, 2022 increased 7%, or $21.5 million, to $323.1 million as compared to ~~$386~~$301.5 million ~~for~~in the ~~three months ended September 30, 2020.~~prior year period. The ~~decrease~~increase in cost of goods sold ~~including impairment charges,~~ was primarily ~~attributable~~due to increased volume within Generics and AvKARE and a ~~decrease~~reduction in impairment charges of $32 million. Excluding impairment charges, cost of goods sold decreased approximately $24 million from the prior year period, attributed to reduced material costs, better plant utilization including manufacturing a higher percentage of the Company’s products, and favorable product mix, which offset the increase in revenue, as noted above.operating efficiency benefits realized period-over-period.

Gross profit for the three months ended ~~September 30, 2021~~March 31, 2022 was ~~$199~~$174.6 million ~~(38%~~(35% of total net revenue) as compared to gross profit of $134 million (26% of total net revenue) for the three months ended September 30, 2020. Our gross profit as a percentage of net revenue increased compared to the prior year period primarily as a result of the factors noted above.

Cost of goods sold, including impairment charges, decreased 7%, or $67 million, to $954 million for the nine months ended September 30, 2021 as compared to $1,021 million for the nine months ended September 30, 2020. The decrease in cost of goods sold, including impairment charges, was primarily attributable to $34 million of impairment charges in the prior year period, as well as gross margin improvement in the current year, which was related to reduced material costs, better plant utilization including manufacturing a higher percentage of the Company’s products, and favorable product mix. Partially offsetting this decrease was an extra month of AvKARE expense, as well as an increase in revenues for the comparative period.

~~Gross profit for the nine months ended September 30, 2021 was $603~~$191.6 million (39% of total net revenue) ~~as compared to gross profit of $461 million (31% of total net revenue)~~ for ~~the nine months ended September 30, 2020. Our gross profit as a percentage of net revenue increased compared to the~~ prior year ~~period 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 ~~September 30, 2021~~March 31, 2022 were ~~$91~~$98.7 million, as compared to ~~$83~~$90.7 million for the ~~three months ended September 30, 2020.~~prior year period. The $8$7.9 million increase from the prior year period was primarily due to an increase in employee compensation ~~increased logistics costs,~~ and ~~an increase in third party spend and promotional efforts as the Company began to resume normal activities and in-person meetings in the current year. This increase was partially offset by~~ a ~~reduction in cost savings~~$5 million expense associated with ~~the elimination of redundancies in connection with Company’s integration efforts of recent business acquisitions.~~a biosimilar regulatory approval.

Selling, general, and administrative (“SG&A”) expenses for the nine months ended September 30, 2021 were $268 million, as compared to $242 million for the nine months ended September 30, 2020. The $26 million increase from the prior year period was primarily due to an increase in employee compensation, an extra month of expenses from our AvKARE segment and an increase in indirect taxes. This increase was partially offset by a reduction in cost savings associated with the elimination of redundancies in connection with Company’s integration efforts of recent business acquisitions.

Research and Development

Research and development (“R&D”) expenses for the three months ended ~~September 30, 2021 was $49~~March 31, 2022 were $52.8 million, as compared to ~~$45~~$48.2 million for the three months ended ~~September 30, 2020.~~March 31, 2021. The increase compared to the prior year period was primarily attributable to projects acquired in the acquisition of Kashiv Specialty Pharmaceuticals, LLC (the “KSP Acquisition”) and other development costs, partially offset by a reduction in in-licensing and upfront milestone payments. Refer to ~~Note 3. Acquisitions~~ ~~for additional information.~~

~~R&D expenses for the nine months ended September 30, 2021 were $150 million, as compared to $126 million for the nine months ended September 30, 2020. The $24~~$4.6 million increase compared to the prior year period was primarily attributable to ~~a $7 million increase related to projects acquired in the KSP Acquisition as well as~~charges of $6 million ~~increase for in-licensing and upfront milestone payments, which was incurred to grow our Specialty and Generics pipelines, and increased~~associated with acquired businesses in 2021 offset in part by a decrease in project spend ~~for ongoing~~of $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 ~~each of~~ the three months ended ~~September 30,~~March 31, 2022 and 2021 were $0.8 million and ~~2020 were each $2 million. Intellectual property legal development expenses for each~~$3.6 million, respectively. The period-over-period decrease of $2.8 million was due to the ~~nine months ended September 30, 2021 and 2020 were $7 million.~~timing of specific cases. Expenses may vary ~~by period~~ based ~~upon~~on the number of individual cases and corresponding litigation outstanding in ~~any~~a particular period.

Acquisition, Transaction-Related and Integration Expenses

Acquisition, transaction-related and integration expenses were $1$0.4 million for the three months ended ~~September 30, 2020 (immaterial~~March 31, 2022 as compared to $2.8 million for the three months ended September 30, 2021). Acquisition, transaction-related and integration expenses were $7 million for the nine months ended September 30, 2021 as compared to $5 million for the nine months ended September 30, 2020.March 31, 2021.

Acquisition, transaction-related and integration expenses for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 were primarily related to ~~KSP~~the Saol Acquisition, which closed on ~~April 2, 2021, and the related integration, and the integration of the acquisitions that comprise our AvKARE segment.~~February 9, 2022. For the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, acquisition, transaction-related and integration expenses were primarily related to the ~~acquisition~~KSP Acquisition, which closed on April 2, 2021, and integration ofexpenses related to the businesses that comprise our AvKARE ~~segment and system integration expenses related to the combination with Impax Laboratories, LLC.~~segment. Refer to Note 3. Acquisitions for additional information.

~~Charges~~Credit Related to Legal Matters, Net

For the three and nine months ended September 30, 2021, we recorded charges of $19 million for Corporate commercial legal proceedings and claims. For the nine months ended September 30, 2020, we recorded net charges of $6 million for commercial legal proceedings and claims, which were primarily recorded in our Generics segment (immaterial for the three months ended September 30, 2020). Insurance recoveries are recorded in the periods when it is probable they will be realized. Refer to ~~Note 13. Commitments and Contingencies, for additional information about legal matters.~~

~~Restructuring 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 June 30, 2022, primarily by closing our manufacturing facility located in Hauppauge, NY. Through September 30, 2021, the Company had reduced headcount by 280 employees under this plan.

For the three months ended ~~September 30, 2021 and 2020, restructuring and other~~March 31, 2022, we recorded a net credit of $2.3 million for an insurance recovery of $4.0 million, partially offset by charges ~~were $0.4 million and $0.3 million, respectively.~~for legal proceedings. For the ~~nine~~three months ended ~~September 30,~~March 31, 2021, ~~and 2020, restructuring and other~~there were no charges were $0.8 million and $3 million, respectively. These charges primarily consisted of the cost of benefits provided pursuant to our severance programs for former senior executives and management employees.

~~Property Losses and Associated Expenses~~

On September 1, 2021, Tropical Storm Ida brought extreme rainfall and flash flooding to New Jersey that caused damage to two of our facilities in Branchburg. Operations at these facilities were closed for the majority of September in order to assess the damage, make repairs and restore operations. Although, as a result of the significant recovery effort and sufficient safety stock, we did not incur a material business disruption for the three and nine months ended September 30, 2021, we concluded that all inventory on-hand at the time of the flooding was damaged and unsellable, and that a majority of the equipment was damaged beyond repair. In addition, we incurred significant costs to repair both facilities. Accordingly, we recorded $8 million of charges for property losses and associated expenses in our Generics segment for the three and nine months ended September 30, 2021.

Total Other Expense, Net

~~Other~~Total other expense, net was ~~$31~~$33.2 million for the three months ended ~~September 30, 2021,~~March 31, 2022 as compared to ~~$24~~$31.0 million for the three months ended ~~September 30, 2020.~~March 31, 2021. Overall, the increase from the prior year period was driven by a ~~$10~~$4.1 million unfavorable period-over-period impact of net foreign exchange gains and losses, ~~which was~~ partially offset by lower interest expense and a ~~$3 million~~ benefit ~~relating~~related to a previously outstanding contingent liability.

Other expense, net was $94 million for the nine months ended September 30, 2021, as compared to $101 million for the three months ended September 30, 2020. The decrease of $7 million was primarily due to a $9 million decline in interest expense due to a reduction in interest rates compared to the prior year period, and a $7 million benefit relating to a previously outstanding contingent liability. The overall decrease was partially offset by a $8 million favorable period-over-period impact of net foreign exchange gains and losses.

(Benefit From) Provision For ~~(Benefit From)~~ Income Taxes

For the three months ended ~~September 30,~~March 31, 2022 and 2021, our (benefit from) provision for income taxes and effective tax rates were $4$(3.5) million and ~~(198.2)%, respectively, compared to $0.1~~34.9% and $0.4 million and ~~(0.7)%~~2.4%, ~~respectively, for~~respectively.

The period-over-period change in the ~~three months ended September 30, 2020.~~

~~For the nine months ended September 30, 2021, our~~(benefit from) provision for ~~(benefit from)~~ income taxes was related to an Internal Revenue Service examination and ~~effective tax rates were $7 million and 14.8%, respectively, compared to $(106) million and 349.3%, respectively, for the nine months ended September 30, 2020.~~

~~The~~Joint Committee review of our 2012-2018 federal income tax ~~benefit for the nine months ended September 30, 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~~returns, which enabled us to ~~the COVID-19 pandemic which, among other things, includes provisions relating to income and non-income-based~~recognize previously unrecognized tax ~~laws. For further details, refer to~~ ~~Note 7~~. ~~Income Taxes~~.benefits.

Net (Loss) Income

We recognized a net loss for the three months ended ~~September 30, 2021~~March 31, 2022 of $6$6.5 million as compared to net ~~loss~~income of ~~$22~~$14.5 million for the three months ended ~~September 30, 2020.~~March 31, 2021. The ~~year-over-year decrease in net loss of $16 million~~period-over-period change was attributable to the factors listed above.

We recognized net income for the nine months ended September 30, 2021 of $41 million as compared to net income of $76 million for the nine months ended September 30, 2020. The year-over-year decrease in net income of $35 million was attributable to the factors listed above.

Generics

The following table sets forth results of operations for our Generics segment for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Net revenue	Net revenue	$	347,127	$	341,920	$	1,020,072	$	1,001,065	Net revenue	$	317,747	$	312,508
Cost of goods sold	Cost of goods sold	208,670		229,067		598,122		666,841		Cost of goods sold	199,030		185,298
Cost of goods sold impairment charges		688		32,364		688		34,579
Gross profit	Gross profit	137,769		80,489		421,262		299,645		Gross profit	118,717		127,210
Selling, general and administrative	Selling, general and administrative	15,941		13,153		46,500		42,578		Selling, general and administrative	27,593		18,762
Research and development	Research and development	34,999		39,232		114,547		108,582		Research and development	43,221		36,117
In-process research and development impairment charges		—		—		710		960
Intellectual property legal development expenses	Intellectual property legal development expenses	1,584		2,132		6,506		6,947		Intellectual property legal development expenses	772		3,582
Acquisition, transaction-related and integration expenses		—		—		—		325
Charges related to legal matters, net	Charges related to legal matters, net	—		60		—		5,610		Charges related to legal matters, net	1,674		—
Restructuring and other (credit) charges	Restructuring and other (credit) charges	—		(536)		80		(158)		Restructuring and other (credit) charges	206		80
Property losses and associated expenses		8,186		—		8,186		—
Operating income	Operating income	$	77,059	$	26,448	$	244,733	$	134,801	Operating income	$	45,251	$	68,669

Net Revenue

Generics net revenue was ~~$347~~$317.7 million for the three months ended ~~September 30, 2021,~~March 31, 2022, an increase of $5$5.2 million or 2% ~~when~~as compared ~~with the same period in 2020. The increase from~~to the prior year period was attributable to new products launched in 2020 and 2021, which contributed revenue growth of approximately $45 million. The overall increase was offset, in part, by price erosion in our base business and the impact of weaker orders of Oseltamivir (generic Tamiflu®).

~~Generics net revenue was $1,020 million for the nine months ended September 30, 2021, an increase of $19 million or 2% when compared with the same period in 2020.~~period. The increase primarily related to new products launched in ~~2020~~2022 and 2021 ~~which~~that contributed revenue growth of ~~$141~~$14 million, as well as volume growth, offset in ~~our base business. This increase was partially offset~~part by ~~a $40 million decline in Oseltamivir (generic Tamiflu®) sales from lower demand due to decreased influenza activity during the COVID-19 pandemic, and~~continued price ~~erosion in our base business.~~erosion.

Cost of Goods Sold and Gross Profit

Generics cost of goods sold ~~including impairment charges,~~ for the three months ended ~~September 30, 2021~~March 31, 2022 was ~~$209~~$199.0 million, ~~a decrease~~an increase of ~~20%~~7% or ~~$52~~$13.7 million compared to the three months ended ~~September 30, 2020.~~March 31, 2021. The ~~decrease~~increase in cost of goods sold was primarily attributable to increased volume and a ~~decrease~~reduction in impairment charges of $32 million. Excluding impairment charges, cost of goods sold decreased approximately $20 million from the prior year period, attributed to reduced material costs, better plant utilization including manufacturing a higher percentage of the Company’s products, and favorable product mix.operating efficiency benefits realized period-over-period.

Generics gross profit for the three months ended ~~September 30, 2021~~March 31, 2022 was ~~$138~~$118.7 million ~~(40%~~(37% of net revenue) as compared to gross profit of ~~$80~~$127.2 million ~~(24%~~(41% of net revenue) for the three months ended ~~September 30, 2020~~March 31, 2021 as a result of the factors described above.

Generics cost of goods sold, including impairment charges, for the nine months ended September 30, 2021 was $599 million, a decrease of 15% or $103 million compared to the nine months ended September 30, 2020. The decrease in cost of goods sold was primarily attributable to $35 million of impairment charges in the prior year period, as well as gross margin improvement in the current year, which was related to reduced material costs, better plant utilization including manufacturing a higher percentage of the Company’s products, and favorable product mix.

Generics gross profit for the nine months ended September 30, 2021 was $421 million (41% of net revenue) as compared to gross profit of $300 million (30% of net revenue) for the nine months ended September 30, 2020 as a result of the factors described above.

Selling, General, and Administrative

Generics SG&A expense for the three months ended ~~September 30, 2021~~March 31, 2022 was ~~$16~~$27.6 million, as compared to ~~$13~~$18.8 million for the three months ended ~~September 30, 2020.~~March 31, 2021. The $3$8.8 million, or ~~23%~~47%, increase from the prior year period was primarily ~~related to increased payroll costs and logistics costs.~~

Generics SG&A expense for the nine months ended September 30, 2021 was $47 million, as compared to $43 million for the nine months ended September 30, 2020. The $4 million, or 9%, increase was primarily attributedattributable to increased employee compensation and ~~an increase in indirect taxes, partially offset by cost savings~~$5 million expense associated with ~~the elimination of redundancies in connection with Company’s integration efforts of recent business acquisitions.~~a biosimilar regulatory approval.

Research and Development

Generics R&D expenses for the three months ended ~~September 30, 2021~~March 31, 2022 was ~~$35~~$43.2 million, ~~a decrease~~an increase of ~~11%~~20% or $4$7.1 million compared to the three months ended September 30, 2020. The decrease from the prior year period was primarily attributable to a decrease of in-licensing and upfront milestone payments of $6 million, which was partially offset by an increase in employee compensation and project costs on complex generics.

~~Generics R&D expenses for the nine months ended September 30, 2021 was $115 million, an increase of 5% or $6 million compared to the nine months ended September 30, 2020.~~March 31, 2021. The increase from the prior year period was primarily associated with ~~an increase~~inflationary pressures and the costs associated with acquired businesses in ~~employee compensation, and increased project spend on~~2021 of $3.0 million relating to complex 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 ~~both~~ the three months ended ~~September 30,~~March 31, 2022 and 2021 were $0.8 million and ~~2020 were $2 million. Intellectual property legal development expenses for both~~$3.6 million, respectively. The period-over-period decrease of $2.8 million was due to the ~~nine months ended September 30, 2021 and 2020 were $7 million.~~timing of specific cases. Expenses may vary based ~~upon in~~on the number of individual cases and corresponding litigation outstanding in a particular period.

Charges Related to Legal Matters, Net

~~There were no charges related to legal matters for~~For the three ~~and nine~~ months ended ~~September 30, 2021. For the nine months ended September 30, 2020,~~March 31, 2022, we recorded ~~a net charge~~charges of $6$1.7 million for ~~commercial~~ legal ~~claims (immaterial~~proceedings. (None for the three months ended ~~September 30, 2020)~~March 31, 2021).

~~Property Losses and Associated Expenses~~

~~Refer to~~ ~~Note 18. Property Losses and Associated Expenses~~ ~~for additional information.~~

Specialty

The following table sets forth results of operations for our Specialty segment for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Net revenue	Net revenue	$	92,745	$	87,868	$	277,311	$	270,101	Net revenue	$	85,086	$	95,931
Cost of goods sold	Cost of goods sold	47,303		47,735		144,184		145,782		Cost of goods sold	43,853		48,198

Gross profit	Gross profit	45,442		40,133		133,127		124,319		Gross profit	41,233		47,733
Selling, general and administrative	Selling, general and administrative	22,211		19,181		62,748		56,993		Selling, general and administrative	24,400		19,881
Research and development	Research and development	13,928		5,287		35,426		17,888		Research and development	9,577		12,065

Intellectual property legal development expenses	Intellectual property legal development expenses	43		2		68		7		Intellectual property legal development expenses	(8)		—
Acquisition, transaction-related and integration expenses		—		1		16		83
Charges related to legal matters, net		—		—		—		250
Change in fair value of contingent consideration	Change in fair value of contingent consideration	300		—		300		—		Change in fair value of contingent consideration	200		—
Operating income	Operating income	$	8,960	$	15,662	$	34,569	$	49,098	Operating income	$	7,064	$	15,787

Net Revenue

Specialty net revenue for the three months ended ~~September 30, 2021~~March 31, 2022 was ~~$93~~$85.1 million, ~~an increase~~a decrease of $5$10.8 million, or 6%11%, compared to the three months ended ~~September 30, 2020. The overall growth was primarily attributed an increase~~March 31, 2021, 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® ~~revenue of $4 million, or 11%,~~declined 6% and ~~$2 million, or 18%~~increased 13%, respectively, ~~compared~~due to the ~~prior year period, partially offset by a decline in non-promoted Specialty brands.~~

~~Specialty net revenue~~timing of shipments as prescription growth remained strong for the nine months ended September 30, 2021 was $277 million, an increase of $7 million, or 3% compared to the nine months ended September 30, 2020. The increase in revenues reflected growth in Rytary® and Unithroid® of $8 million, or 7%, and $7 million, or 19%, respectively, compared to the prior year period, partially offset by declines in Zomig® nasal spray and other non-promotedboth products.

Cost of Goods Sold and Gross Profit

Specialty cost of goods sold for the three months ended ~~September 30, 2021~~March 31, 2022 was ~~$47~~$43.9 million as compared to ~~$48~~$48.2 million for the three months ended ~~September 30, 2020.~~March 31, 2021. Specialty gross profit for the three months ended ~~September 30, 2021~~March 31, 2022 was $45 million (49% of net revenue) as compared to gross profit of $40 million (46% of net revenue) for the three months ended September 30, 2020. The increase in gross profit primarily related to revenue growth and the mix of revenues, including the impact of non-promoted products.

Specialty cost of goods sold for of the nine months ended September 30, 2021 was $144 million as compared to $146 million for the nine months ended September 30, 2020. Specialty gross profit for the nine months ended September 30, 2021 was $133$41.2 million (48% of net revenue) as compared to gross profit of ~~$124~~$47.7 million ~~(46%~~(50% of net revenue) for the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021. The ~~increase~~decrease in gross profit primarily related to the ~~mix of~~decrease in revenues, including the impact of non-promoted ~~products and declines~~products. Additionally, the decrease in ~~Zomig® nasal spray, which has a higher cost structure than the overall Specialty portfolio.~~gross margin was due to product mix.

Selling, General, and Administrative

Specialty SG&A expense was ~~$22~~$24.4 million for the three months ended ~~September 30, 2021,~~March 31, 2022, an increase of $3$4.5 million or ~~16%~~23% compared to the three months ended ~~September 30, 2020.~~March 31, 2021. The increase was primarily driven by an increase in ~~employee compensation mainly due to additional headcount in our endocrinology~~in-person sales ~~force,~~ and ~~an increase in third party spend~~marketing efforts and ~~promotional efforts as the Company began to resume normal activities and in-person meetings in the current year.~~

Specialty SG&A expense was $63 million for the nine months ended September 30, 2021, an increase of $6 million or 10% compared to the nine months ended September 30, 2020. The increase was driven by payroll-related expenses, primarily

attributable to the expansion of our sales force, an increase in indirect taxes, and an increase in third party spend and promotional efforts as the Company began to resume normal activities and in-person meetings in the current year.increased compensation.

Research and Development

Specialty R&D expenses for the three months ended ~~September 30, 2021~~March 31, 2022 were ~~$14~~$9.6 million, as compared to $5$12.1 million for the three months ended ~~September 30, 2020.~~March 31, 2021. The $9$2.5 million ~~increase~~decrease from the prior year period was primarily attributable to ~~increased project spend, including $3 million relating to new projects associated with the KSP Acquisition, and an increase~~a decrease in in-licensing and upfront milestone payments of ~~$2 million.~~

~~Specialty R&D expenses for~~$5.0 million and a reduction in IPX-203 spend as the ~~nine months ended September 30, 2021 were $35~~project neared completion, partially offset by increased spend of $3.0 million as compared to $18 million for the nine months ended September 30, 2020. The $18 million increase from the prior year period was primarily attributable to an increase in in-licensing and upfront milestone payments of $7 million to grow our Specialty pipeline and increased project spend, including $6 million relating to new projects associated with the KSP Acquisition.

AvKARE

The following table sets forth results of operations for our AvKARE segment for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (in thousands):

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Net revenue $ 88,721 $ 89,506 $ 259,390 $ 211,323
Cost of goods sold 73,421 76,543 211,208 173,966
Gross profit 15,300 12,963 48,182 37,357
Selling, general and administrative 14,683 15,374 41,986 41,809
Acquisition, transaction-related and integration expenses — — 1,422 —
Operating income (loss) $ 617 $ (2,411) $ 4,774 $ (4,452)

We completed the acquisitions of the businesses that comprise our AvKARE segment on January 31, 2020. As a result, the increase in results of operations for the AvKARE segment was primarily due to nine months of activity in 2021 as compared to eight months of activity in 2020 The following discussion specifically is for operating results for the comparative three months ended September 30, 2021 and 2020. Refer to ~~Note 3. Acquisitions, for additional information on the acquisitions.~~


	Three Months Ended March 31,
	2022		2021
Net revenue	$	94,800	$	84,666
Cost of goods sold	80,179		68,047
Gross profit	14,621		16,619
Selling, general and administrative	13,410		13,704
Acquisition, transaction-related and integration expenses	—		931
Operating income	$	1,211	$	1,984

Net Revenue

AvKARE net revenue for the three months ended ~~September 30, 2021~~March 31, 2022 was $94.8 million, an increase of ~~$89~~$10.1 million, ~~was flat~~or 12%, as compared to ~~the prior year period as growth in new product introductions offset favorable timing of a discrete item that benefited~~ the three months ended ~~September 30, 2020.~~March 31, 2021, driven by growth in our distribution channel.

Cost of Goods Sold and Gross Profit

AvKARE cost of goods sold for the three months ended ~~September 30, 2021~~March 31, 2022 was ~~$73~~$80.2 million as compared to ~~$77~~$68.0 million for the three months ended ~~September 30, 2020.~~March 31, 2021. AvKARE gross profit for the three months ended ~~September 30, 2021~~March 31, 2022 was ~~$15~~$14.6 million ~~(17%~~(15% of net revenue) as compared to gross profit of ~~$13~~$16.6 million ~~(14%~~(20% of net revenue) for the three months ended ~~September 30, 2020.~~March 31, 2021. The ~~increase~~decrease in ~~gross profit and~~ gross profit percentage primarily related to ~~organic growth due to new product introductions which more than offset a decrease~~an increase in ~~less profitable revenues.~~sales through our lower margin distribution channel.

Selling, General, and Administrative

AvKARE SG&A expense was ~~approximately $15~~essentially flat period-over-period with $13.4 million of expense for the three months ended March 31, 2022 as compared to $13.7 million for ~~each of~~ the ~~three-month periods~~three months ended ~~September 30, 2021 and 2020.~~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 ~~$469~~$446.9 million of available capacity on our revolving credit facility as of ~~September 30, 2021.~~March 31, 2022. Refer to Note 17. Debt in our ~~2020~~2021 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, 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 ~~$50~~$75.0 million to ~~$60~~$85.0 million during ~~2021~~2022 for capital expenditures to support and grow our existing operations, primarily related to investments in manufacturing equipment, information technology and facilities. ~~As discussed in~~ ~~Note. 3 Acquisitions, the KSP Acquisition closed on~~ ~~April 2, 2021. Under the terms of the acquisition, in addition to the cash paid at closing, we are required to make a cash payment of $30 million on January 11, 2022. Additionally, as discussed in Note 19,~~ ~~Subsequent Events~~, we announced on November 2, 2021 that we had entered into a definitive agreement to acquire Puniska Healthcare Pvt. Ltd. (“Puniska”). We paid $73 million for approximately 74% of the equity interests of Puniska. We expect to pay an additional $4 million for land held by one of the sellers during November 2021 and $16 million for the remaining 26% of the equity interests upon approval by the government of India. We expect to fund the entire purchase price with cash on hand.

Over the next 12 months, we ~~will~~expect to make substantial payments, ~~for~~including a $10 million milestone payment to Mabxience S.L. (refer to Note 5. Alliance and Collaboration), monthly interest and quarterly principal amounts due for 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. Leases in our ~~2020~~2021 Annual Report on Form 10-K for detailed information. 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. Related to our Rondo Term Loan, we made a prepayment of $25 million towards the outstanding principal during the three months ended September 30, 2021, in addition to planned principal payments during 2021. ~~Additionally, we fully repaid the Short-Term Sellers Note of $1 million during February 2021.~~

We are party to a tax receivable agreement (“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 units~~Common 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 units~~Common Units sold or exchanged for our class A ~~Common Stock,~~common stock, the price of our class A ~~Common Stock~~common stock on the date of sale or exchange, the timing

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 ~~Holdings~~the 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 ~~September 30, 2021~~March 31, 2022 could result in future Amneal tax deductions and obligations to pay 85% of such benefits to the holders of Amneal ~~common units.~~Common Units. These obligations could be incremental to and substantially larger than the approximate ~~$206~~$206.3 million contingent liability as of ~~September 30, 2021~~March 31, 2022 (refer to Note 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 Taxes~~in our ~~2020~~2021 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.~~TRA. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and March 31, 2021, we made tax distributions of $9 $4.4 million (net) and ~~$34~~$9.2 million, respectively, to ~~Amneal's members.~~the Members.

~~At September 30, 2021,~~As of March 31, 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)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Cash provided by (used in):	Cash provided by (used in):					Cash provided by (used in):
Operating activities	Operating activities	$	178,559	$	273,043	Operating activities	$	120,343	$	148,128
Investing activities	Investing activities	(107,213)		(285,751)		Investing activities	(97,395)		(12,693)
Financing activities	Financing activities	(107,772)		143,089		Financing activities	(61,570)		(26,149)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(76)		447		Effect of exchange rate changes on cash	(1,572)		(593)
Net (decrease) increase in cash, cash equivalents, and restricted cash	Net (decrease) increase in cash, cash equivalents, and restricted cash	$	(36,502)	$	130,828	Net (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 ~~$179~~$120.3 million for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 as compared to ~~$273~~$148.1 million for the ~~nine~~three months ended ~~September 30, 2020. Excluding~~March 31, 2021. The decrease in operating cash flows was primarily driven by net income in the ~~Federal tax refund and related interest of $110 million received in August 2020 (refer to Note 7.~~ ~~Income Taxes~~ ~~for additional information), cash provided by operating activities for the nine months ended September 30, 2021 increased $16 million~~prior period as compared to a net loss in the ~~prior year~~current period. The period-over-period increase was primarily a result of increased income and an improvement in days sales outstanding in trade accounts receivable, partially offset by an increase in rebate payments and an increase in inventory resulting from rebuilding stock levels drawn down during the COVID-19 pandemic.

Cash Flows from Investing Activities

Net cash used in investing activities for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was ~~$107~~$97.4 million as compared to ~~$286~~$12.7 million for the ~~nine~~three months ~~ended September 30, 2020.~~ended March 31, 2021. The ~~$179~~period-over-period increase of $84.7 million ~~decrease~~ in net cash used ~~in investing activities for the nine months ended September 30, 2021 as compared to the prior year period~~ was primarily due to ~~$254 million of net~~ cash paid for the ~~Rondo Acquisitions in the prior year period as compared to $74 million of net cash paid for the KSP Acquisition in the current year period. Refer to~~ ~~Note 3. Acquisitions, for additional information on our acquisitions.~~Saol Acquisition.

Cash Flows from Financing Activities

Net cash used in financing activities was ~~$108~~$61.6 million for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 as compared to net cash ~~provided by~~used in financing activities of ~~$143~~$26.1 million for the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021. The ~~$250~~period-over-period increase of $35.4 million ~~year-over-year change~~in net cash used was primarily ~~attributable~~due to $44.0 million paid for deferred consideration associated with the KSP Acquisition and the Puniska Acquisition (refer to Note 3. Acquisitions), net ~~proceeds from the $180~~of a decrease in debt payments of $14.0 million ~~Rondo Term Loan~~related to an excess cash flow payment made in the prior year period an increase in period-over-period tax distributions made to non-controlling interests of $35 million, and an increase in period-over-period payments on debt, primarily the $14 million paid in March 2021 to satisfy the excess cash flow requirements of Amneal’s Term Loan, and the $25 million prepayment made on the Rondo Term Loan in September 2021. Refer to ~~Note 3. Acquisitions, for additional information~~ on our ~~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.

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 ~~2020~~2021 Annual Report on Form 10-K. As of ~~September 30, 2021, other than the contractual obligations noted below,~~March 31, 2022, there have been no material changes to the disclosure presented in our ~~2020~~2021 Annual Report on Form 10-K.

Payments Due by Period
Contractual Obligations Total Less
Than 1
Year 1-3
Years 3-5
Years More
Than 5
Years
Kashiv Specialty Pharmaceuticals, LLC acquisition $ 30,500 $ 30,500 $ — $ — $ —

The foregoing table does not include contingent consideration liabilities related to the KSP Acquisition. Such milestone payments are dependent upon the occurrence of specific and contingent events, and not the passage of time. Refer to ~~Note 3. Acquisitions~~ ~~and~~ ~~Note 10. Fair Value Measurements~~ ~~for additional information.~~

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of ~~September 30, 2021.~~March 31, 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 ~~2020~~2021 Annual Report on Form 10-K. There have been no material changes to the disclosures presented in our ~~2020~~2021 Annual Report on Form ~~10-K, except those discussed in~~ ~~Note 2. Summary of Significant Accounting Policies~~.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 ~~2020~~2021 Annual Report on Form 10-K.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

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 ~~September 30, 2021.~~March 31, 2022.

Changes in Internal Control over Financial Reporting

During the ~~quarter~~three months ended ~~September 30, 2021,~~March 31, 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.

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 13. Commitments and Contingencies and is incorporated by reference herein.

Item 1A. Risk Factors

~~Other than as set forth below, there~~There have been no material changes to the disclosures presented in our ~~2020~~2021 Annual Report on Form 10-K under Item 1A. Risk Factors.

~~Severe weather or legal, regulatory or market measures to address severe weather may negatively affect our business and results of operations.~~

Severe weather, such as a hurricane, tornado, earthquake, wildfire or flooding, may pose physical risks to our facilities and disrupt the operation of our supply chain. For example, on September 1, 2021, Tropical Storm Ida brought extreme rainfall and flash flooding to New Jersey that caused damage to two of our facilities in Branchburg. The impacts of the changing weather on water resources may result in water scarcity, limiting our ability to access sufficient high-quality water in certain locations, which may increase operational costs.

Concern over severe weather may also result in new or additional legal or regulatory requirements designed to mitigate the effects of severe weather on the environment. If such laws or regulations are more stringent than current legal or regulatory obligations, we may experience disruption in, or an increase in the costs associated with sourcing, manufacturing and distribution of our products, which may adversely affect our business, results of operations or financial condition.

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

~~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.~~

5747

Item 6. Exhibits


Exhibit No.						Description of Document







31.1						Certification of the Co - Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.2						Certification of the Co - Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.3						Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32.1						Certification of the Co - Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

32.2						Certification of the Co - Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

32.3						Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**



101						The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2021~~March 31, 2022 formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for each of the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ (ii) Consolidated Statements of Comprehensive ~~(Loss)~~ Income for each of the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ (iii) Consolidated Balance Sheets as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, (iv) Consolidated Statements of Cash Flows for the nine months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ (v) Consolidated Statements of Changes in Stockholders' Equity for each of the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ 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 ~~September 30, 2021~~March 31, 2022 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.

5848

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: ~~November 8, 2021~~May 6, 2022	Amneal Pharmaceuticals, Inc.
		(Registrant)

	By:	/s/ Anastasios Konidaris
		Anastasios Konidaris
		Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

5949


	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Stockholders' Accumulated Deficit		Accumulated Other Comprehensive Loss		Non- Controlling Interests		Total Equity		Redeemable Non-Controlling Interests
	Shares	Amount		Shares	Amount
Balance at January 1, 2020	147,070	$	1,470	152,117	$	1,522	$	606,966	$	(377,880)	$	(68)	$	114,778	$	346,788	$	—
Net income (loss)	—	—		—	—		—		94,096		—		(19,471)		74,625		915
Foreign currency translation adjustment	—	—		—	—		—		—		(4,795)		(4,953)		(9,748)		—
Stock-based compensation	—	—		—	—		15,617		—		—		—		15,617		—
Exercise of stock options	79	1		—	—		217		—		(9)		7		216		—
Restricted stock unit vesting, net of shares withheld to cover payroll taxes	438	4		—	—		227		—		(25)		(1,007)		(801)		—
Unrealized loss on cash flow hedge, net of tax	—	—		—	—		—		—		(36,409)		(37,622)		(74,031)		—
Tax distributions	—	—		—	—		—		—		—		(1,170)		(1,170)		(458)
Non-controlling interests from Rondo transaction	—	—		—	—		—		—		—		—		—		11,475
Distribution of earnings to and acquisition of non-controlling interests	—	—		—	—		106		—		—		(3,406)		(3,300)		—
Balance at September 30, 2020	147,587	$	1,475	152,117	$	1,522	$	623,133	$	(283,784)	$	(41,306)	$	47,156	$	348,196	$	11,932


Contingent Consideration Liability	Fair Value as of September 30, 2021 (in thousands)	Unobservable input	Range				Weighted Average(1)
Regulatory Milestones	$500	Discount rate	2.8	%	-	4.6%	3.0%
		Probability of payment	1.8	%	-	20.0%	16.7%
		Projected year of payment	2023		-	2027	2023
Royalties	$5,900	Discount rate	11.0	%	-	11.0%	11.0%
		Probability of payment	1.8	%	-	20.0%	18.0%
		Projected year of payment	2023		-	2032	2029


	Future Amortization
Remainder of 2021	$	43,701
2022	164,385
2023	150,681
2024	140,269
2025	100,177
Thereafter	227,989
Total	$	827,202


Nine Months Ended September 30, 2021	Generics (1)		Specialty		AvKARE (1)		Corporate and Other		Total Company
Net revenue	$	1,020,072	$	277,311	$	259,390	$	—	$	1,556,773
Cost of goods sold	598,122		144,184		211,208		—		953,514
Cost of goods sold impairment charges	688		—		—		—		688
Gross profit	421,262		133,127		48,182		—		602,571
Selling, general and administrative	46,500		62,748		41,986		117,046		268,280
Research and development	114,547		35,426		—		—		149,973
In-process research and development impairment charges	710		—		—		—		710
Intellectual property legal development expenses	6,506		68		—		—		6,574
Acquisition, transaction-related and integration expenses	—		16		1,422		5,781		7,219
Charges related to legal matters, net	—		—		—		19,000		19,000
Restructuring and other charges	80		—		—		708		788
Change in fair value of contingent consideration	—		300		—		—		300
Property losses and associated expenses	8,186		—		—		—		8,186
Operating income (loss)	$	244,733	$	34,569	$	4,774	$	(142,535)	$	141,541


Three Months Ended September 30, 2020	Generics (1)		Specialty		AvKARE (1,2)		Corporate and Other		Total Company
Net revenue	$	341,920	$	87,868	$	89,506	$	—	$	519,294
Cost of goods sold	229,067		47,735		76,543		—		353,345
Cost of goods sold impairment charges	32,364		—		—		—		32,364
Gross profit	80,489		40,133		12,963		—		133,585
Selling, general and administrative	13,153		19,181		15,374		35,412		83,120
Research and development	39,232		5,287		—		—		44,519

Intellectual property legal development expenses	2,132		2		—		—		2,134
Acquisition, transaction-related and integration expenses	—		1		—		1,040		1,041
Charges related to legal matters, net	60		—		—		—		60
Restructuring and other (credit) charges	(536)		—		—		812		276
Operating income (loss)	$	26,448	$	15,662	$	(2,411)	$	(37,264)	$	2,435


Nine Months Ended September 30, 2020	Generics (1)		Specialty		AvKARE (1,2)		Corporate and Other		Total Company
Net revenue	$	1,001,065	$	270,101	$	211,323	$	—	$	1,482,489
Cost of goods sold	666,841		145,782		173,966		—		986,589
Cost of goods sold impairment charges	34,579		—		—		—		34,579
Gross profit	299,645		124,319		37,357		—		461,321
Selling, general and administrative	42,578		56,993		41,809		100,660		242,040
Research and development	108,582		17,888		—		—		126,470
In-process research and development impairment charges	960		—		—		—		960
Intellectual property legal development expenses	6,947		7		—		—		6,954
Acquisition, transaction-related and integration expenses	325		83		—		4,995		5,403
Charges related to legal matters, net	5,610		250		—		—		5,860
Restructuring and other (credit) charges	(158)		—		—		2,815		2,657
Operating income (loss)	$	134,801	$	49,098	$	(4,452)	$	(108,470)	$	70,977


(Amounts in millions)		Research and development expenses
		For the three months ended September 30				For the nine months ended September 30
Products	Agreement Date	2021		2020		2021		2020
Filgrastim and PEG-Filgrastim (1)	October 2017	$	—	$	1	$	—	$	1
Ganirelix Acetate and Cetrorelix Acetate (2)	August 2020	$	—	$	1	$	1	$	1


	Payments Due by Period
Contractual Obligations	Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
Kashiv Specialty Pharmaceuticals, LLC acquisition	$	30,500	$	30,500	$	—	$	—	$	—