DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 28, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | IMPAX LABORATORIES INC | |
Trading Symbol | ipxl | |
Entity Central Index Key | 1,003,642 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding (in shares) | 73,879,017 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 232,123 | $ 340,351 |
Accounts receivable, net | 239,590 | 324,451 |
Inventory, net | 167,554 | 125,582 |
Prepaid expenses and other current assets | 61,319 | 31,689 |
Total current assets | 700,586 | 822,073 |
Property, plant and equipment, net | 227,588 | 214,156 |
Intangible assets, net | 891,225 | 602,020 |
Goodwill | 208,382 | 210,166 |
Deferred income taxes | 36,666 | 315 |
Other non-current assets | 55,209 | 73,757 |
Total assets | 2,119,656 | 1,922,487 |
Current liabilities: | ||
Accounts payable | 61,885 | 56,325 |
Accrued expenses | 235,181 | 204,711 |
Accrued profit sharing and royalty expenses | 19,759 | 65,725 |
Current portion of long-term debt, net | 17,708 | 0 |
Total current liabilities | 334,533 | 326,761 |
Long-term debt, net | 812,375 | 424,595 |
Deferred income taxes | 0 | 72,770 |
Other non-current liabilities | 68,888 | 35,952 |
Total liabilities | 1,215,796 | 860,078 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock, $0.01 par value, 2,000,000 shares authorized; No shares issued or outstanding at September 30, 2016 and December 31, 2015 | 0 | 0 |
Common stock, $0.01 par value, 150,000,000 shares authorized; 74,174,083 issued and 73,930,354 outstanding shares at September 30, 2016; 72,926,205 issued and 72,682,476 outstanding shares at December 31, 2015 | 742 | 729 |
Treasury stock at cost: 243,729 shares at September 30, 2016 and December 31, 2015 | (2,157) | (2,157) |
Additional paid-in capital | 531,301 | 504,077 |
Retained earnings | 377,777 | 570,223 |
Accumulated other comprehensive loss | (3,803) | (10,463) |
Total stockholders’ equity | 903,860 | 1,062,409 |
Total liabilities and stockholders’ equity | $ 2,119,656 | $ 1,922,487 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 2,000,000 | 2,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, shares issued (in shares) | 74,174,083 | 72,926,205 |
Common stock, shares outstanding (in shares) | 73,930,354 | 72,682,476 |
Treasury stock, shares (in shares) | 243,729 | 243,729 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenues: | ||||
Total revenues | $ 227,909 | $ 221,099 | $ 626,007 | $ 578,377 |
Cost of revenues | 136,873 | 127,550 | 357,852 | 340,743 |
Cost of revenues impairment charges | 256,462 | 0 | 258,007 | 0 |
Gross (loss) profit | (165,426) | 93,549 | 10,148 | 237,634 |
Operating expenses: | ||||
Selling, general and administrative | 55,038 | 46,307 | 144,244 | 144,776 |
Research and development | 20,115 | 18,631 | 59,937 | 50,588 |
In-process research and development impairment charges | 28,770 | 0 | 29,716 | 0 |
Patent litigation | 3,279 | 1,052 | 6,527 | 3,506 |
Total operating expenses | 107,202 | 65,990 | 240,424 | 198,870 |
(Loss) income from operations | (272,628) | 27,559 | (230,276) | 38,764 |
Other income (expense): | ||||
Interest expense | (11,089) | (8,182) | (27,874) | (19,110) |
Interest income | 222 | 247 | 895 | 825 |
Reserve for Turing receivable | (48,043) | 0 | ||
Loss on debt extinguishment | 0 | 0 | 0 | (16,903) |
Gain on sale of asset | 0 | 45,574 | 0 | 45,574 |
Net change in fair value of derivatives | 0 | (4,000) | 0 | (4,000) |
Other, net | (373) | 134 | (14) | 929 |
(Loss) income before income taxes | (283,868) | 61,332 | (305,312) | 46,079 |
(Benefit from) provision for income taxes | (104,531) | 25,577 | (112,866) | 18,509 |
Net (loss) income | $ (179,337) | $ 35,755 | $ (192,446) | $ 27,570 |
Net (loss) income per common share: | ||||
Basic (in dollars per share) | $ (2.51) | $ 0.51 | $ (2.71) | $ 0.40 |
Diluted (in dollars per share) | $ (2.51) | $ 0.49 | $ (2.71) | $ 0.38 |
Weighted-average common shares outstanding: | ||||
Basic (in shares) | 71,331,247 | 69,820,348 | 71,033,346 | 69,378,792 |
Diluted (in shares) | 71,331,247 | 72,777,746 | 71,033,346 | 72,548,557 |
Turing Pharmaceuticals AG | ||||
Other income (expense): | ||||
Reserve for Turing receivable | $ 0 | $ 0 | $ (48,043) | $ 0 |
(Benefit from) provision for income taxes | (17,400) | |||
Impax Generics, net | ||||
Revenues: | ||||
Total revenues | 175,320 | 180,666 | 467,094 | 484,086 |
Impax Specialty Pharma, net | ||||
Revenues: | ||||
Total revenues | $ 52,589 | $ 40,433 | $ 158,913 | $ 94,291 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Net Income (Loss) Attributable to Parent | ||||
Net (loss) income | $ (179,337) | $ 35,755 | $ (192,446) | $ 27,570 |
Other comprehensive (loss) income component: | ||||
Currency translation adjustments | 3,687 | (8,707) | 6,660 | (5,123) |
Comprehensive (loss) income | $ (175,650) | $ 27,048 | $ (185,786) | $ 22,447 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (192,446) | $ 27,570 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 63,101 | 48,664 |
Non-cash interest expense | 16,604 | 6,026 |
Share-based compensation expense | 23,375 | 21,851 |
Tax benefit from employees’ exercises of stock options and vestings of restricted stock awards | (507) | (5,213) |
Deferred income taxes, net and uncertain tax positions | (94,703) | (8,833) |
Intangible asset impairment charges | 287,723 | 0 |
Accrued profit sharing and royalty expenses, net of payments | (45,966) | 16,004 |
Reserve for Turing receivable | 48,043 | 0 |
Gain on sale of asset | 0 | (45,574) |
Loss on debt extinguishment | 0 | 16,903 |
Net change in fair value of derivatives | 0 | 4,000 |
Provision for inventory reserves | 14,779 | (10,204) |
Other | 23 | (762) |
Changes in certain assets and liabilities, net of effects from acquisition: | ||
Accounts receivable | 36,818 | (25,180) |
Inventory | (50,524) | (8,818) |
Prepaid expenses and other assets | (42,655) | 7,025 |
Accounts payable and accrued expenses | 31,824 | (5,505) |
Other liabilities | 2,279 | (2,878) |
Net cash provided by operating activities | 97,768 | 35,076 |
Cash flows from investing activities: | ||
Payment for business acquisition (prior year net of cash acquired) | (585,800) | (691,348) |
Proceeds from sales of intangible assets | 0 | 59,546 |
Purchases of property, plant and equipment | (31,860) | (14,709) |
Proceeds from sales of property, plant and equipment | 1,346 | 0 |
Payments for licensing agreements | (3,500) | (5,550) |
Proceeds from repayment of Tolmar loan | 15,000 | 0 |
Maturities of short-term investments | 0 | 200,064 |
Net cash used in investing activities | (604,814) | (451,997) |
Cash flows from financing activities: | ||
Proceeds from sale of convertible notes | 0 | 600,000 |
Proceeds from issuance of term loan | 400,000 | 435,000 |
Repayment of term loan | 0 | (435,000) |
Payment of deferred financing fees | (11,867) | (36,941) |
Purchase of bond hedge derivative asset | 0 | (147,000) |
Proceeds from sale of warrants | 0 | 88,320 |
Tax benefit from employees’ exercises of stock options and vestings of restricted stock awards | 507 | 5,213 |
Proceeds from exercises of stock options and ESPP | 9,137 | 10,928 |
Net cash provided by financing activities | 397,777 | 520,520 |
Effect of exchange rate changes on cash and cash equivalents | 1,041 | (70) |
Net (decrease) increase in cash and cash equivalents | (108,228) | 103,529 |
Cash and cash equivalents, beginning of period | 340,351 | 214,873 |
Cash and cash equivalents, end of period | 232,123 | 318,402 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 8,206 | 9,843 |
Cash paid for income taxes | $ 23,136 | $ 24,599 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | DESCRIPTION OF BUSINESS Impax Laboratories, Inc. (“Impax” or the “Company”) is a specialty pharmaceutical company that focuses on developing, manufacturing, marketing and distributing generic and branded pharmaceutical products. The Company has two reportable segments, referred to as “Impax Generics” and “Impax Specialty Pharma.” The Impax Generics division focuses on a broad range of therapeutic areas, including products having technically challenging drug-delivery mechanisms or unique product formulations. In addition to developing solid oral dosage products, the Impax Generics division’s portfolio includes alternative dosage form products, primarily through alliance and collaboration agreements with third parties. The Company’s Impax Specialty Pharma division is focused on the development and promotion, through the Company’s specialty sales force, of proprietary branded pharmaceutical products for the treatment of central nervous system (“CNS”) disorders and other select specialty segments. Operating and Reporting Structure The Company currently operates in two divisions: the Impax Generics division and the Impax Specialty Pharma division. The Impax Generics division includes the Company’s legacy Global Pharmaceuticals business as well as the acquired businesses of CorePharma, LLC ("CorePharma") and Lineage Therapeutics, Inc. ("Lineage") from the Company's acquisition of Tower Holdings, Inc. ("Tower") and its subsidiaries on March 9, 2015 (the "Tower Acquisition"). The Impax Specialty Pharma division includes the legacy Impax Pharmaceuticals business as well as the acquired business of Amedra Pharmaceuticals, LLC ("Amedra") from the Tower Acquisition. Impax Generics develops, manufactures, sells, and distributes generic pharmaceutical products primarily through the following four sales channels: the “Impax Generics” sales channel, for generic pharmaceutical prescription products the Company sells directly to wholesalers, large retail drug chains, and others; the “Private Label” sales channel, for generic pharmaceutical over-the-counter (“OTC”) and prescription products the Company sells to unrelated third-party customers who, in turn, sell the product to third parties under their own label; the “Rx Partner” sales channel, for generic prescription products sold through unrelated third-party pharmaceutical entities under their own label pursuant to alliance agreements; and the “OTC Partner” sales channel, for generic pharmaceutical OTC products sold through unrelated third-party pharmaceutical entities under their own labels pursuant to alliance and supply agreements. Revenues from the “Impax Generics” sales channel and the “Private Label” sales channel are reported under the caption “Impax Generics sales, net” in “Note 23. Supplementary Financial Information.” Revenues from the “OTC Partner” sales channel are reported under the caption “Other Revenues” in “Note 23. Supplementary Financial Information.” Impax Specialty Pharma is engaged in the development, sale and distribution of proprietary branded pharmaceutical products that the Company believes represent improvements to already-approved pharmaceutical products addressing CNS disorders and other select specialty segments. Impax Specialty Pharma currently has one internally developed branded pharmaceutical product, Rytary® (IPX066), 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 and/or manganese intoxication, which was approved by the U.S. Food and Drug Administration ("FDA") on January 7, 2015 and which the Company began marketing in the United States in April 2015. The Company received marketing authorization from the European Commission for NUMIENT™ (the brand name of IPX066 outside of the United States) during the fourth quarter of fiscal year 2015. In addition to Rytary®, Impax Specialty Pharma is also currently engaged in the sale and distribution of four other branded products; the more significant include Zomig® (zolmitriptan) products, indicated for the treatment of migraine headaches, under the terms of a Distribution, License, Development and Supply Agreement with AstraZeneca UK Limited (“AstraZeneca”) in the United States and in certain U.S. territories (the "AZ Agreement"), and Emverm® (mebendazole) 100 mg chewable tablets, indicated for the treatment of pinworm, whipworm, common roundworm, common hookworm, and American hookworm in single or mixed infections. Revenues from Impax-labeled branded products are reported under the caption “Impax Specialty Pharma sales, net” in “Note 23. Supplementary Financial Information.” Finally, the Company generated revenue in Impax Specialty Pharma from research and development services provided under a development and license agreement with another unrelated third-party pharmaceutical company (which was terminated by mutual agreement of the parties effective December 23, 2015), and reports such revenue under the caption “Other Revenues” in “Note 23. Supplementary Financial Information.” Impax Specialty Pharma also has a number of product candidates that are in varying stages of development. See “Note 22. Segment Information” for financial information about our segments for the three and nine months ended September 30, 2016 and 2015 . Operating Locations The Company owns and/or leases facilities in California, Pennsylvania, New Jersey and Taiwan, Republic of China (“R.O.C.”). In California, the Company utilizes a combination of owned and leased facilities mainly located in Hayward. The Company’s primary properties in California consist of a leased office building used as the Company’s corporate headquarters, in addition to five properties it owns, including a research and development center facility and a manufacturing facility. Additionally, the Company leases two facilities in Hayward, utilized for additional research and development, equipment storage and quality assurance support. In Pennsylvania, the Company leased facilities in Chalfont, Montgomeryville, and Horsham used for sales and marketing, finance, and administrative personnel. During September 2016, the Company consolidated the three Pennsylvania locations into a new leased facility located in Fort Washington, Pennsylvania. In addition, the Company previously owned a packaging plant in Philadelphia, Pennsylvania that was closed and sold in February 2016 in conjunction with the Company's restructuring of its packaging and distribution operations announced in June 2015 and discussed below in "Note 17. Restructurings." In New Jersey, the Company leases manufacturing, packaging, research and development and warehousing facilities in Middlesex, New Jersey and office space in Bridgewater, New Jersey. Outside the United States, in Taiwan, R.O.C., the Company owns a manufacturing facility. BASIS OF PRESENTATION Interim Financial Statements The accompanying unaudited interim consolidated financial statements have been prepared from the books and records of the Company in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information and Rule 10-01 of Regulation S-X promulgated by the United States Securities and Exchange Commission (“SEC”), which permit reduced disclosures for interim periods. All adjustments necessary for a fair presentation of the accompanying balance sheets and statements of operations, comprehensive (loss) income, and cash flows have been made. Although these interim consolidated financial statements do not include all of the information and footnotes required for complete annual financial statements, management believes the disclosures are adequate to make the information presented not misleading. Unaudited interim results of operations and cash flows are not necessarily indicative of the results that may be expected for the full year. Unaudited interim consolidated financial statements and footnotes should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015 , as filed with the SEC, wherein a more complete discussion of significant accounting policies and certain other information can be found. Principles of Consolidation The Company's unaudited interim consolidated financial statements include the accounts of the operating parent company, Impax Laboratories, Inc., its wholly owned subsidiaries, including Impax Laboratories USA, LLC, Impax Laboratories (Taiwan), Inc., ThoRx Laboratories, Inc., Impax International Holdings, Inc., Impax Holdings, LLC, Impax Laboratories (Netherlands) C.V., Impax Laboratories (Netherlands) B.V., Impax Laboratories Ireland Limited, Lineage and Tower, including operating subsidiaries CorePharma, Amedra Pharmaceuticals, Mountain LLC and Trail Services, Inc., in addition to an equity investment in Prohealth Biotech (Taiwan), Inc. (“Prohealth”), in which the Company held a 57.54% majority ownership interest at September 30, 2016 . All significant intercompany accounts and transactions have been eliminated. Foreign Currency Translation The Company translates the assets and liabilities of the Taiwan dollar functional currency of its majority-owned affiliate Prohealth and its wholly-owned subsidiary Impax Laboratories (Taiwan), Inc. into the U.S. dollar reporting currency using exchange rates in effect at the end of each reporting period. The revenues and expenses of these entities are translated using an average of the rates in effect during the reporting period. Gains and losses from these translations are recorded as currency translation adjustments included in the consolidated statements of comprehensive (loss) income. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP and the rules and regulations of the SEC requires the use of estimates and assumptions, based on complex judgments considered reasonable, which affect the reported amounts of assets and liabilities and disclosure of contingent assets and contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant judgments are employed in estimates used in determining values of tangible and intangible assets, contingent consideration, legal contingencies, tax assets and tax liabilities, fair value of share-based compensation related to equity incentive awards issued to employees and directors, and estimates used in applying the Company’s revenue recognition policy, including those related to accrued chargebacks, rebates, product returns, Medicare, Medicaid, and other government rebate programs, shelf-stock adjustments, and the timing and amount of deferred and recognized revenue and deferred and amortized product manufacturing costs related to alliance and collaboration agreements. Actual results may differ from estimated results. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. |
BUSINESS ACQUISITIONS
BUSINESS ACQUISITIONS | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
BUSINESS ACQUISITIONS | BUSINESS ACQUISITIONS Teva Transaction On August 3, 2016, the Company completed its previously announced acquisition of (A) certain assets related to (i) 15 currently marketed generic pharmaceutical products, (ii) one approved generic product and two tentatively approved strengths of a currently marketed product, which have not yet launched, (iii) one pipeline generic product and one pipeline strength of a currently marketed product, which are pending approval by the FDA and (iv) one generic product under development, and (B) the return to the Company of its full commercial rights to its pending Abbreviated New Drug Application ("ANDA") for the generic equivalent to Concerta® (methylphenidate hydrochloride), a product the Company previously partnered with Teva Pharmaceuticals USA, Inc. (“Teva USA”) (collectively, the products and pipeline products and the assets related thereto in (A) and (B), the “Acquired Product Lines” and the transactions related thereto the “Teva Transaction”), pursuant to (x) an Asset Purchase Agreement, dated as of June 20, 2016, as amended on June 30, 2016, with Teva Pharmaceutical Industries Ltd. (“Teva”), acting directly or through its affiliates (the “Teva APA”), (y) an Asset Purchase Agreement, dated as of June 20, 2016, as amended on June 30, 2016, with affiliates of Allergan plc (“Allergan”), including Actavis Elizabeth LLC, Actavis Group PTC Ehf., Actavis Holdco US, Inc., Actavis LLC, Actavis Mid Atlantic LLC, Actavis Pharma, Inc., Actavis South Atlantic LLC, Andrx LLC, Breath Ltd., The Rugby Group, Inc. and Watson Laboratories, Inc. (the “Allergan APA” and collectively with the Teva APA, the "APAs"), and (z) a Termination Agreement, dated as of June 20, 2016, between the Company and Teva USA, terminating each party’s rights and obligations with respect to methylphenidate hydrochloride under the Strategic Alliance Agreement, dated June 27, 2001, as amended between the Company and Teva USA. The aggregate purchase price for the Acquired Product Lines pursuant to the terms of the Teva APA and the Allergan APA, including the upfront payment to Teva in accordance with the Termination Agreement, was $585.8 million in cash at closing. The Company is also obligated to make future payments to Teva of up to $40.0 million under the terms of the Termination Agreement, payable upon the achievement of specified commercialization events related to methylphenidate hydrochloride. The Teva Transaction was part of the divestiture process mandated by the Federal Trade Commission in connection with the acquisition by Teva of the U.S. generics business of Allergan. The Company financed the Teva Transaction utilizing cash on hand and $400.0 million , the full amount of borrowing available, from its new Term Loan Facility, as discussed in "Note 13. Debt." The Company incurred acquisition-related costs for the Teva Transaction of $3.6 million , of which $1.6 million and $2.9 million are included, respectively in selling, general and administration expenses in the Company's consolidated statement of operations for the three and nine months ended September 30, 2016 , respectively. The acquisition of the foregoing currently marketed and pipeline products fits with the Company’s strategic priorities of maximizing its Generics Division’s platform and optimizing research and development opportunities. Through the Teva Transaction, the Company expects to expand its portfolio of difficult-to-manufacture or limited-competition products and maximize utilization of its existing manufacturing facilities in Hayward, California and Taiwan. As part of the closing of the Teva Transaction, the Company, Teva and Allergan agreed to certain transition related services pursuant to which the Company agreed to manage the payment process for certain commercial chargebacks and rebates on behalf of Teva and Allergan related to products each of Teva and Allergan sold into the channel prior to the closing date. On August 18, 2016, the Company received a payment totaling $42.4 million from Teva and Allergan, which represented their combined estimate of the amount of commercial chargebacks and rebates to be paid by the Company on their behalf to wholesalers who purchased product from Teva and Allergan prior to the closing. Pursuant to the agreed upon transition services, Teva and Allergan are obligated to reimburse the Company for additional payments related to chargebacks and rebates made on their behalf in excess of the $42.4 million . If the total payments made by the Company on behalf of Teva and Allergan are less than $42.4 million , the Company is obligated to refund the difference to Teva and/or Allergan. As of September 30, 2016, the Company had paid $24.8 million on behalf of Teva and Allergan related to chargebacks and rebates as described above and $17.6 million remained in accrued expenses on the consolidated balance sheet. Purchase Accounting and Consideration Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 805, Business Combinations ("ASC 805") defines a business as consisting of inputs and processes applied to those inputs that have the ability to create outputs. The Company has determined that the Acquired Product Lines meet the definition of a business and, accordingly, has accounted for the Teva Transaction as a business combination under the acquisition method of accounting. The following is a preliminary estimate of the purchase price for the Teva Transaction (in thousands) as of the closing date of August 3, 2016: Estimated Fair Value Purchase price per the APAs $ 575,800 Upfront payment pursuant to Termination Agreement 10,000 Total cash consideration 585,800 Fair value of contingent consideration pursuant to Termination Agreement (1) 30,100 Total consideration transferred $ 615,900 (1) The contingent consideration arrangement pursuant to the Termination Agreement potentially requires the Company to pay up to $40.0 million of additional consideration to Teva upon the achievement of specified commercialization events related to methylphenidate hydrochloride. The $30.1 million fair value of the potential contingent consideration payments recognized on the acquisition date was estimated by applying a probability-weighted expected return methodology. Recognition and Measurement of Assets Acquired at Fair Value The Company has preliminarily allocated the purchase price for the Teva Transaction based upon the estimated fair value of the assets acquired at the date of acquisition. Accordingly, the preliminary purchase price allocation described below is subject to change. The Company expects to finalize the allocation of purchase price upon receipt of the final valuations for the intangible assets. Any adjustments to the preliminary fair values will be made as soon as practicable but no later than one year from the August 3, 2016 closing date of the Teva Transaction. The following is a preliminary estimate of the fair value of the intangible and tangible assets acquired in connection with the Teva Transaction on the closing date of August 3, 2016 (in thousands): Estimated Fair Value Intangible assets $ 613,032 Inventory - raw materials 2,868 Total assets acquired $ 615,900 Intangible Assets The following identifies the Company’s preliminary allocations of purchase price to intangible assets, including the weighted-average amortization period, in total and by major intangible asset class as of the closing date. See also "Note 11. Intangible Assets and Goodwill" for a discussion on a non-cash impairment charge recorded during the third quarter of 2016 related to the intangible assets acquired in the Teva Transaction: Estimated Fair Value Weighted-Average Estimated Useful Life Marketed product rights $ 461,152 19 years Acquired IPR&D product rights (1) 151,880 n/a Total intangible assets $ 613,032 (1) "IPR&D" refers to the Company's in-process research and development product rights. Pursuant to the Termination Agreement, Teva returned to the Company its full commercial rights to its pending ANDA for the generic equivalent to Concerta ® (methylphenidate hydrochloride), a product the Company previously partnered with Teva USA under a Strategic Alliance Agreement dated June 27, 2001, as amended. As a result, the Company recognized an intangible asset of $78.1 million related to the reacquired in-process research and development product right. The Company engaged a third-party valuation specialist to measure the value of the reacquired product right using a discounted cash flow analysis. The asset was determined to be indefinite-lived based on the market participant methodology prescribed in ASC 805. The estimated fair value of the in-process research and development and identifiable intangible assets was determined using the “income approach,” which is a valuation technique that provides an estimate of the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. The assumptions, including the expected projected cash flows, utilized in the preliminary purchase price allocation and in determining the purchase price were based on management's best estimates as of the closing date of the Teva Transaction on August 3, 2016. Some of the more significant assumptions inherent in the development of those asset valuations include the estimated net cash flows for each year for each asset or product (including net revenues, cost of sales, research and development costs, 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 discount rates used to arrive at the present value at the closing date of the intangible assets was 6.9% . No assurances can be given that the underlying assumptions used to prepare the discounted cash flow analysis will not change. For these and other reasons, actual results may vary significantly from estimated results. As described in "Note 11. Intangible Assets and Goodwill," the Company recorded a non-cash impairment charge during the third quarter of 2016 in the amount of $251.0 million related to the intangible assets from the Teva Transaction. Revenues and Earnings for Acquired Product Lines Included in the Company's consolidated statement of operations for the three and nine months ended September 30, 2016 were revenues of $11.4 million and a net loss of $162.0 million (including the $251.0 million impairment charge - See "Note 11. Intangible Assets and Goodwill"), representing the results of operations for the Acquired Product Lines from the Teva Transaction from the August 3, 2016 closing date through September 30, 2016. Unaudited Pro Forma Results of Operations The unaudited pro forma combined results of operations for the three and nine months ended September 30, 2016 and 2015 (assuming the closing of the Teva Transaction occurred on January 1, 2015) are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Total revenues $ 242,647 $ 262,381 $ 729,171 $ 702,224 Net (loss) income (177,379 ) 43,600 (167,505 ) 50,535 During the third quarter, the Company recognized an intangible asset impairment charge of $251.0 million , related to certain of the intangible assets acquired in the Teva Transaction. See "Note 11. Intangible Assets and Goodwill." The impairment charge is reflected as part of the loss from operations in the accompanying financial statements. 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 Teva Transaction taken place on January 1, 2015. Furthermore, the pro forma results do not purport to project the future results of operations of the Company. The unaudited pro forma information reflects primarily the following adjustments: • Adjustments to cost of revenues for amortization expense related to identifiable intangible assets acquired; • Adjustments to interest expense for the Term Loan Facility (described in detail in “Note 13. Debt” below); and • Adjustments to selling, general and administrative expense, including the following non-recurring transaction costs which have been included in the comparable nine months ended September 30, 2015 as if the transaction closed on January 1, 2015: (i) For the three months ended September 30, 2016, the elimination of $1.7 million of non-recurring transaction costs directly related to the transaction; and (ii) For the nine months ended September 30, 2016, the elimination of $2.9 million of non-recurring transaction costs directly related to the transaction. All of the items above were adjusted for the applicable tax impact. Tower Acquisition On March 9, 2015, the Company completed the Tower Acquisition for a purchase price of $691.3 million , net of $41.5 million of cash acquired and including the repayment of indebtedness of Tower and Lineage and post-closing working capital adjustments. The privately-held companies specialized in the development, manufacture and commercialization of complex generic and branded pharmaceutical products. The Tower Acquisition included the Company's acquisition of all of the outstanding shares of common stock of Tower and Lineage, pursuant to the Stock Purchase Agreement dated as of October 8, 2014, by and among the Company, Tower, Lineage, Roundtable Healthcare Partners II, L.P., Roundtable Healthcare Investors II, L.P., and the other parties thereto, including holders of certain options and warrants, to acquire the common stock of Tower and Lineage. In connection with the Tower Acquisition, all of the options and warrants of Tower and Lineage that were outstanding at the time of the acquisition were cancelled. The total consideration paid for Tower and Lineage was $691.3 million , net of $41.5 million of cash acquired and including the repayment of indebtedness of Tower and Lineage and post-closing working capital adjustments. The Company incurred total acquisition-related costs of $10.9 million , of which $6.8 million were incurred during the nine months ended September 30, 2015 and were included in selling, general and administrative expenses in the Company’s consolidated statement of operations for that period. In connection with the Tower Acquisition, the Company recorded an accrual for severance and related termination costs of $2.4 million during 2015 related to the elimination of approximately 10 positions at the acquired companies. The Company paid all severance and related termination costs related to the Tower Acquisition as of the end of the second quarter of 2016. The Tower Acquisition allows the Company to expand its commercialized generic and branded product portfolios. The Company has also leveraged its sales and marketing organization to promote the marketed products acquired. Consideration The Company has accounted for the Tower Acquisition as a business combination under the acquisition method of accounting. The Company has allocated the purchase price for the transaction based upon the fair value of net assets acquired and liabilities assumed at the date of acquisition. Recognition and Measurement of Assets Acquired and Liabilities Assumed at Fair Value The following tables summarize the final fair values of the tangible and identifiable intangible assets acquired and liabilities assumed in the transaction at the closing date, net of cash acquired of $41.5 million (in thousands): Accounts receivable (1) $ 56,851 Inventory 31,259 Income tax receivable and other prepaid expenses 2,407 Property, plant and equipment 27,540 Intangible assets 632,600 Intangible assets held for sale 4,000 Goodwill 180,808 Deferred income taxes 37,041 Other non-current assets 3,844 Total assets acquired 976,350 Current liabilities 67,706 Deferred tax liabilities 210,005 Other non-current liabilities 7,291 Total liabilities assumed 285,002 Cash paid, net of cash acquired (2) $ 691,348 (1) The accounts receivable acquired in the Tower Acquisition had a fair value of $56.9 million , net of an allowance for doubtful accounts of $9.0 million , which represented the Company’s best estimate on March 9, 2015 (the closing date of the transaction) of the contractual cash flows not expected to be collected by the acquired companies. (2) The initial net purchase price of $697.2 million was subject to post-closing working capital adjustments, which resulted in the return of $5.9 million to the Company during the third quarter of 2015. Intangible Assets The following table identifies the Company’s allocations, by category, of the Tower purchase price to the intangible assets acquired as of the closing date: Estimated Fair Weighted-Average (years) Marketed product rights $ 381,100 13 Royalty rights 80,800 12 Acquired IPR&D product rights 170,700 n/a Total intangible assets $ 632,600 The estimated fair value of the in-process research and development and identifiable intangible assets was determined using the “income approach,” which is a valuation technique that provides an estimate of the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. Some of the more significant assumptions inherent in the development of those asset valuations include the estimated net cash flows for each year for each asset or product (including net revenues, cost of sales, research and development costs, 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 discount rates used to arrive at the present value at the acquisition date of currently marketed products was 15% . For in-process research and development, the discount rate used was 16% to reflect the internal rate of return and incremental commercial uncertainty in the cash flow projections. No assurances can be given that the underlying assumptions used to prepare the discounted cash flow analysis will not change. For these and other reasons, actual results may vary significantly from estimated results. Goodwill The Company recorded $180.8 million of goodwill in connection with the Tower Acquisition, some of which will not be tax-deductible. Goodwill of $59.7 million was assigned to the Impax Specialty Pharma segment and $121.1 million was assigned to the Impax Generics segment. Factors that contributed to the Company’s recognition of goodwill include the Company’s intent to expand its generic and branded pharmaceutical product portfolios and to acquire certain benefits from the Tower and Lineage product pipelines, in addition to the anticipated synergies that the Company expects to generate from the acquisition. Unaudited Pro Forma Results of Operations The following table reflects the unaudited pro forma combined results of operations for the nine months ended September 30, 2015 (assuming the closing of the Tower Acquisition occurred on January 1, 2014) (in thousands): Nine Months Ended September 30, 2015 Total revenues $ 610,814 Net income $ 40,007 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 transaction taken place on January 1, 2014. Furthermore, the pro forma results do not purport to project the future results of operations of the Company. The unaudited pro forma information reflects primarily the following adjustments: • Adjustments to amortization expense related to identifiable intangible assets acquired; • Adjustments to depreciation expense related to property, plant and equipment acquired; • Adjustments to interest expense to reflect the long-term debt held by Tower and Lineage paid out and eliminated at the closing and the Company's Senior Secured Credit Facilities with Barclays Bank PLC (described in "Note 13. Debt" below); • Adjustments to cost of revenues related to the fair value adjustments in inventory sold, including elimination of $6.1 million for the nine months ended September 30, 2015 ; • Adjustments to selling, general and administrative expense related to severance and retention costs of $3.4 million incurred as part of the transaction. These costs were eliminated in the pro forma results for the nine months ended September 30, 2015 ; • Adjustments to selling, general and administrative expense related to transaction costs directly attributable to the transaction include the elimination of $12.2 million of charges in the pro forma results for the nine month period ended September 30, 2015 ; and • Adjustments to reflect the elimination of $2.3 million in commitment fees related to the Company's $435.0 million term loan with Barclays Bank PLC (described in "Note 13. Debt" below) that were incurred during the nine months ended September 30, 2015 . All of the items above were adjusted for the applicable tax impact. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | DESCRIPTION OF BUSINESS Impax Laboratories, Inc. (“Impax” or the “Company”) is a specialty pharmaceutical company that focuses on developing, manufacturing, marketing and distributing generic and branded pharmaceutical products. The Company has two reportable segments, referred to as “Impax Generics” and “Impax Specialty Pharma.” The Impax Generics division focuses on a broad range of therapeutic areas, including products having technically challenging drug-delivery mechanisms or unique product formulations. In addition to developing solid oral dosage products, the Impax Generics division’s portfolio includes alternative dosage form products, primarily through alliance and collaboration agreements with third parties. The Company’s Impax Specialty Pharma division is focused on the development and promotion, through the Company’s specialty sales force, of proprietary branded pharmaceutical products for the treatment of central nervous system (“CNS”) disorders and other select specialty segments. Operating and Reporting Structure The Company currently operates in two divisions: the Impax Generics division and the Impax Specialty Pharma division. The Impax Generics division includes the Company’s legacy Global Pharmaceuticals business as well as the acquired businesses of CorePharma, LLC ("CorePharma") and Lineage Therapeutics, Inc. ("Lineage") from the Company's acquisition of Tower Holdings, Inc. ("Tower") and its subsidiaries on March 9, 2015 (the "Tower Acquisition"). The Impax Specialty Pharma division includes the legacy Impax Pharmaceuticals business as well as the acquired business of Amedra Pharmaceuticals, LLC ("Amedra") from the Tower Acquisition. Impax Generics develops, manufactures, sells, and distributes generic pharmaceutical products primarily through the following four sales channels: the “Impax Generics” sales channel, for generic pharmaceutical prescription products the Company sells directly to wholesalers, large retail drug chains, and others; the “Private Label” sales channel, for generic pharmaceutical over-the-counter (“OTC”) and prescription products the Company sells to unrelated third-party customers who, in turn, sell the product to third parties under their own label; the “Rx Partner” sales channel, for generic prescription products sold through unrelated third-party pharmaceutical entities under their own label pursuant to alliance agreements; and the “OTC Partner” sales channel, for generic pharmaceutical OTC products sold through unrelated third-party pharmaceutical entities under their own labels pursuant to alliance and supply agreements. Revenues from the “Impax Generics” sales channel and the “Private Label” sales channel are reported under the caption “Impax Generics sales, net” in “Note 23. Supplementary Financial Information.” Revenues from the “OTC Partner” sales channel are reported under the caption “Other Revenues” in “Note 23. Supplementary Financial Information.” Impax Specialty Pharma is engaged in the development, sale and distribution of proprietary branded pharmaceutical products that the Company believes represent improvements to already-approved pharmaceutical products addressing CNS disorders and other select specialty segments. Impax Specialty Pharma currently has one internally developed branded pharmaceutical product, Rytary® (IPX066), 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 and/or manganese intoxication, which was approved by the U.S. Food and Drug Administration ("FDA") on January 7, 2015 and which the Company began marketing in the United States in April 2015. The Company received marketing authorization from the European Commission for NUMIENT™ (the brand name of IPX066 outside of the United States) during the fourth quarter of fiscal year 2015. In addition to Rytary®, Impax Specialty Pharma is also currently engaged in the sale and distribution of four other branded products; the more significant include Zomig® (zolmitriptan) products, indicated for the treatment of migraine headaches, under the terms of a Distribution, License, Development and Supply Agreement with AstraZeneca UK Limited (“AstraZeneca”) in the United States and in certain U.S. territories (the "AZ Agreement"), and Emverm® (mebendazole) 100 mg chewable tablets, indicated for the treatment of pinworm, whipworm, common roundworm, common hookworm, and American hookworm in single or mixed infections. Revenues from Impax-labeled branded products are reported under the caption “Impax Specialty Pharma sales, net” in “Note 23. Supplementary Financial Information.” Finally, the Company generated revenue in Impax Specialty Pharma from research and development services provided under a development and license agreement with another unrelated third-party pharmaceutical company (which was terminated by mutual agreement of the parties effective December 23, 2015), and reports such revenue under the caption “Other Revenues” in “Note 23. Supplementary Financial Information.” Impax Specialty Pharma also has a number of product candidates that are in varying stages of development. See “Note 22. Segment Information” for financial information about our segments for the three and nine months ended September 30, 2016 and 2015 . Operating Locations The Company owns and/or leases facilities in California, Pennsylvania, New Jersey and Taiwan, Republic of China (“R.O.C.”). In California, the Company utilizes a combination of owned and leased facilities mainly located in Hayward. The Company’s primary properties in California consist of a leased office building used as the Company’s corporate headquarters, in addition to five properties it owns, including a research and development center facility and a manufacturing facility. Additionally, the Company leases two facilities in Hayward, utilized for additional research and development, equipment storage and quality assurance support. In Pennsylvania, the Company leased facilities in Chalfont, Montgomeryville, and Horsham used for sales and marketing, finance, and administrative personnel. During September 2016, the Company consolidated the three Pennsylvania locations into a new leased facility located in Fort Washington, Pennsylvania. In addition, the Company previously owned a packaging plant in Philadelphia, Pennsylvania that was closed and sold in February 2016 in conjunction with the Company's restructuring of its packaging and distribution operations announced in June 2015 and discussed below in "Note 17. Restructurings." In New Jersey, the Company leases manufacturing, packaging, research and development and warehousing facilities in Middlesex, New Jersey and office space in Bridgewater, New Jersey. Outside the United States, in Taiwan, R.O.C., the Company owns a manufacturing facility. BASIS OF PRESENTATION Interim Financial Statements The accompanying unaudited interim consolidated financial statements have been prepared from the books and records of the Company in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information and Rule 10-01 of Regulation S-X promulgated by the United States Securities and Exchange Commission (“SEC”), which permit reduced disclosures for interim periods. All adjustments necessary for a fair presentation of the accompanying balance sheets and statements of operations, comprehensive (loss) income, and cash flows have been made. Although these interim consolidated financial statements do not include all of the information and footnotes required for complete annual financial statements, management believes the disclosures are adequate to make the information presented not misleading. Unaudited interim results of operations and cash flows are not necessarily indicative of the results that may be expected for the full year. Unaudited interim consolidated financial statements and footnotes should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015 , as filed with the SEC, wherein a more complete discussion of significant accounting policies and certain other information can be found. Principles of Consolidation The Company's unaudited interim consolidated financial statements include the accounts of the operating parent company, Impax Laboratories, Inc., its wholly owned subsidiaries, including Impax Laboratories USA, LLC, Impax Laboratories (Taiwan), Inc., ThoRx Laboratories, Inc., Impax International Holdings, Inc., Impax Holdings, LLC, Impax Laboratories (Netherlands) C.V., Impax Laboratories (Netherlands) B.V., Impax Laboratories Ireland Limited, Lineage and Tower, including operating subsidiaries CorePharma, Amedra Pharmaceuticals, Mountain LLC and Trail Services, Inc., in addition to an equity investment in Prohealth Biotech (Taiwan), Inc. (“Prohealth”), in which the Company held a 57.54% majority ownership interest at September 30, 2016 . All significant intercompany accounts and transactions have been eliminated. Foreign Currency Translation The Company translates the assets and liabilities of the Taiwan dollar functional currency of its majority-owned affiliate Prohealth and its wholly-owned subsidiary Impax Laboratories (Taiwan), Inc. into the U.S. dollar reporting currency using exchange rates in effect at the end of each reporting period. The revenues and expenses of these entities are translated using an average of the rates in effect during the reporting period. Gains and losses from these translations are recorded as currency translation adjustments included in the consolidated statements of comprehensive (loss) income. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP and the rules and regulations of the SEC requires the use of estimates and assumptions, based on complex judgments considered reasonable, which affect the reported amounts of assets and liabilities and disclosure of contingent assets and contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant judgments are employed in estimates used in determining values of tangible and intangible assets, contingent consideration, legal contingencies, tax assets and tax liabilities, fair value of share-based compensation related to equity incentive awards issued to employees and directors, and estimates used in applying the Company’s revenue recognition policy, including those related to accrued chargebacks, rebates, product returns, Medicare, Medicaid, and other government rebate programs, shelf-stock adjustments, and the timing and amount of deferred and recognized revenue and deferred and amortized product manufacturing costs related to alliance and collaboration agreements. Actual results may differ from estimated results. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company's complete Summary of Significant Accounting Policies can be found in "Item 15. Exhibits and Financial Statement Schedules - Note 4. Summary of Significant Accounting Policies" in the Company's Annual Report on Form 10-K for the year ended December 31, 2015 , as filed with the SEC. Certain significant accounting policies have been repeated below. Revenue Recognition The Company recognizes revenue when the earnings process is complete, which under SEC Staff Accounting Bulletin No. 104, Topic No. 13, “Revenue Recognition” (“SAB 104”), is when revenue is realized or realizable and earned, there is persuasive evidence a revenue arrangement exists, delivery of goods or services has occurred, the sales price is fixed or determinable, and collectability is reasonably assured. The Company accounts for material revenue arrangements which contain multiple deliverables in accordance with FASB ASC Topic 605-25, Revenue Recognition - Multiple-Element Arrangements ("ASC 605-25"), which addresses the determination of whether an arrangement involving multiple deliverables contains more than one unit of accounting. A delivered item within an arrangement is considered a separate unit of accounting only if both of the following criteria are met: • the delivered item has value to the customer on a stand-alone basis; and • if the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item is considered probable and substantially in the control of the vendor. Under ASC 605-25, if both of the criteria above are not met, then separate accounting for the individual deliverables is not appropriate. Revenue recognition for arrangements with multiple deliverables constituting a single unit of accounting is recognized generally over the greater of the term of the arrangement or the expected period of performance, either on a straight-line basis or on a modified proportional performance method. The Company accounts for milestones related to research and development activities in accordance with FASB ASC Topic 605-28, Revenue Recognition - Milestone Method ("ASC 605-28"). ASC 605-28 allows for the recognition of consideration, which is contingent on the achievement of a substantive milestone, in its entirety in the period the milestone is achieved. A milestone is considered to be substantive if all of the following criteria are met: • the milestone is commensurate with either (1) the performance required to achieve the milestone or (2) the enhancement of the value of the delivered items resulting from the performance required to achieve the milestone; • the milestone relates solely to past performance; and • the milestone payment is reasonable relative to all of the deliverables and payment terms within the agreement. Impax Generics revenues, net and Impax Specialty Pharma revenues, net The Impax Generics revenues, net and Impax Specialty Pharma revenues, net include revenue recognized related to shipments of generic and branded pharmaceutical products to the Company’s customers, primarily drug wholesalers and retail chains. Gross sales revenue is recognized at the time title and risk of loss passes to the customer, which is generally when product is received by the customer. Net revenues may include deductions from the gross sales price related to estimates for chargebacks, rebates, distribution service fees, returns, shelf-stock adjustments, and other pricing adjustments. The Company records an estimate for these deductions in the same period when revenue is recognized. A description of each of these gross-to-net deductions follows. • Chargebacks The Company has agreements establishing contract prices for certain products with certain indirect customers, such as managed care organizations, hospitals and government agencies who purchase products from drug wholesalers. The contract prices are lower than the prices the customer would otherwise pay to the wholesaler, and the price difference is referred to as a chargeback, which generally takes the form of a credit memo issued by the Company to reduce the invoiced gross selling price charged to the wholesaler. An estimated accrued provision for chargeback deductions is recognized at the time of product shipment. The primary factors considered when estimating the provision for chargebacks are the average historical chargeback credits given, the mix of products shipped, and the amount of inventory on hand at the major drug wholesalers with whom the Company does business. The Company also monitors actual chargebacks granted and compares them to the estimated provision for chargebacks to assess the reasonableness of the chargeback reserve at each quarterly balance sheet date. • Rebates The Company maintains various rebate programs with its customers in an effort to maintain a competitive position in the marketplace and to promote sales and customer loyalty. The rebates generally take the form of a credit memo to reduce the invoiced gross selling price charged to a customer for products shipped. An estimated accrued provision for rebate deductions is recognized at the time of product shipment. The primary factors the Company considers when estimating the provision for rebates are the average historical experience of aggregate credits issued, the mix of products shipped and the historical relationship of rebates as a percentage of total gross product sales, the contract terms and conditions of the various rebate programs in effect at the time of shipment, and the amount of inventory on hand at the major drug wholesalers with whom the Company does business. The Company also monitors actual rebates granted and compares them to the estimated provision for rebates to assess the reasonableness of the rebate reserve at each quarterly balance sheet date. • Distribution Service Fees The Company pays distribution service fees to several of its wholesaler customers related to sales of its Impax Products. The wholesalers are generally obligated to provide the Company with periodic outbound sales information as well as inventory levels of the Company’s Impax Products held in their warehouses. Additionally, the wholesalers have agreed to manage the variability of their purchases and inventory levels within specified days on hand limits. An accrued provision for distribution service fees is recognized at the time products are shipped to wholesalers. • Returns The Company allows its customers to return product if approved by authorized personnel in writing or by telephone with the lot number and expiration date accompanying any request and if such products are returned within six months prior to or until twelve months following, the product’s expiration date. The Company estimates and recognizes an accrued provision for product returns as a percentage of gross sales based upon historical experience. The product return reserve is estimated using a historical lag period, which is the time between when the product is sold and when it is ultimately returned, and estimated return rates which may be adjusted based on various assumptions including: changes to internal policies and procedures, business practices, commercial terms with customers, and the competitive position of each product; the amount of inventory in the wholesale and retail supply chain; the introduction of new products; and changes in market sales information. The Company also considers other factors, including significant market changes which may impact future expected returns and actual product returns. The Company monitors actual returns on a quarterly basis and may record specific provisions for returns it believes are not covered by historical percentages. • Shelf-Stock Adjustments Based upon competitive market conditions, the Company may reduce the selling price of certain Impax Generics division products. The Company may issue a credit against the sales amount to a customer based upon their remaining inventory of the product in question, provided the customer agrees to continue to make future purchases of product from the Company. This type of customer credit is referred to as a shelf-stock adjustment, which is the difference between the initial sales price and the revised lower sales price, multiplied by an estimate of the number of product units on hand at a given date. Decreases in selling prices are discretionary decisions made by the Company in response to market conditions, including estimated launch dates of competing products and declines in market price. The Company records an estimate for shelf-stock adjustments in the period it agrees to grant such a credit memo to a customer. • Cash Discounts The Company offers cash discounts to its customers, generally 2% to 3% of the gross selling price, as an incentive for paying within invoice terms, which generally range from 30 to 90 days. An estimate of cash discounts is recorded in the same period when revenue is recognized. • Medicaid and Other U.S. Government Pricing Programs As required by law, the Company provides a rebate on drugs dispensed under the Medicaid program, Medicare Part D, TRICARE, and other U.S. government pricing programs. The Company determines its estimated government rebate accrual primarily based on historical experience of claims submitted by the various states and other jurisdictions and any new information regarding changes in the various programs which may impact the Company’s estimate of government rebates. In determining the appropriate accrual amount, the Company considers historical payment rates and processing lag for outstanding claims and payments. The Company records estimates for government rebates as a deduction from gross sales, with a corresponding adjustment to accrued liabilities. • Rx Partner and OTC Partner The Rx Partner and OTC Partner contracts include revenue recognized under alliance and collaboration agreements between the Company and unrelated third-party pharmaceutical companies. The Company has entered into these alliance agreements to develop marketing and/or distribution relationships with its partners to fully leverage its technology platform. The Rx Partners and OTC Partners alliance agreements obligate the Company to deliver multiple goods and/or services over extended periods. Such deliverables include manufactured pharmaceutical products, exclusive and semi-exclusive marketing rights, distribution licenses, and research and development services. In exchange for these deliverables the Company receives payments from its agreement partners for product shipments and research and development services, and may also receive other payments including royalties, profit sharing payments, and upfront and periodic milestone payments. Revenue received from the alliance agreement partners for product shipments under these agreements is not subject to deductions for chargebacks, rebates, product returns, and other pricing adjustments. Royalty and profit sharing amounts the Company receives under these agreements are calculated by the respective agreement partner, with such royalty and profit share amounts generally based upon estimates of net product sales or gross profit which include estimates of deductions for chargebacks, rebates, product returns, and other adjustments the alliance agreement partners may negotiate with their respective customers. The Company records the agreement partner's adjustments to such estimated amounts in the period the agreement partner reports the amounts to the Company. The Company applies the guidance of ASC 605-25 to the Strategic Alliance Agreement, as amended, with Teva Pharmaceuticals USA, Inc., an affiliate of Teva Pharmaceutical Industries Limited (the “Teva Agreement”). The Company looks to the underlying delivery of goods and/or services which give rise to the payment of consideration under the Teva Agreement to determine the appropriate revenue recognition. The Company initially defers consideration received as a result of research and development-related activities performed under the Teva Agreement. The Company recognizes deferred revenue on a straight-line basis over the expected period of performance for such services. Consideration received as a result of the manufacture and delivery of products under the Teva Agreement is recognized at the time title and risk of loss passes to the customer, which is generally when product is received by Teva. The Company recognizes profit share revenue in the period earned. OTC Partner revenue is related to agreements with Pfizer, Inc., formerly Wyeth LLC (“Pfizer”) and L. Perrigo Company (“Perrigo”) with respect to the supply of the Company's over-the-counter pharmaceutical product Loratadine and Pseudoephedrine Sulfate 5 mg/120 mg 12-hour Extended Release Tablets (the "D12 Product"). The OTC Partner sales channel is no longer a core area of the business, and the over-the-counter pharmaceutical products the Company sells through this sales channel are older products which are now only sold to Pfizer and Perrigo. The Company is currently only required to manufacture the over-the-counter pharmaceutical products under its agreements with Pfizer and Perrigo. The Company recognizes profit share revenue in the period earned. • Research Partner The Research Partner contract revenue results from development agreements the Company enters into with unrelated third-party pharmaceutical companies. The development agreements generally obligate the Company to provide research and development services over multiple periods. In exchange for this service, the Company generally receives upfront payments upon signing of each development agreement and is eligible to receive contingent milestone payments, payment of which is based upon the achievement of contractually specified events. Additionally, the Company may also receive royalty payments from the sale, if any, of a successfully developed and commercialized product under one of these development agreements. The Company recognizes revenue received from the achievement of contingent research and development milestones in the period such payment is earned. Royalty revenue, if any, will be recognized as current period revenue when earned. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk are cash, cash equivalents, and accounts receivable. The Company limits its credit risk associated with cash and cash equivalents by placing its investments with high quality money market funds, corporate debt, and short-term commercial paper and in securities backed by the U.S. Government. The Company limits its credit risk with respect to accounts receivable by performing credit evaluations when deemed necessary. The Company does not require collateral to secure amounts owed to it by its customers. In July 2015, the Company received an unsolicited offer from Turing Pharmaceuticals AG (“Turing”) to purchase the U.S. rights to Daraprim®, one of the marketed products acquired in the Tower Acquisition, as well as the active pharmaceutical ingredient for the product and the finished goods inventory on hand. Pursuant to the terms of the Asset Purchase Agreement between the Company and Turing dated August 7, 2015 (the “Turing APA”), the Company also granted a limited license to sell the existing Daraprim® product under the Company’s labeler code with the Company’s trade dress. The sale closed on August 7, 2015. In accordance with the terms of the Turing APA and in accordance with federal laws and regulations, the Company receives, and is initially responsible for processing and paying (subject to reimbursement by Turing), all chargebacks and rebates resulting from utilization by Medicaid, Medicare and other federal, state and local governmental programs, health plans and other health care providers for product sold under the Company’s labeler code. Under the terms of the Turing APA, Turing is responsible for liabilities related to chargebacks and rebates that arise as a result of Turing’s marketing or selling related activities in connection with Daraprim®. During the fourth quarter of 2015, the Company began receiving invoices for chargebacks from wholesalers and rebates from various state Medicaid agencies for Daraprim® purchases made by governmental agencies during the third quarter of 2015. As a result, the Company recorded a $40.6 million receivable from Turing as of December 31, 2015, representing actual invoices received related to the third quarter of 2015 and an estimate for invoices not yet received related to the third and fourth quarters of 2015. During the first three quarters of 2016, the Company received additional invoices related to the third and fourth quarters of 2015 and recorded an estimate for invoices not yet received related to the first three quarters of 2016. In total, the Company recorded an additional $7.4 million receivable from Turing during the nine month period ended September 30, 2016 , resulting in an estimated accounts receivable balance due to the Company of $48.0 million as of September 30, 2016 , with over $40.4 million of such amount representing overdue unpaid invoices due from Turing for chargebacks and Medicaid rebate liability as of September 30, 2016 . The Company has paid $33.5 million of cash on Turing's behalf through September 30, 2016 and the remaining difference of $14.5 million (compared to the $48.0 million receivable due from Turing) is included in "Accrued expenses" on the Company's consolidated balance sheet. As of October 28, 2016 , the amount of total payments made by the Company on Turing’s behalf was $33.6 million . As a result of the uncertainty of the Company collecting the reimbursement amounts owed by Turing that developed since the filing of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 , the Company recorded a reserve in the amount of $48.0 million on the Company’s consolidated statement of operations in "Other income (expense)" for the three month period ended March 31, 2016, representing the full amount of the estimated receivable due from Turing as of March 31, 2016. There were no changes to either the receivable or the related reserve from March 31, 2016 through September 30, 2016 . On May 2, 2016, the Company filed suit against Turing in the United States District Court for the Southern District of New York alleging breach of the terms of the Turing APA seeking (i) a declaratory judgment that the Company may revoke Turing’s right to sell Daraprim® under the Company’s labeler code and national drug codes; (ii) specific performance to require Turing to comply with its obligations under the Turing APA for past due reports and for reports going forward; and (iii) money damages to remedy Turing’s failure to reimburse the Company for chargebacks and Medicaid rebate liability when due, currently in excess of $40.4 million , and for future amounts that may be due. See “Note 21. Legal and Regulatory Matters” for a description of the Company’s suit against Turing. If the Company receives an unfavorable outcome in its suit against Turing or if Turing for any reason does not, or is unable to, make its reimbursement payments to the Company, it could have a material adverse effect on the Company’s business, results of operation and financial condition. |
FAIR VALUE MEASUREMENT AND FINA
FAIR VALUE MEASUREMENT AND FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENT AND FINANCIAL INSTRUMENTS | FAIR VALUE MEASUREMENT AND FINANCIAL INSTRUMENTS The carrying values of cash equivalents, accounts receivable, prepaid expenses and other current assets, and accounts payable in the Company’s consolidated balance sheets approximated their fair values as of September 30, 2016 and December 31, 2015 due to their short-term nature. Certain of the Company’s financial instruments are measured at fair value using a three-level hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: • Level 1 - Inputs are quoted prices for identical instruments in active markets. • Level 2 - Inputs are quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; or model-derived valuations whose inputs are observable or whose significant value drivers are observable. • Level 3 - Inputs are unobservable and reflect the Company's own assumptions, based on the best information available, including the Company's own data. The carrying amounts and fair values of the Company’s financial instruments as of September 30, 2016 and December 31, 2015 are indicated below (in thousands): As of September 30, 2016 Fair Value Measurement Based on Carrying Fair Value Quoted Prices in Active Markets Significant Significant Unobservable Assets Deferred Compensation Plan assets (1) $ 32,050 $ 32,050 $ — $ 32,050 $ — Liabilities Term Loan Facility due August 2021, current portion (2) $ 20,000 $ 20,000 $ — $ 20,000 $ — Term Loan Facility due August 2021, long-term portion (2) $ 380,000 $ 380,000 $ — $ 380,000 $ — 2% Convertible senior notes due June 2022 (3) $ 600,000 $ 532,692 $ 532,692 $ — $ — Deferred Compensation Plan liabilities (1) $ 27,860 $ 27,860 $ — $ 27,860 $ — Contingent consideration (4) $ 30,100 $ 30,100 $ — $ — $ 30,100 As of December 31, 2015 Fair Value Measurement Based on Carrying Fair Value Quoted Prices in Active Markets Significant Significant Unobservable Assets Deferred Compensation Plan assets (1) $ 30,726 $ 30,726 $ — $ 30,726 $ — Liabilities 2% Convertible senior notes due June 2022 (3) $ 600,000 $ 602,250 $ 602,250 $ — $ — Deferred Compensation Plan liabilities (1) $ 25,581 $ 25,581 $ — $ 25,581 $ — (1) The Deferred Compensation Plan liabilities are non-current liabilities recorded at the value of the amount owed to the plan participants, with changes in value recognized as compensation expense in the Company’s consolidated statements of operations. The calculation of the Deferred Compensation Plan obligation is derived from observable market data by reference to hypothetical investments selected by the participants and is included in the line item captioned “Other non-current liabilities” on the Company’s consolidated balance sheets. The Company invests participant contributions in corporate-owned life insurance (“COLI”) policies, for which the cash surrender value is included in the line item captioned “Other non-current assets” on the Company’s consolidated balance sheets. (2) The difference between the amount shown as the carrying value in the above tables and the amount shown on the Company’s consolidated balance sheets at September 30, 2016 and December 31, 2015 represents the unaccreted discount related to deferred debt issuance costs. (3) The difference between the amount shown as the carrying value in the above tables and the amount shown on the Company’s consolidated balance sheets at September 30, 2016 and December 31, 2015 represents the unaccreted discounts related to deferred debt issuance costs and bifurcation of the conversion feature of the notes. (4) The contingent consideration liability is a non-current liability representing future consideration potentially payable to Teva upon the achievement of specified commercialization events related to methylphenidate hydrochloride in accordance with the Termination Agreement related to the Teva Transaction as described in "Note 2. Business Acquisitions". A discounted cash flow valuation model was used to value the contingent consideration as of September 30, 2016. The valuation is based on significant unobservable inputs, including the probability and timing of successful product launch and the expected number of competitors at the time of launch and the launch anniversary date. The Company conducts a quarterly review of the underlying inputs and assumptions and significant changes in unobservable inputs could result in material changes to the contingent consideration liability. Changes in the value of the contingent consideration liability are included in "Other income (expense)" on the Company's consolidated statements of operations. A 5% increase or decrease in the probability of successful product launch would cause the fair value of the contingent consideration to both decrease and increase by $1.6 million , respectively. An increase or decrease in the number of competitors at the date of the product launch or the first anniversary would cause the fair value of the contingent consideration to decrease by $13.0 million and increase by $5.0 million , respectively. The maximum aggregate amount in contingent consideration payments the Company could be expected to make to Teva in accordance with the Termination Agreement related to methylphenidate hydrochloride is $40.0 million . |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS In May 2014, the FASB issued Accounting Standards Update ("ASU") 2014-09, “Revenue from Contracts with Customers” (Topic 606) regarding the accounting for and disclosures of revenue recognition, with an effective date for annual and interim periods beginning after December 15, 2016. This update provides a single comprehensive model for accounting for revenue from contracts with customers. The model requires that revenue recognized reflect the actual consideration to which the entity expects to be entitled in exchange for the goods or services defined in the contract, including in situations with multiple performance obligations. In July 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” which deferred the effective date of the previously issued revenue recognition guidance by one year. The guidance will be effective for annual and interim periods beginning after December 15, 2017. In April 2016 and May 2016, the FASB issued ASU 2016-10, "Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing" and ASU 2016-12, "Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients," respectively. Both of these updates provide improvements and clarification to the previously issued revenue recognition guidance. The guidance can be applied using one of two methods: retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application. The Company is currently evaluating the effect that this guidance may have on its consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): “Simplifying the Measurement of Inventory,” with guidance regarding the accounting for and measurement of inventory. The update requires that inventory measured using first-in, first-out ("FIFO") shall be measured at the lower of cost and net realizable value. When there is evidence that the net realizable value of inventory is lower than its cost, the difference shall be recognized as a loss in earnings in the period in which it occurs. The guidance will be effective for annual and interim periods beginning after December 15, 2016. The Company is currently evaluating the effect that this guidance may have on its consolidated financial statements. In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): “Simplifying the Accounting for Measurement-Period Adjustments,” with guidance regarding the accounting for and disclosure of measurement-period adjustments that occur in periods after a business combination is consummated. This update requires that the acquirer recognize measurement-period adjustments in the reporting period in which they are determined and, as such, eliminates the previous requirement to retrospectively account for these adjustments. This update also requires an entity to present separately on the face of the income statement, or disclose in the notes, the amount recorded in the current-period income statement that would have been recorded in previous reporting periods if the adjustments had been recognized as of the acquisition date. The effective date for annual and interim periods begins after December 15, 2015. The Company adopted this guidance during 2016, and it did not have a material effect on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), with guidance regarding the accounting for and disclosure of leases. The update requires lessees to recognize all leases, including operating leases, with a term greater than 12 months on the balance sheet. This update also requires lessees and lessors to disclose key information about their leasing transactions. The guidance will be effective for annual and interim periods beginning after December 15, 2018. The Company is currently evaluating the effect that this guidance may have on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-06, Contingent Put and Call Options in Debt Instruments (Topic 815), with guidance regarding the accounting for embedded derivatives related to debt contracts. The update clarifies that determining whether the economic characteristics of a put or call are clearly and closely related to its debt host requires only an assessment of the four-step decision sequence outlined in FASB ASC paragraph 815-15-25-24. The update also indicates that entities are not required to separately assess whether the contingency itself is clearly and closely related. The guidance will be effective for annual and interim periods beginning after December 15, 2016. The Company is currently evaluating the effect that this guidance may have on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718), with guidance regarding the simplification of accounting for share-based payment award transactions. The update changes the accounting for such areas as the accounting and cash flow classification for excess tax benefits and deficiencies; forfeitures; and tax withholding requirements and cash flow classification. The guidance will be effective for annual and interim periods beginning after December 15, 2016. The Company is currently evaluating the effect that this guidance may have on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, with guidance intended to reduce the diversity in practice regarding how certain cash receipts and cash payments are presented and classified within the statement of cash flows. The update addresses eight specific cash flow issues including debt prepayment or debt extinguishment costs, the settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies (COLIs) (including bank-owned life insurance policies (BOLIs)), distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the predominance principle. The guidance will be effective for annual and interim periods beginning after December 15, 2017. The Company is currently evaluating the effect that this guidance may have on its consolidated financial statements. |
SHORT-TERM INVESTMENTS
SHORT-TERM INVESTMENTS | 9 Months Ended |
Sep. 30, 2016 | |
Investments Schedule [Abstract] | |
SHORT-TERM INVESTMENTS | SHORT-TERM INVESTMENTS Prior to December 31, 2014, the Company invested its excess cash in high quality (AAA-rated) short-maturity marketable debt securities, such as commercial paper and corporate bonds. The Company historically held all of its investments in marketable debt securities until maturity. Accordingly, these investments were accounted for as “held-to-maturity” securities and were recorded at amortized cost, which approximated fair value. During the first quarter of 2015, the Company allowed all of its investments in marketable debt securities to mature. The proceeds from these maturities of $200.1 million were used to fund part of the Tower Acquisition on March 9, 2015. The Company held no short-term investments as of September 30, 2016 and December 31, 2015 . |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 9 Months Ended |
Sep. 30, 2016 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE | ACCOUNTS RECEIVABLE The composition of accounts receivable, net is as follows (in thousands): September 30, 2016 December 31, 2015 Gross accounts receivable (1) $ 755,859 $ 738,730 Less: Rebate reserve (295,489 ) (265,229 ) Less: Chargeback reserve (127,251 ) (102,630 ) Less: Distribution services reserve (16,529 ) (12,576 ) Less: Discount reserve (15,743 ) (18,657 ) Less: Uncollectible accounts reserve (2) (61,257 ) (15,187 ) Accounts receivable, net $ 239,590 $ 324,451 (1) Includes estimated $48.0 million and $40.6 million as of September 30, 2016 and December 31, 2015 , respectively, receivable due from Turing for reimbursement of Daraprim® chargebacks and Medicaid rebate liabilities. (2) As a result of the uncertainty of collection that developed since the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, the Company recorded a reserve of $48.0 million as of March 31, 2016, which represents the full amount of the estimated receivable due from Turing. See "Note 4. Summary of Significant Accounting Policies - Concentration of Credit Risk" for additional information regarding the Turing receivable. There were no changes to the reserve from March 31, 2016 through September 30, 2016. A roll-forward of the rebate and chargeback reserves activity for the nine months ended September 30, 2016 and the year ended December 31, 2015 is as follows (in thousands): Rebate reserve Nine Months Ended September 30, 2016 Year Ended December 31, 2015 Beginning balance $ 265,229 $ 88,812 Acquired balances — 75,447 Provision recorded during the period for Impax Generics rebates 526,913 571,642 Credits issued during the period for Impax Generics rebates (496,653 ) (470,672 ) Ending balance $ 295,489 $ 265,229 The payment mechanisms for rebates in the Impax Generics and Impax Specialty Pharma divisions are different, which impacts the location on the Company's consolidated balance sheets. Impax Specialty Pharma rebates are classified as "Accrued expenses" on the Company's consolidated balance sheets. Chargeback reserve Nine Months Ended September 30, 2016 Year Ended December 31, 2015 Beginning balance $ 102,630 $ 43,125 Acquired balances — 24,532 Provision recorded during the period 690,275 833,157 Credits issued during the period (665,654 ) (798,184 ) Ending balance $ 127,251 $ 102,630 |
INVENTORY
INVENTORY | 9 Months Ended |
Sep. 30, 2016 | |
Inventory Disclosure [Abstract] | |
INVENTORY | INVENTORY Inventory, net of carrying value reserves, at September 30, 2016 and December 31, 2015 consisted of the following (in thousands): September 30, 2016 December 31, 2015 Raw materials $ 51,806 $ 52,366 Work in-process 5,959 4,417 Finished goods 121,087 82,311 Total inventory 178,852 139,094 Less: Non-current inventory 11,298 13,512 Total inventory-current $ 167,554 $ 125,582 Inventory carrying value reserves were $39.0 million and $24.1 million at September 30, 2016 and December 31, 2015 , respectively. The Company recognizes pre-launch inventories at the lower of its cost or the expected net selling price. Cost is determined using a standard cost method, which approximates actual cost, and assumes a FIFO flow of goods. Costs of unapproved products are the same as approved products and include materials, labor, quality control, and production overhead. When the Company concludes FDA approval is expected within approximately six months, the Company will generally begin to schedule manufacturing process validation studies as required by the FDA to demonstrate the production process can be scaled up to manufacture commercial batches. Consistent with industry practice, the Company may build quantities of pre-launch inventories of certain products pending required final FDA approval and/or resolution of patent infringement litigation, when, in the Company’s assessment, such action is appropriate to prepare for the anticipated commercial launch, FDA approval is expected in the near term, and/or the related litigation will be resolved in the Company’s favor. The capitalization of unapproved pre-launch inventory involves risks, including, among other items, FDA approval of product may not occur; approvals may require additional or different testing and/or specifications than used for unapproved inventory; and, in cases where the unapproved inventory is for a product subject to litigation, the litigation may not be resolved or settled in favor of the Company. If any of these risks were to materialize and the launch of the unapproved product delayed or prevented, then the net carrying value of unapproved inventory may be partially or fully reserved. Generally, the selling price of a generic pharmaceutical product is at discount from the corresponding brand product selling price. Typically, a generic drug is easily substituted for the corresponding branded product, and once a generic product is approved, the pre-launch inventory is typically sold within the subsequent three months. If the market prices become lower than the product inventory carrying costs, then the pre-launch inventory value is reduced to such lower market value. If the inventory produced exceeds the estimated market acceptance of the generic product and becomes short-dated, a carrying value reserve will be recorded. In all cases, the carrying value of the Company's pre-launch product inventory is lower than the respective estimated net selling prices. The carrying value of unapproved inventory less reserves was $13.0 million and $8.7 million at September 30, 2016 and December 31, 2015 , respectively. To the extent inventory is not scheduled to be utilized in the manufacturing process and/or sold within twelve months of the balance sheet date, it is included as a component of other non-current assets. Amounts classified as non-current inventory consist of raw materials, net of valuation reserves. Raw materials generally have a shelf life of approximately three to five years , while finished goods generally have a shelf life of approximately two years . |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment, net of accumulated depreciation, consists of the following (in thousands): September 30, 2016 December 31, 2015 Land $ 5,603 $ 5,773 Buildings and improvements 173,637 165,322 Equipment 143,914 135,998 Office furniture and equipment 15,018 14,548 Construction-in-progress 41,641 25,659 Property, plant and equipment, gross 379,813 347,300 Less: Accumulated depreciation (152,225 ) (133,144 ) Property, plant and equipment, net $ 227,588 $ 214,156 Depreciation expense was $21.8 million and $19.2 million for the nine months ended September 30, 2016 and September 30, 2015 , respectively. Unpaid vendor invoices relating to purchases of property, plant and equipment of $3.5 million and $1.0 million , which were accrued as of September 30, 2016 and September 30, 2015 , respectively, have been excluded from the purchase of property, plant, and equipment and the change in accounts payable and accrued expenses in the Company’s consolidated statements of cash flows. |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS AND GOODWILL | INTANGIBLE ASSETS AND GOODWILL Intangible Assets The Company’s finite-lived intangible assets, consisting of marketed product rights and royalties received from product sales by the Company’s third-party partners, are amortized over the estimated useful life of the asset based on the pattern of economic benefit expected to be realized or, if that pattern is not readily determinable, on a straight-line basis. The remaining weighted-average amortization period for the Company's finite-lived intangible assets not yet fully amortized is 12.1 years as of September 30, 2016 . The Company’s indefinite-lived intangible assets consist of acquired in-process research and development ("IPR&D") product rights and acquired future royalty rights to be paid based on other companies’ net sales of products not yet approved. Amortization over the estimated useful life will commence at the time of the respective product’s launch. If FDA approval to market the product is not obtained, the Company will immediately expense the related capitalized cost. The following tables show the gross carrying values and accumulated amortization, where applicable, of the Company’s intangible assets by type for the consolidated balance sheets presented (in thousands): September 30, 2016 Gross Carrying Value Accumulated Amortization Intangible Assets, Net Amortized intangible assets: Marketed product rights $ 760,981 $ (122,359 ) $ 638,622 Royalties 339 (339 ) — 761,320 (122,698 ) 638,622 Non-amortized intangible assets: Acquired IPR&D product rights 244,803 — 244,803 Acquired future royalty rights 7,800 — 7,800 252,603 — 252,603 Total intangible assets $ 1,013,923 $ (122,698 ) $ 891,225 December 31, 2015 Gross Carrying Value Accumulated Amortization Intangible Assets, Net Amortized intangible assets: Marketed product rights $ 458,675 $ (82,906 ) $ 375,769 Royalties 2,200 (189 ) 2,011 460,875 (83,095 ) 377,780 Non-amortized intangible assets: Acquired IPR&D product rights 145,640 — 145,640 Acquired future royalty rights 78,600 — 78,600 224,240 — 224,240 Total intangible assets $ 685,115 $ (83,095 ) $ 602,020 During the first quarter of 2016, the Company capitalized $3.5 million of milestone payments due to an affiliate of Teva under the terms of the product agreement between the parties and related to the FDA's approval and the Company's subsequent commercial launch of Emverm® (mebendazole) 100 mg chewable tablets. As of December 31, 2015, the Emverm® acquired IPR&D product right had a carrying value of $82.8 million , which was the fair value assigned by the Company during the purchase price allocation accounting for the Tower Acquisition. As a result of the Company's commercial launch of the product during the first quarter of 2016, the Company transferred the total $86.3 million of asset value from non-amortized, indefinite-lived acquired IPR&D product rights to amortized, finite-lived marketed product rights and began amortization of the asset. The Emverm® marketed product right intangible asset will be amortized over an estimated useful life of nine years based on the pattern of economic benefit expected to be realized through 2024. During the second quarter of 2016, the Company recognized a total of $1.5 million of charges within cost of revenues impairment charges on the Company's consolidated statements of operations related to two currently marketed products, which were acquired as part of the Tower Acquisition, primarily due to active pharmaceutical ingredient ("API") supply issues and minimal sales activity, resulting in immediate discontinuation of one product and rapid phase-out of the other. Additionally, one of the Company's IPR&D generic products, also acquired as part of the Tower Acquisition, was determined to be impaired as a result of the commercial launch of a competitor's generic product, resulting in a $1.0 million charge to in-process research and development impairment charges on the Company's consolidated statements of operations. During the third quarter of 2016, the Company recorded $613.0 million of intangible asset additions as a result of the Teva Transaction, of which $461.1 million were amortized, finite-lived marketed product rights and $151.9 million were non-amortized, indefinite-lived acquired IPR&D product rights. Refer to "Note 2. Business Acquisitions" for additional information on the Teva Transaction. Pursuant to the Termination Agreement, the Company reacquired its full commercial rights to its pending ANDA for the generic equivalent to Concerta® (methylphenidate hydrochloride), a product candidate the Company had acquired in the Tower Acquisition that the Company had previously partnered with Teva USA, in accordance with the terms of the Strategic Alliance Agreement, as amended, pursuant to which each party would retain 50% of the gross profit realized upon sales of the product following approval. The Company's 50% interest in this product was previously considered a non-amortized, indefinite-lived acquired future royalty right owing to the fact that Teva would sell the product upon receiving FDA approval and pay the Company 50% of the gross profit realized. Upon reacquisition of Teva's interest in this product, the $70.8 million asset value of the Company's 50% interest, determined at the time of the Tower Acquisition, was transferred to non-amortized, indefinite-lived acquired IPR&D products rights, as reflected in the tables above. In addition to the intangible asset additions resulting from the Teva Transaction as described above, during the third quarter of 2016, the Company also commercially launched two products, resulting in the transfer of $11.0 million of asset value from non-amortized, indefinite-lived acquired IPR&D product rights to amortized, finite-lived marketed products rights. Upon closing the Teva Transaction on August 3, 2016, the Company initiated the process of transferring and securing Teva’s and Allergan’s customers for the acquired products to its account. The Company assumed certain price concessions would occur following the closing, however, the Company elected to take additional price reductions on certain of the acquired products in order to retain key customers. These reductions produced significantly lower than expected operating cash flows from the Acquired Product Lines and triggered an impairment analysis. The Company's impairment analysis resulted in the recognition of a total $251.0 million non-cash impairment charge to earnings. Of the total $251.0 million impairment charge, $248.0 million was recorded in cost of revenues impairment charges and $3.0 million was recorded in in-process research and development impairment charges, each in the Company’s consolidated statement of operations for the third quarter of 2016. Certain other non-cash impairment charges unrelated to the Teva Transaction were also recorded in the third quarter of 2016. During the third quarter of 2016, the Company also recognized a total of $34.2 million of intangible asset impairment charges, of which $8.5 million was recognized in cost of revenues impairment charges on the Company's consolidated statement of operations and attributable to the full impairment of three marketed products and one third-party partnered product where the Company received royalties from the sale of such product. The affected products were manufactured in the Company's Middlesex, New Jersey facility, which the Company is in the process of closing as discussed in "Note 17. Restructurings." The products were discontinued for several reasons, including the inability to efficiently transfer technology to another manufacturing site, the inability to continue to secure API from third parties on a timely basis, and/or minimal current and projected sales activity. The remaining $25.7 million of impairment charges recognized by the Company during the third quarter of 2016 were recognized in in-process research and development impairment charges and related to two of the Company's IPR&D product rights acquired in the Tower Acquisition due to delays in expected start of commercialization and lower pricing amid highly competitive market conditions, resulting in lower expected future cash flows. The Company recognized amortization expense of $18.4 million and $39.6 million for the three and nine months ended September 30, 2016 , respectively, and $10.3 million and $27.2 million for the three and nine months ended September 30, 2015 , respectively, in cost of revenues on its consolidated statements of operations. Assuming no changes to the gross carrying amount of finite-lived intangible assets, amortization expense for fiscal years 2016 through 2020 is estimated to be in the range of $56.6 million to $87.4 million annually. Goodwill Goodwill on the Company’s consolidated balance sheets at September 30, 2016 and December 31, 2015 is the result of the 2015 Tower Acquisition and the 1999 merger of Impax Pharmaceuticals, Inc. with Global Pharmaceuticals Corporation. Goodwill had a carrying value of $208.4 million and $210.2 million at September 30, 2016 and December 31, 2015 , respectively. The change in the carrying value during the nine months ended September 30, 2016 compared to December 31, 2015 was entirely attributable to the finalization of the purchase price allocation during the first quarter of 2016 for the Tower Acquisition as a result of the completion and filing of federal and state tax returns for the various entities acquired, which resulted in the adjustment of goodwill. At September 30, 2016 , the Company attributed $148.7 million and $59.7 million to the Impax Generics division and the Impax Specialty Pharma division, respectively. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 9 Months Ended |
Sep. 30, 2016 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES | ACCRUED EXPENSES The following table sets forth the Company’s accrued expenses (in thousands): September 30, 2016 December 31, 2015 Payroll-related expenses $ 29,761 $ 37,419 Product returns 70,282 48,950 Accrued shelf stock 9,614 6,619 Government rebates (1) 79,775 91,717 Legal and professional fees 14,633 5,929 Income taxes payable — 830 Physician detailing sales force fees — 1,132 Interest payable 3,500 500 Estimated Teva and Allergan chargebacks and rebates (2) 17,627 — Other 9,989 11,615 Total accrued expenses $ 235,181 $ 204,711 (1) Includes estimated $14.5 million and $40.6 million as of September 30, 2016 and December 31, 2015 , respectively, of liabilities for Daraprim® chargebacks and rebates resulting from utilization by Medicaid, Medicare and other federal, state and local governmental programs, health plans and other health care providers for product sold under the Company’s labeler code, which amounts are subject to reimbursement by Turing in accordance with the terms of the Company's purchase agreement with Turing. The Company made payments of $33.5 million on Turing's behalf during the first three quarters of 2016. See "Note 4. Summary of Significant Accounting Policies - Concentration of Credit Risk" for additional information related to the Turing receivable. (2) As discussed in "Note 2. Business Acquisitions," pursuant to certain agreed upon transition related services by and among the Company, Teva and Allergan after the closing of the Teva Transaction, the Company agreed to manage the payment process for certain commercial chargebacks and rebates on behalf of Teva and Allergan related to products each of Teva and Allergan sold into the channel prior to the Company's acquisition of the products. On August 18, 2016, the Company received a payment totaling $42.4 million from Teva and Allergan, which represented their combined estimate of the amount of commercial chargebacks and rebates to be paid by the Company on their behalf to wholesalers who purchased product from Teva and Allergan prior to the closing. Pursuant to the agreed upon transition services, Teva and Allergan are obligated to reimburse the Company for additional payments related to chargebacks and rebates for products they sold into the channel prior to the closing and made on their behalf in excess of the $42.4 million . If the total payments made by the Company on behalf of Teva and Allergan are less than $42.4 million , the Company is obligated to refund the difference to Teva and/or Allergan. As of September 30, 2016, the Company had paid $24.8 million related to chargebacks and rebates as described above and $17.6 million remained in accrued expenses on the Company's consolidated balance sheet. Product Returns The Company maintains a return policy to allow customers to return product within specified guidelines. The Company estimates a provision for product returns as a percentage of gross sales based upon historical experience for sales made through its Impax Generics and Impax Specialty Pharma sales channels. Sales of product under the Private Label, Rx Partner and OTC Partner alliance, collaboration and supply agreements are not subject to returns. A roll-forward of the return reserve activity for the nine months ended September 30, 2016 and the year ended December 31, 2015 is as follows (in thousands): Returns Reserve Nine Months Ended September 30, 2016 Year Ended December 31, 2015 Beginning balance $ 48,950 $ 27,174 Acquired balances — 11,364 Provision related to sales recorded in the period 41,662 43,967 Credits issued during the period (20,330 ) (33,555 ) Ending balance $ 70,282 $ 48,950 |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Royal Bank of Canada Credit Facilities On August 3, 2016, the Company entered into a restatement agreement with Royal Bank of Canada, as administrative agent, and the lenders and guarantors party thereto (the "Restatement Agreement"). The Restatement Agreement amends and restates the Company's existing Revolving Credit Facility Agreement (as amended and restated, the "Amended and Restated Credit Agreement") to, among other things, (i) add a term loan feature to allow for the borrowing of up to $400.0 million of term loans (the "Term Loan Facility") by the Company in accordance with the terms of the Amended and Restated Credit Agreement, (ii) increase the aggregate principal amount of revolving loans permitted under the Amended and Restated Credit Agreement (the "Revolving Credit Facility," and, together with the Term Loan Facility, the "RBC Credit Facilities"), from $100.0 million to $200.0 million ; and (iii) extend the maturity date of the Revolving Credit Facility from August 4, 2020 to August 3, 2021. Borrowings under the Amended and Restated Credit Agreement will accrue interest at a rate equal to LIBOR or the base rate, plus an applicable margin. The applicable margin may be increased or reduced by 0.25% based on the Company's total net leverage ratio. Up to $12.5 million of the Revolving Credit Facility is available for issuance of letters of credit and any such letters of credit will reduce the amount available under the Revolving Credit Facility on a dollar-for-dollar basis. The Company is required to pay a commitment fee to the lenders on the average daily unused portion of the Revolving Credit Facility at 0.50% or 0.375% per annum, depending on the Company's total net leverage ratio. The Amended and Restated Credit Agreement contains certain negative covenants (subject to exceptions, materiality thresholds and other allowances) including, without limitation, negative covenants that limit the Company's and its restricted subsidiaries' ability to incur additional debt, guarantee other obligations, grant liens on assets, make loans, acquisitions or other investments, dispose of assets, make optional payments in connection with or modify certain debt instruments, pay dividends or make other payments on capital stock, engage in mergers or consolidations, enter into arrangements that restrict the Company's and its restricted subsidiaries' ability to pay dividends or grant liens, engage in transactions with affiliates, or change its fiscal year. The Amended and Restated Credit Agreement also includes a financial maintenance covenant whereby the Company must not permit its total net leverage ratio in any 12 -month period to exceed 5.00 :1.00, as tested at the end of each fiscal quarter. The Amended and Restated Credit Agreement contains events of default, including, without limitation (subject to customary grace periods and materiality thresholds), events of default upon (i) the failure to make payments pursuant to the terms of the Amended and Restated Credit Agreement, (ii) violation of covenants, (iii) incorrectness of representations and warranties, (iv) cross-default and cross-acceleration to other material indebtedness, (v) bankruptcy events, (vi) material monetary judgments (to the extent not covered by insurance), (vii) certain matters arising under the Employee Retirement Income Security Act of 1974, as amended, that could reasonably be expected to result in a material adverse effect, (viii) the actual or asserted invalidity of the documents governing the RBC Credit Facilities, any material guarantees or the security interests (including priority thereof) required under the Amended and Restated Credit Agreement and (ix) the occurrence of a change of control (as defined therein). Upon the occurrence of certain events of default, the obligations under the Amended and Restated Credit Agreement may be accelerated and any remaining commitments thereunder may be terminated. The full amount of proceeds from the Term Loan Facility of $400.0 million , along with $196.4 million of cash on the Company's consolidated balance sheet, were used to finance the Teva Transaction (including transaction costs) at closing on August 3, 2016. The full amount of the $200.0 million Revolving Credit Facility remains available to the Company for working capital and other general corporate purposes. In connection with the Term Loan Facility, the Company incurred $11.0 million of debt issuance costs for banking, legal and accounting fees and other expenses which were recorded on the Company's consolidated balance sheet as a reduction to the current and long-term portions of debt related to the Term Loan Facility. These deferred debt issuance costs will be accreted to interest expense over the term of the debt using the effective interest method. In connection with the increase in the aggregate principal amount of revolving loans permitted under the Revolving Credit Facility, the Company incurred $0.8 million of debt issuance costs for banking fees which were recorded as an asset with current and long-term portions on the Company's consolidated balance sheet. These deferred debt issuance costs, in addition to the $0.3 million balance remaining from the initial $100.0 million revolving credit facility, will be amortized to interest expense over the term of the Revolving Credit Facility using the straight-line method. For the period of August 3, 2016 through September 30, 2016 , the Company recognized $2.6 million of interest expense related to the Term Loan Facility, of which $2.2 million was cash and $0.4 million was non-cash accretion of the debt discount recorded for deferred debt issuance costs. As of September 30, 2016 , the Term Loan Facility had a carrying value of $389.3 million , of which $17.7 million is classified as current debt and $371.6 million is classified as long-term debt on the Company's consolidated balance sheets. The Term Loan Facility requires quarterly principal payments of $5.0 million beginning from December 2016 through June 2021, and the remaining principal balance is payable in August 2021. 2% Convertible Senior Notes due June 2022 On June 30, 2015, the Company issued an aggregate principal amount of $600.0 million of 2.00% Convertible Senior Notes due June 2022 (the “Notes”) in a private placement offering, which are the Company’s senior unsecured obligations. The Notes were issued pursuant to an Indenture dated June 30, 2015 (the “Indenture”) between the Company and Wilmington Trust, N.A. as trustee. The Indenture includes customary covenants and sets forth certain events of default after which the Notes may be due and payable immediately. The Notes will mature on June 15, 2022, unless earlier redeemed, repurchased or converted. The Notes bear interest at a rate of 2.00% per year, and interest is payable semiannually in arrears on June 15 and December 15 of each year, beginning from December 15, 2015. The conversion rate for the Notes is initially set at 15.7858 shares per $1,000 of principal amount, which is equivalent to an initial conversion price of $63.35 per share of the Company’s common stock. If a Make-Whole Fundamental Change (as defined in the Indenture) occurs or becomes effective prior to the maturity date and a holder elects to convert its Notes in connection with the Make-Whole Fundamental Change, the Company is obligated to increase the conversion rate for the Notes so surrendered by a number of additional shares of the Company’s common stock as prescribed in the Indenture. Additionally, the conversion rate is subject to adjustment in the event of an equity restructuring transaction such as a stock dividend, stock split, spinoff, rights offering, or recapitalization through a large, nonrecurring cash dividend (“standard antidilution provisions,” per FASB ASC Topic 815-40, Contracts in Entity’s Own Equity ("ASC 815-40")). The Notes are convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding December 15, 2021 only under the following circumstances: (i) If during any calendar quarter commencing after the quarter ending September 30, 2015 (and only during such calendar quarter) the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than 130% of the conversion price on each applicable trading day; or (ii) If during the five business day period after any 10 consecutive trading day period (the “measurement period”) in which the trading price per $1,000 of principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last report sale price of the Company’s common stock and the conversion rate on each such trading day; or (iii) Upon the occurrence of corporate events specified in the Indenture. On or after December 15, 2021 until the close of business on the second scheduled trading day immediately preceding the maturity date, the holders may convert their Notes at any time, regardless of the foregoing circumstances. The Company may satisfy its conversion obligation by paying or delivering, as the case may be, cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock, at the Company’s election and in the manner and subject to the terms and conditions provided in the Indenture. Concurrently with the offering of the Notes and using a portion of the proceeds from the sale of the Notes, the Company entered into a series of convertible note hedge and warrant transactions (the “Note Hedge Transactions” and “Warrant Transactions”) which are designed to reduce the potential dilution to the Company’s stockholders and/or offset the cash payments the Company is required to make in excess of the principal amount upon conversion of the Notes. The Note Hedge Transactions and Warrant Transactions are separate transactions, in each case, entered into by the Company with a financial institution and are not part of the terms of the Notes. These transactions will not affect any holder’s rights under the Notes, and the holders of the Notes have no rights with respect to the Note Hedge Transactions and Warrant Transactions. See “Note 14. Stockholders’ Equity” for additional information. At the June 30, 2015 issuance date of the Notes, the Company did not have the necessary number of authorized but unissued shares of its common stock available to share-settle the conversion option of the Notes. Therefore, in accordance with guidance found in FASB ASC Topic 470-20, Debt with Conversion and Other Options , and FASB Topic ASC 815-15, Embedded Derivatives , the conversion option of the Notes was deemed an embedded derivative requiring bifurcation from the Notes (host contract) and separate accounting as a derivative liability. The fair value of the conversion option derivative liability at June 30, 2015 was $167.0 million , which was recorded as a reduction to the carrying value of the debt and will be accreted to interest expense over the term of the debt using the effective interest method. Although the Company subsequently amended the Company’s Restated Certificate of Incorporation to increase the authorized number of shares of the Company’s common stock in December 2015, the debt discount remains and continues to be accreted to interest expense. See “Note 14. Stockholders’ Equity” for additional information. In connection with the issuance of the Notes, the Company incurred $18.7 million of debt issuance costs for banking, legal and accounting fees and other expenses. This amount was also recorded on the Company’s balance sheet as a reduction to the carrying value of the debt and is being accreted to interest expense over the term of the debt using the effective interest method. For the three and nine months ended September 30, 2016 , the Company recognized $8.5 million and $25.3 million , respectively, of interest expense related to the Notes, of which $3.0 million and $9.0 million , respectively, was cash and $5.5 million and $16.3 million , respectively, was non-cash accretion of the debt discounts recorded. As the Notes mature in 2022, they have been classified as long-term debt on the Company's consolidated balance sheets, with a carrying value of $440.8 million and $424.6 million as of September 30, 2016 and December 31, 2015 , respectively. Accrued interest payable on the Notes of $3.5 million as of September 30, 2016 and $0.5 million as of December 31, 2015 is included in accrued expenses on the Company's consolidated balance sheets. Loss on Early Extinguishment of Debt – Barclays $435.0 million Term Loan In connection with the Tower Acquisition during the first quarter of 2015, the Company entered into a $435.0 million senior secured term loan facility (the “Barclays Term Loan”) and a $50.0 million senior secured revolving credit facility (the “Barclays Revolver,” and collectively with the Barclays Term Loan, the “Barclays Senior Secured Credit Facilities”), pursuant to a credit agreement, dated as of March 9, 2015, by and among the Company, the lenders party thereto from time to time and Barclays Bank PLC ("Barclays"), as administrative and collateral agent (the “Barclays Credit Agreement”). In connection with the Barclays Senior Secured Credit Facilities, the Company incurred debt issuance costs for banking, legal and accounting fees and other expenses of $17.8 million , which were previously reflected as a discount to the carrying value of the debt on the Company’s consolidated balance sheet in accordance with ASU 2015-03. Prior to repayment of the Barclays Term Loan on June 30, 2015, this debt discount was accreted to interest expense over the term of the loan using the effective interest rate method. On June 30, 2015, the Company used $436.4 million of the proceeds from the sale of the Notes to repay the $435.0 million of principal and $1.4 million of accrued interest due on its Barclays Term Loan under the Barclays Credit Agreement. In connection with this repayment of the loan, for the quarter ended June 30, 2015, the Company recorded a loss on early extinguishment of debt of $16.9 million related to the unaccreted portion of the debt discount. For the six months ended June 30, 2015, the Company incurred total interest expense related to the Barclays Term Loan of $10.7 million , of which $9.8 million was cash and $0.9 million was non-cash accretion of the debt discount recorded. Included in the prior year-to-date cash interest expense of $12.8 million is a $2.3 million ticking fee paid to Barclays during the first quarter of 2015, prior to the funding of the Barclays Senior Secured Credit Facilities on March 9, 2015, to lock in the financing terms from the lenders' commitment of the Barclays Term Loan until the actual allocation of the loan occurred at the closing of the Tower Acquisition. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2016 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY Preferred Stock Pursuant to its Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”), the Company is authorized to issue 2,000,000 shares of “blank check” preferred stock, $0.01 par value per share, which enables the Board of Directors, from time to time, to create one or more new series of preferred stock. Each series of preferred stock issued can have the rights, preferences, privileges and restrictions designated by the Board of Directors. The issuance of any new series of preferred stock could affect, among other things, the dividend, voting, and liquidation rights of the Company’s common stock. The Company had no preferred stock issued or outstanding as of September 30, 2016 and December 31, 2015 . Common Stock Pursuant to its Certificate of Incorporation, the Company is authorized to issue 150,000,000 shares of common stock, $0.01 par value per share, of which 74,174,083 shares have been issued and 73,930,354 shares were outstanding as of September 30, 2016 . In addition, the Company had reserved for issuance the following amounts of shares of its common stock for the purposes described below as of September 30, 2016 (in thousands): Shares issued 74,174 Stock options outstanding (1) 2,470 Conversion of Notes payable (2) 9,471 Warrants outstanding (see below) 9,471 Total shares of common stock issued and reserved for issuance 95,586 (1) See “Note 16. Share-based Compensation.” (2) See “Note 13. Debt.” Warrants As discussed in “Note 13. Debt,” on June 30, 2015, the Company entered into a series of Note Hedge Transactions and Warrant Transactions with a financial institution which are designed to reduce the potential dilution to the Company’s stockholders and/or offset the cash payments the Company is required to make in excess of the principal amount upon conversion of the Notes. Pursuant to the Warrant Transactions, the Company sold to a financial institution 9.47 million warrants to purchase the Company’s common stock, for which it received proceeds of $88.3 million . The warrants have an exercise price of $81.277 per share (subject to adjustment), are immediately exercisable, and have an expiration date of September 15, 2022. Additional Paid-in Capital Pursuant to the Note Hedge Transactions, the Company purchased from a financial institution 0.6 million call options on the Company's common stock, for which it paid consideration of $147.0 million . Each call option entitles the Company to purchase 15.7858 shares of the Company's common stock at an exercise price of $63.35 per share, is immediately exercisable, and has an expiration date of June 15, 2022, subject to earlier exercise. At the time of the Note Hedge Transactions, because of an insufficient number of authorized but unissued shares of the Company's common stock, these call options did not meet the criteria for equity classification under ASC 815-40 and were accounted for as a derivative asset. As of December 8, 2015, pursuant to the Company's amendment to its Certificate of Incorporation to increase the number of authorized shares of common stock, the call options purchased pursuant to the Note Hedge Transactions (formerly a derivative asset) and the conversion option of the Notes (formerly an embedded derivative liability) were reclassified to equity in additional paid-in capital. The net effect of the reclassification of these derivatives was a $21.0 million , net of tax, increase in additional paid-in capital reflected on the Company's December 31, 2015 consolidated balance sheet. During the quarter ended September 30, 2015, the Company recognized in its consolidated statement of income $4.0 million of net expense related to the change in the fair value of the former derivative asset and liability. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE The Company's basic earnings per common share (“EPS”) is computed by dividing net income (loss) available to the Company’s common stockholders (as presented on the consolidated statements of operations) by the weighted-average number of shares of the Company’s common stock outstanding during the period. The Company’s restricted stock awards (non-vested shares) are issued and outstanding at the time of grant but are excluded from the Company’s computation of weighted-average shares outstanding in the determination of basic EPS until vesting occurs. For purposes of calculating diluted EPS, the denominator includes both the weighted-average number of shares of common stock outstanding and the number of common stock equivalents if the inclusion of such common stock equivalents would be dilutive. Dilutive common stock equivalents potentially include warrants, stock options and non-vested restricted stock awards using the treasury stock method and the number of shares of common stock issuable upon conversion of the Company’s outstanding convertible notes payable. In the case of the Company’s outstanding convertible notes payable, the diluted EPS calculation is further affected by an add-back of interest expense, net of tax, to the numerator under the assumption that the interest would not have been incurred if the convertible notes had been converted into common stock. The following is a reconciliation of basic and diluted net (loss) income per share of common stock for the three and nine months ended September 30, 2016 and 2015 (in thousands, except per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Basic (Loss) Earnings Per Common Share: Net (loss) income $ (179,337 ) $ 35,755 $ (192,446 ) $ 27,570 Weighted-average common shares outstanding 71,331 69,820 71,033 69,379 Basic (loss) earnings per share $ (2.51 ) $ 0.51 $ (2.71 ) $ 0.40 Diluted (Loss) Earnings Per Common Share: Net (loss) income $ (179,337 ) $ 35,755 $ (192,446 ) $ 27,570 Add-back of interest expense on outstanding convertible notes payable, net of tax — (1) — (2) — (1) — (2) Adjusted net (loss) income $ (179,337 ) $ 35,755 $ (192,446 ) $ 27,570 Weighted-average common shares outstanding 71,331 69,820 71,033 69,379 Weighted-average incremental shares related to assumed exercise of warrants and stock options, vesting of non-vested shares and ESPP share issuance — (3) 2,958 (4) — (3) 3,170 (4) Weighted-average incremental shares assuming conversion of outstanding notes payable — (1) — (2) — (1) — (2) Diluted weighted-average common shares outstanding 71,331 (3) 72,778 (5) 71,033 (3) 72,549 (5) Diluted net (loss) income per share $ (2.51 ) $ 0.49 $ (2.71 ) $ 0.38 (1) For the three and nine month periods ended September 30, 2016 , the Company incurred a net loss, which cannot be diluted, so basic and diluted loss per common share were the same. Accordingly, there were no numerator or denominator adjustments related to the Company's outstanding Notes. (2) The add-back of interest expense incurred on the Company’s outstanding Notes, net of tax, to the numerator and the weighted-average incremental shares assuming conversion of the outstanding Notes to the denominator were excluded from the calculation of diluted EPS for the period ended September 30, 2015 because the Company was required to settle the conversion of the Notes in cash. See “Note 13. Debt” and “Note 14. Stockholders’ Equity” for additional information. (3) For the three and nine month periods ended September 30, 2016 , the Company incurred a net loss, which cannot be diluted, so basic and diluted loss per common share were the same. As of September 30, 2016 , shares issuable but not included in the Company's calculation of diluted EPS, which could potentially dilute future earnings, included 9.47 million warrants outstanding, 9.47 million shares for conversion of outstanding Notes payable, 2.47 million stock options outstanding and 2.60 million non-vested restricted stock awards. (4) The 9.47 million warrants outstanding have been excluded from the denominator of the diluted EPS calculation under the treasury stock method as of September 30, 2015 because the weighted-average exercise price of the warrants exceeded the average market price of the Company’s common stock for the periods presented and to do so would be anti-dilutive. (5) As of September 30, 2015 , shares issuable but not included in the Company's calculation of diluted EPS, which could potentially dilute future earnings, included 9.47 million warrants outstanding and 9.47 million shares for conversion of outstanding convertible notes payable. In addition, for the three and nine month periods ended September 30, 2015 , the Company excluded 0.4 million and 0.3 million , respectively, of shares issuable upon the exercise of stock options and vesting of non-vested restricted stock awards from the computation of diluted net income per common share under the treasury stock method. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION The Company recognizes the grant date fair value of each stock option and restricted stock award over its vesting period. Stock options and restricted stock awards are granted under the Company’s Third Amended and Restated 2002 Equity Incentive Plan (the “2002 Plan”), generally vest over a three or four year period, and, in the case of stock options, have a term of 10 years. Impax Laboratories, Inc. 1999 Equity Incentive Plan ("1999 Plan") The aggregate number of shares of common stock authorized for issuance pursuant to the Company’s 1999 Plan is 5,000,000 shares. There were 938 and 10,938 stock options outstanding at September 30, 2016 and December 31, 2015 , respectively, under the 1999 Plan. Impax Laboratories, Inc. Third Amended and Restated 2002 Equity Incentive Plan ("2002 Plan") The aggregate number of shares of common stock authorized for issuance pursuant to the Company's 2002 Plan is 15,950,000 shares. There were 2,469,397 and 2,394,433 stock options outstanding at September 30, 2016 and December 31, 2015 , respectively, and 2,599,661 and 2,146,498 non-vested restricted stock awards outstanding at September 30, 2016 and December 31, 2015 , respectively, under the 2002 Plan. The stock option activity for all of the Company’s equity compensation plans noted above is summarized as follows: Stock Options Number of Weighted- Outstanding at December 31, 2015 2,405,371 $ 21.39 Options granted 552,180 $ 12.52 Options exercised (464,950 ) $ 19.37 Options forfeited (22,266 ) $ 38.10 Outstanding at September 30, 2016 2,470,335 $ 23.94 Options exercisable at September 30, 2016 1,453,277 $ 17.43 As of September 30, 2016 , stock options outstanding and exercisable had average remaining contractual lives of 7.24 years and 5.50 years, respectively. Also, as of September 30, 2016 , stock options outstanding and exercisable each had aggregate intrinsic values of $12.0 million and $11.5 million , respectively, and restricted stock awards outstanding had an aggregate intrinsic value of $61.6 million . As of September 30, 2016 , the Company estimated there were 2,186,970 stock options and 2,301,462 restricted shares granted to employees and service providers which had vested or were expected to vest. The Company grants restricted stock to certain eligible employees as a component of its long-term incentive compensation program. The restricted stock award grants are made in accordance with the Company’s 2002 Plan and are issued and outstanding at the time of grant but are subject to forfeiture if the vesting conditions are not met. A summary of the non-vested restricted stock awards is as follows: Restricted Stock Awards Number of Weighted- Non-vested at December 31, 2015 2,146,498 $ 33.20 Granted 1,181,068 $ 32.20 Vested (528,396 ) $ 31.14 Forfeited (199,509 ) $ 32.74 Non-vested at September 30, 2016 2,599,661 $ 33.20 Included in the 528,396 shares of restricted stock vested during the nine months ended September 30, 2016 are 179,018 shares with a weighted-average fair value of $32.30 per share that were withheld for minimum withholding tax purposes upon vesting of such awards from stockholders who elected to net share settle such tax withholding obligation. As of September 30, 2016 , the Company had 1,520,062 shares available for issuance for either stock options or restricted stock awards, including 1,160,413 shares from the 2002 Plan, 296,921 shares from the 1999 Plan, and 62,728 shares from the 2001 Non-Qualified Employee Stock Purchase Plan (“ESPP”) Plan. As of September 30, 2016 , the Company had total unrecognized share-based compensation expense, net of estimated forfeitures, of $73.4 million related to all of its share-based awards, which will be recognized over a weighted-average period of 2.2 years. The intrinsic value of options exercised during the nine months ended September 30, 2016 and 2015 was $5.6 million and $33.0 million , respectively. The total fair value of restricted shares which vested during the nine months ended September 30, 2016 and 2015 was $16.4 million and $9.0 million , respectively. The Company estimated the fair value of each stock option award on the grant date using the Black-Scholes option pricing model, wherein expected volatility is based on historical volatility of the Company’s common stock. The expected term calculation is based on the “simplified” method described in SAB No. 107, Share-Based Payments and SAB No. 110, Share-Based Payment, as the result of the simplified method provides a reasonable estimate in comparison to actual experience. The risk-free interest rate is based on the U.S. Treasury yield at the date of grant for an instrument with a maturity that is commensurate with the expected term of the stock options. The dividend yield of zero is based on the fact that the Company has never paid cash dividends on its common stock and has no present intention to pay cash dividends. Options granted under each of the above plans generally vest from three to four years and have a term of 10 years. The amount of share-based compensation expense recognized by the Company is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Manufacturing expenses $ 1,331 $ 1,436 $ 4,579 $ 3,674 Research and development 1,312 1,755 4,259 4,486 Selling, general and administrative 5,070 5,101 14,537 13,691 Total $ 7,713 $ 8,292 $ 23,375 $ 21,851 |
RESTRUCTURINGS
RESTRUCTURINGS | 9 Months Ended |
Sep. 30, 2016 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURINGS | RESTRUCTURINGS Middlesex, New Jersey Manufacturing and Packaging Operations In March 2016, the Company's Board of Directors approved a plan of restructuring designed to reduce costs, improve operating efficiencies and enhance the Company's long-term competitive position by closing the Company's Middlesex, New Jersey manufacturing and packaging site and transferring the products and the functions performed there to the Company's other facilities or to third-party manufacturers. This plan will take up to two years to complete. In August 2016, the Company's Board of Directors approved a plan to repurpose a part of the Middlesex manufacturing site as a research and development pilot plant in an effort to expand capacity for the number of generic projects in the Company's pipeline. As a result, approximately 32 employees that were previously expected to be terminated will be retained, reducing the number of positions expected to be eliminated to 183 . Management currently estimates that over the next two years the Company will incur aggregate pre-tax charges in connection with this plan of $45.6 million , of which approximately half will be incurred in the fourth quarter of 2016 and the remainder by the second quarter of 2018. The following is a summary of the total estimated charges to be incurred by major type of cost (in millions): Type of Cost Amount Expected to be Incurred Employee retention and severance payments $ 13.7 Technical transfer of products 12.6 Asset impairment and accelerated depreciation charges 18.0 Facilities lease terminations and asset retirement obligations 1.0 Legal and professional fees 0.3 Total estimated restructuring charges $ 45.6 Employee retention and severance payments are being accrued over the estimated service period. For the three months ended September 30, 2016 , the Company recorded to cost of revenues accrued expenses for employee retention and severance payments of $1.9 million and accelerated depreciation, intangible asset impairment charges, technical transfer and legal and professional fees and expenses of $1.5 million , $8.5 million , $1.9 million , and $0.1 million , respectively. For the nine months ended September 30, 2016 , the Company recorded to cost of goods sold accrued expenses for employee retention and severance payments of $4.5 million and accelerated depreciation, intangible asset impairment charges, technical transfer and legal and professional fees and expenses of $3.8 million , $8.5 million , $3.5 million and $0.2 million , respectively. At September 30, 2016 , the $4.5 million balance of accrued employee retention and severance payments was included in accrued expenses on the Company’s consolidated balance sheet. Hayward, California Technical Operations and R&D In November 2015, the Company's management assessed the headcount in the technical operations and research and development groups in Hayward, California, primarily as a result of the resolution of the warning letter at the Hayward facility, and determined that a reduction-in-force was necessary to adjust the headcount to the operating conditions of the post-warning letter resolution environment. The Company eliminated 27 positions and recorded an accrual for severance and related employee termination benefits of $2.5 million during the quarter ended December 31, 2015. As of September 30, 2016 , $2.0 million has been paid, and the Company currently expects the remainder of this balance to be paid by early 2017. Philadelphia, Pennsylvania Packaging and Distribution Operations On June 30, 2015, the Company committed to a plan of restructuring of its packaging and distribution operations and as a result of this plan, the Company closed its Philadelphia packaging site and all Company-wide distribution operations were outsourced to United Parcel Services during the fiscal year ended December 31, 2015. The Company eliminated 93 positions and recorded an accrual for severance and related employee termination benefits of $2.6 million during the quarter ended June 30, 2015. As of June 30, 2016, the full $2.6 million had been paid. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company calculates its interim income tax provision in accordance with FASB ASC Topics 270 and 740. At the end of each interim period, the Company makes an estimate of the annual United States domestic and foreign jurisdictions’ expected effective tax rates and applies these rates to its respective year-to-date taxable income or loss. The computation of the annual estimated effective tax rates at each interim period requires certain estimates and assumptions including, but not limited to, the expected operating income for the year, projections of the proportion of income (or loss) earned and taxed in the United States, and the various state and local tax jurisdictions, as well as tax jurisdictions outside the United States, along with permanent differences, and the likelihood of deferred tax asset utilization. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is acquired or additional information is obtained. The computation of the annual estimated effective tax rate includes modifications, which were projected for the year, for share-based compensation and state research and development credits, among others. In addition, the effect of changes in enacted tax laws, rates, or tax status is recognized in the interim period in which the respective change occurs. The Company's effective tax rate for the nine month periods ended September 30, 2016 and 2015 was 37% and 40% , respectively. During the nine month period ended September 30, 2016 and 2015 , the Company recognized aggregate consolidated tax benefit of $112.9 million and tax provision of $18.5 million, respectively, for U.S. domestic and foreign income taxes. The amount of tax benefit recorded for the nine months ended September 30, 2016 reflects the Company’s estimate as of such date of the annual effective tax rate applied to the year-to-date loss. A discrete tax benefit of $17.4 million for the reserve recorded against the Turing receivable as described above under "Note 4. Summary of Significant Accounting Policies - Concentration of Credit Risk" is also reflected in income tax benefit for the nine months ended September 30, 2016 . The decrease in tax provision compared to the prior year period resulted from a consolidated loss before taxes in the nine month period ended September 30, 2016 , as compared to consolidated income in the same period in the prior year. The decrease in tax provision during the nine month period ended September 30, 2016 was also a result of a change in the timing and mix of U.S. and foreign income; the exclusion of a zero-rate jurisdiction from the interim effective tax rate calculation; the inclusion of the federal research and development credit which was permanently reinstated in December 2015; and an increase in the deferred tax asset related to a state R&D tax credit carryforward in a state with indefinite carryforwards. The Company is closely monitoring the events and circumstances that determine the need for a valuation allowance related to state research and development tax credit carryforwards and have determined that, based upon the evaluation of the provisions of ASC 740, no valuation allowance will be recorded at this time. As of June 30, 2016, Lineage was in the process of closing an audit for federal income tax by the U.S. Internal Revenue Service ("IRS") for the 2013 tax year, which pre-dates the Company’s acquisition of Lineage. Even though the Company would not have been responsible for pre-acquisition income tax liabilities, under the Stock Purchase Agreement related to the Tower Acquisition, the Company was notified, in a letter dated July 29, 2016, that the IRS made no changes to the reported federal income tax for the 2013 tax year. Neither the Company nor any of its other affiliates is currently under audit for federal income tax. No provision has been made for U.S. federal deferred income taxes on accumulated earnings on foreign subsidiaries since it is the current intention of management to indefinitely reinvest the undistributed earnings in the foreign subsidiary. |
ALLIANCE AND COLLABORATION AGRE
ALLIANCE AND COLLABORATION AGREEMENTS | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ALLIANCE AND COLLABORATION AGREEMENTS | ALLIANCE AND COLLABORATION AGREEMENTS The Company has entered into several alliance, collaboration, license and distribution agreements, and similar agreements with respect to certain of its products and services, with unrelated 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 its 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 alliance and collaboration agreements often include milestones and provide for milestone payments upon achievement of these milestones. Generally, the milestone events contained in the Company’s alliance and collaboration agreements coincide with the progression of the Company’s products and technologies from pre-commercialization to commercialization. The Company groups pre-commercialization milestones in its alliance and collaboration agreements into clinical and regulatory categories, each of which may include the following types of events: Clinical Milestone Events: • Designation of a development candidate . Following the designation of a development candidate, generally, IND-enabling animal studies for a new development candidate take 12 to 18 months to complete. • Initiation of a Phase I clinical trial . Generally, Phase I clinical trials take one to two years to complete. • Initiation or completion of a Phase II clinical trial . Generally, Phase II clinical trials take one to three years to complete. • Initiation or completion of a Phase III clinical trial . Generally, Phase III clinical trials take two to four years to complete. • Completion of a bioequivalence study . Generally, bioequivalence studies take three months to one year to complete. Regulatory Milestone Events: • Filing or acceptance of regulatory applications for marketing approval such as a New Drug Application in the United States or Marketing Authorization Application in Europe . Generally, it takes six to 12 months to prepare and submit regulatory filings and two months for a regulatory filing to be accepted for substantive review. • Marketing approval in a major market, such as the United States or Europe . Generally it takes one to three years after an application is submitted to obtain approval from the applicable regulatory agency. • Marketing approval in a major market, such as the United States or Europe for a new indication of an already-approved product . Generally it takes one to three years after an application for a new indication is submitted to obtain approval from the applicable regulatory agency. Commercialization Milestone Events: • First commercial sale in a particular market , such as in the United States or Europe . • Product sales in excess of a pre-specified threshold, such as annual sales exceeding $100 million . The amount of time to achieve this type of milestone depends on several factors including but not limited to the dollar amount of the threshold, the pricing of the product and the pace at which customers begin using the product. License and Distribution Agreement with Shire In January 2006, the Company entered into a License and Distribution Agreement with an affiliate of Shire Laboratories, Inc., which was subsequently amended (“Prior Shire Agreement”), under which the Company received a non-exclusive license to market and sell an authorized generic of Shire’s Adderall XR® product (“AG Product”) subject to certain conditions, but in any event by no later than January 1, 2010. The Company commenced sales of the AG Product in October 2009. On February 7, 2013, the Company entered into an Amended and Restated License and Distribution Agreement with Shire (the “Amended and Restated Shire Agreement”), which amended and restated the Prior Shire Agreement. The Amended and Restated Shire Agreement was entered into by the parties in connection with the settlement of the Company’s litigation with Shire relating to Shire’s supply of the AG Product to the Company under the Prior Shire Agreement. During 2013, the Company received a payment of $48.0 million from Shire in connection with such litigation settlement, which was recorded in the first quarter of 2013 under the line item “Other Income” on the consolidated statement of operations. Under the Amended and Restated Shire Agreement, Shire was required to supply the AG Product and the Company was responsible for marketing and selling the AG Product subject to the terms and conditions thereof until the earlier of (i) the first commercial sale of the Company’s generic equivalent product to Adderall XR® and (ii) September 30, 2014 (the “Supply Term”), subject to certain continuing obligations of the parties upon expiration or early termination of the Supply Term, including Shire’s obligation to deliver AG Products still owed to the Company as of the end of the Supply Term. The Company is required to pay a profit share to Shire on sales of the AG Product, of which the Company owed a profit share payable to Shire of $7.2 million and $15.4 million on sales of the AG Product during the nine months ended September 30, 2016 and 2015 , respectively, with a corresponding charge included in the cost of revenues line in the consolidated statement of operations. Although the Supply Term expired on September 30, 2014, the Company was permitted to sell any AG Products in its inventory or owed to the Company by Shire under the Amended and Restated Shire Agreement until all such products are sold. The Company continued to pay a profit share to Shire on sales of such products during the nine months ended September 30, 2016 . Development, Supply and Distribution Agreement with TOLMAR, Inc. In June 2012, the Company entered into the Tolmar Agreement with Tolmar. Under the terms of the Tolmar Agreement, Tolmar granted to the Company an exclusive license to commercialize up to 11 generic topical prescription drug products, including ten currently approved products in the United States and its territories; the parties agreed in 2015 to terminate development efforts of one product under the Tolmar Agreement that had been pending approval at the FDA. Under the terms of the Tolmar Agreement, Tolmar is responsible for developing and manufacturing the products, and the Company is responsible for marketing and sale of the products. As of September 30, 2016 , the Company was currently marketing and selling four approved products. The Company is required to pay a profit share to Tolmar on sales of each product commercialized pursuant to the terms of the Tolmar Agreement. The Company paid Tolmar a $21.0 million upfront payment upon signing of the agreement and, pursuant to the terms of the agreement, is also required to make payments to Tolmar upon the achievement of certain specified milestone events. Such contingent milestone payments will initially be recognized in the period the triggering event occurs. Milestone payments which are contingent upon commercialization events will be accounted for as an additional cost of acquiring the product license rights. Milestone payments which are contingent upon regulatory approval events will be capitalized and amortized over the remaining estimated useful life of the approved product. During the year ended December 31, 2012, the Company made a $1.0 million milestone payment and, during the fourth quarter of 2013, the Company made a $12.0 million payment to Tolmar upon Tolmar’s achievement of a regulatory milestone event in accordance with the terms of pursuant to the Tolmar Agreement. The $21.0 million upfront payment for the Tolmar product rights has been allocated to the underlying topical products based upon the relative fair value of each product and will be amortized over the remaining estimated useful life of each underlying product, ranging from five to 12 years, starting upon commencement of commercialization activities by the Company during the second half of 2012. The amortization of the Tolmar product rights has been included as a component of cost of revenues on the consolidated statements of operations. The Company initially allocated $1.55 million of the upfront payment to two products which were in development and has recorded such amount as in-process research and development expense in its results of operations for the year ended December 31, 2012. The Company similarly recorded the $1.0 million milestone paid in the year ended December 31, 2012 as a research and development expense. The Company is required to pay a profit share to Tolmar on sales of the topical products, of which the Company owed a profit share payable to Tolmar of $32.2 million and $35.4 million during the nine months ended September 30, 2016 and 2015 , respectively, with a corresponding charge included in the cost of revenues line in the Company’s consolidated statement of operations. During the fourth quarter of 2014, the Company paid a $2.0 million milestone related to the Diclofenac Sodium Gel 3% or Solaraze® product to Tolmar pursuant to the Tolmar Agreement. During the second quarter of 2015, the Company paid a $5.0 million milestone related to certain topical products pursuant to the Tolmar Agreement. The Company entered into a Loan and Security Agreement with Tolmar in March 2012 (the “Tolmar Loan Agreement”), under which the Company agreed to lend to Tolmar one or more loans through December 31, 2014, in an aggregate amount not to exceed $15.0 million. The outstanding principal amount of, including any accrued and unpaid interest on, the loans under the Tolmar Loan Agreement was payable by Tolmar beginning from March 31, 2017 through March 31, 2020 or the maturity date, in accordance with the terms therein. Pursuant to the Tolmar Loan Agreement, Tolmar could prepay all or any portion of the outstanding balance of the loans prior to the maturity date without penalty or premium. In May 2016, Tolmar repaid in full the $15.0 million due to the Company under the Tolmar Loan Agreement. Strategic Alliance Agreement with Teva The Company entered into a Strategic Alliance Agreement with Teva Pharmaceutical USA, Inc. (“Teva USA”), an affiliate of Teva, which was subsequently amended (“Teva Agreement”). The Teva Agreement commits the Company to develop and manufacture, and Teva to distribute, a specified number of controlled release generic pharmaceutical products (“generic products”), each for a 10 -year period. The Company is required to develop the products, obtain FDA approval to market the products, and manufacture the products for Teva. The revenue the Company earns from the sale of product under the Teva Agreement consists of Teva’s reimbursement of the Company’s manufacturing costs plus a profit share on Teva’s sales of the product to its customers. The Company invoices Teva for the manufacturing costs or products it ships to Teva and payment is due within 30 days. Teva has the right to determine all terms and conditions of the product sales to its customers. Within 30 days of the end of each calendar quarter, Teva is required to provide the Company with a report of its net sales and profits during the quarter and to pay the Company its share of the profits resulting from those sales. Net sales are Teva’s gross sales less discounts, rebates, chargebacks, returns, and other adjustments, all of which are based upon fixed percentages, except chargebacks, which are estimated by Teva and subject to a true-up reconciliation. As of September 30, 2016 , the Company was supplying Teva with oxybutynin extended release tablets (Ditropan XL® 5 mg, 10 mg and 15 mg extended release tablets); the other products under the Teva Agreement have either been returned to the Company, are being manufactured by Teva at its election, were voluntarily withdrawn from the market or the Company’s obligations to supply such product had expired or were terminated in accordance with the Teva Agreement. Refer to "Note 2. Business Acquisitions" for additional information on developments related to the Teva Agreement. OTC Partners Alliance Agreement In June 2002, the Company entered into a Development, License and Supply Agreement with Pfizer, Inc., formerly Wyeth LLC (“Pfizer”), for a term of 15 years, relating to the Company’s Loratadine and Pseudoephedrine Sulfate 5 mg/120 mg 12-hour Extended Release Tablets (the "D12 Product") and Loratadine and Pseudoephedrine Sulfate 10 mg/240 mg 24-hour Extended Release Tablets for the OTC market (the "D-24 Product"). The Company previously developed the products, and is currently only responsible for manufacturing the products, and Pfizer is responsible for marketing and sale. The agreement included payments to the Company upon achievement of development milestones, as well as royalties paid to the Company by Pfizer on its sales of the product. Pfizer launched this product in May 2003 as Alavert® D-12 Hour. In February 2005, the agreement was partially cancelled with respect to the 24-hour Extended Release Product due to lower than planned sales volume. In December 2011, Pfizer and the Company entered into an agreement with L. Perrigo Company (“Perrigo”), which was subsequently amended whereby the parties agreed that the Company would supply the Company’s D-12 Product to Perrigo in the United States and its territories. The agreements with Pfizer and Perrigo are no longer a core area of the Company’s business, and the over-the-counter pharmaceutical products the Company sells to Pfizer and Perrigo under the agreements are older products which are only sold to Pfizer and to Perrigo. As noted above, the Company is currently only required to manufacture the products under its agreements with Pfizer and Perrigo. The Company recognizes profit share revenue in the period earned. On March 31, 2016, the Company entered into an asset purchase agreement with Perrigo (the "Perrigo APA") whereby the Company agreed to, among other things, sell the assets related to the D-12 Product and D-24 Product, including the ANDAs for both products, to Perrigo. The transactions under the Perrigo APA, including the sale of the ANDAs for both products, closed during the third quarter of 2016. Under the terms of the Perrigo APA, the Company will continue to supply the D-12 Product to Pfizer and Perrigo until the date that is the earliest of (i) the date Perrigo’s manufacturing facility is approved to manufacture the D-12 Product and (ii) December 31, 2017 (the "Supply End Date"). On the Supply End Date, the Company will transfer its supply agreement with Pfizer in its entirety to Perrigo in accordance with the Perrigo APA. Agreements with Valeant Pharmaceuticals International, Inc. In November 2008, the Company and Valeant Pharmaceuticals International, Inc., formerly Medicis Pharmaceutical Corporation (“Valeant”), entered into a Joint Development Agreement and a License and Settlement Agreement (the “Joint Development Agreement”). The Joint Development Agreement provides for the Company and Valeant to collaborate in the development of a total of five dermatology products, including four of the Company’s generic products and one branded advanced form of Valeant’s SOLODYN ® product. Under the provisions of the Joint Development Agreement the Company received a $40.0 million upfront payment, paid by Valeant in December 2008. The Company has also received an aggregate of $15.0 million in milestone payments composed of two $5 million milestone payments, paid by Valeant in March 2009 and September 2009, a $2.0 million milestone payment paid by Valeant in December 2009, and a $3.0 million milestone payment paid by Valeant in March 2011. The Company has the potential to receive up to an additional $8.0 million of contingent regulatory milestone payments each of which the Company believes to be substantive, as well as the potential to receive royalty payments from sales, if any, by Valeant of its advanced form SOLODYN ® brand product. Finally, to the extent the Company commercializes any of its four generic dermatology products covered by the Joint Development Agreement, the Company will pay to Valeant a gross profit share on sales of such products. The Company began selling one of the four dermatology products during the year ended December 31, 2011 and began selling a second dermatology product during the quarter ended September 30, 2016. As of December 31, 2014, the full amount of deferred revenue under the Joint Development Agreement was recognized. The Joint Development Agreement results in three items of revenue for the Company, as follows: (1) Research & Development Services. Revenue received from the provision of research and development services including the $40.0 million upfront payment and the $12.0 million of milestone payments received prior to January 1, 2011, have been deferred and are being recognized on a straight-line basis over the expected period of performance of the research and development services. During the three month period ended March 31, 2013, the Company extended the revenue recognition period for the Joint Development Agreement from the previous recognition period ending in November 2013 to December 2014, due to changes in the estimated timing of completion of certain research and development activities. This change was made on a prospective basis, and resulted in a reduced periodic amount of revenue recognized in current and future periods. Revenue from the remaining $8.0 million of contingent milestone payments, including the $3.0 million received from Valeant in March 2011, will be recognized using the Milestone Method of accounting. Revenue recognized under the Joint Development Agreement is included in “Note 23. Supplementary Financial Information,” in the line item captioned “Other Revenues.” (2) Royalty Fees Earned - Valeant’s Sale of Advanced Form SOLODYN® (Brand) Product. Under the Joint Development Agreement, the Company granted Valeant a license for the advanced form of the SOLODYN® product, with the Company receiving royalty fee income under such license for a period ending eight years after the first commercial sale of the advanced form SOLODYN® product. Commercial sales of the new SOLODYN® product, if any, are expected to commence upon FDA approval of Valeant’s NDA. The royalty fee income, if any, from the new SOLODYN® product, will be recognized by the Company as current period revenue when earned. (3) Accounting for Sales of the Company’s Four Generic Dermatology Products. Upon FDA approval of the Company’s ANDA for each of the four generic products covered by the Joint Development Agreement, the Company will have the right (but not the obligation) to begin manufacture and sale of its four generic dermatology products. The Company sells its manufactured generic products to all Impax Generics division customers in the ordinary course of business through its Impax Generics Product sales channel. The Company accounts for the sale, if any, of the generic products covered by the Joint Development Agreement as current period revenue according to the Company’s revenue recognition policy applicable to its Impax Generics products. To the extent the Company sells any of the four generic dermatology products covered by the Joint Development Agreement, the Company pays Valeant a gross profit share, with such profit share payments accounted for as a current period cost of revenues in the consolidated statement of operations. Development and Co-Promotion Agreement with Endo Pharmaceuticals Inc. In June 2010, the Company and Endo Pharmaceuticals, Inc. ("Endo") entered into a Development and Co-Promotion Agreement (“Endo Agreement”) under which the Company and Endo agreed to collaborate in the development and commercialization of a next-generation advanced form of the Company’s lead branded product candidate ("Endo Agreement Product"). The Endo Agreement was terminated upon mutual agreement by the parties effective December 23, 2015. Under the provisions of the Endo Agreement, in June 2010, Endo paid to the Company a $10.0 million upfront payment. Prior to termination of the agreement, the Company also had the potential to receive up to an additional $30.0 million of contingent milestone payments. Prior to the termination of the Endo Agreement, the Company had recognized the $10.0 million upfront payment as revenue on a straight-line basis over a period of 112 months , which was the estimated expected period of performance of research and development activities under the Endo Agreement, commencing with the June 2010 effective date of the Endo Agreement and ending in September 2019, the estimated date of FDA approval of the Company's NDA for the Endo Agreement Product. The FDA approval of the Endo Agreement Product NDA represented the end of the Company’s expected period of performance, as the Company would have had no further contractual obligation to perform research and development activities under the Endo Agreement, and therefore the earnings process would have been completed on such date. There was no deferred revenue under the Endo Agreement as of September 30, 2016 and December 31, 2015 . Revenue recognized under the Endo Agreement was reported in “Note 23. Supplementary Financial Information” in the line item captioned “Other Revenues”. The Company and Endo also entered into a Settlement and License Agreement in June 2010 (the “Endo Settlement Agreement”) pursuant to which Endo agreed to make a payment to the Company should prescription sales of Opana ® ER (as defined in the Endo Settlement Agreement) fall below a predetermined contractual threshold in the quarter immediately prior to the Company launching a generic version of Opana ® ER. As a result of the Company’s launch of its generic version of Opana ER in January 2013 and Endo’s prescription sales of Opana ER during the fourth quarter of 2012, the Company recorded a $102.0 million settlement gain during the three month period ended March 31, 2013. Payment of the $102.0 million settlement was received from Endo in April 2013. In May 2016, Endo filed suit against the Company alleging that the Company breached the Endo Settlement Agreement with respect to the Company’s marketed generic version of Opana ® ER products. Refer to “Note 21. Legal and Regulatory Matters” for a description of the legal proceeding related to the suit. Distribution, License, Development and Supply Agreement with AstraZeneca UK Limited In January 2012, the Company entered into the AZ Agreement with AstraZeneca and 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 the Company 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 the Company’s behalf and AstraZeneca paid to the Company the gross profit on such Zomig® products. The Company is obligated to fulfill certain minimum requirements with respect to the promotion of currently approved Zomig® products as well as other dosage strengths of such products approved by the FDA in the future. The Company may, but has no obligation to, develop and commercialize additional products containing zolmitriptan and additional indications for Zomig®, subject to certain restrictions as set forth in the AZ Agreement. Subject to the terms of the AZ Amendment, the Company will be responsible for conducting clinical studies and preparing regulatory filings related to the development of any such additional products and would bear all related costs. During the term of the AZ Agreement, AstraZeneca will continue to be the holder of the NDA for existing Zomig® products, as well as any future dosage strengths thereof approved by the FDA, and will be responsible for certain regulatory and quality-related activities for such Zomig® products. AstraZeneca will manufacture and supply Zomig® products to the Company and the Company will purchase its requirements of Zomig® products from AstraZeneca until a date determined in the AZ Agreement. Thereafter, AstraZeneca may terminate its supply obligations upon certain advance notice to the Company, in which case the Company would have the right to manufacture or have manufactured its own requirements for the applicable Zomig® product. Under the terms of the AZ Amendment, under certain conditions and depending on the nature and terms of the study agreed to with the FDA, the Company 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 11 years old, as further described in the study protocol mutually agreed to by the parties (the “PREA Study”). In consideration for the Company conducting the PREA Study at its own expense, the AZ Amendment provides for the total royalty payments payable by the Company to AstraZeneca on net sales of Zomig ® products under the AZ Agreement to be 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 $30.0 million . In the event the royalty reduction amounts exceed the royalty payments payable by the Company to AstraZeneca pursuant to the AZ Agreement in any given quarter, AstraZeneca will be required to pay the Company an amount equal to the difference between the royalty reduction amount and the royalty payment payable by the Company to AstraZeneca. The Company’s commitment to perform the PREA Study may be terminated, without penalty, under certain circumstances as set forth in the AZ Amendment. Under the terms of the AZ Agreement, AstraZeneca was required to make payments to the Company representing 100% of the gross profit on sales of AstraZeneca-labeled Zomig® products during the specified transition period. The Company received transition payments from AstraZeneca aggregating $43.6 million during 2012. Beginning in January 2013, the Company was obligated to pay AstraZeneca tiered royalties on net sales of branded Zomig® products, depending on brand exclusivity and subject to customary reductions and other terms and conditions set forth in the AZ Agreement. The Company is also obligated to pay AstraZeneca royalties after a certain specified date based on gross profit from sales of authorized generic versions of the Zomig® products subject to certain terms and conditions set forth in the AZ Agreement. In May 2013, the Company’s exclusivity period for branded Zomig® tablets and orally disintegrating tablets expired and the Company 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 the Company to AstraZeneca on net sales of Zomig ® products under the AZ Agreement will be 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 $30.0 million . The Company owed a royalty payable to AstraZeneca of $12.7 million and $11.5 million during the nine months ended September 30, 2016 and 2015 , respectively, with a corresponding charge included in the cost of revenues line on the consolidated statements of operations. Agreement with DURECT Corporation During the three month period ended March 31, 2014, the Company entered into an agreement with DURECT Corporation (“Durect”) granting the Company the exclusive worldwide rights to develop and commercialize DURECT’s investigational transdermal bupivacaine patch for the treatment of pain associated with post-herpetic neuralgia (PHN), referred to by the Company as IPX239. The Company paid Durect a $2.0 million up-front payment upon signing of the agreement which was recognized immediately as research and development expense. The Company has the potential to pay up to $61.0 million in additional contingent milestone payments upon the achievement of predefined development and commercialization milestones. If IPX239 is commercialized, Durect would also receive a tiered royalty on product sales. Amedra Product Acquisition Agreement with Teva Pharmaceuticals USA, Inc. In August 2013, the Company, through its Amedra Pharmaceuticals subsidiary, entered into a product acquisition agreement (the “Teva Product Acquisition Agreement”) with Teva Pharmaceuticals USA, Inc. (“Teva”) pursuant to which the Company acquired the assets (including the ANDA and other regulatory materials) and related liabilities related to Teva’s mebendazole tablet product in all dosage forms. During the first quarter of 2016, the Company recognized $3.5 million of milestone payments due to Teva under the terms of the agreement related to the FDA's approval and the Company's subsequent launch of Emverm® (mebendazole) 100 mg chewable tablets. The Company is also obligated to pay Teva a royalty payment based on net sales of Emverm®, including a specified annual minimum royalty payment, subject to customary reductions and the other terms and conditions set forth in the Teva Product Acquisition Agreement. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Executive Employment Agreements The Company is a party to employment and separation agreements with certain members of its executive management team that provide for severance and other payments following termination of their employment for various reasons. Lease Agreements The Company leases land, office space, manufacturing, warehouse and research and development facilities, and equipment under non-cancelable operating leases expiring at various dates through December 2026. Purchase Order Commitments As of September 30, 2016 , the Company had $113.5 million of open purchase order commitments, primarily for raw materials. The terms of these purchase order commitments are generally less than one year in duration. Taiwan Facility Expansion The Company has entered into several contracts related to ongoing expansion activities at its Taiwan manufacturing facility. As of September 30, 2016 , the Company had remaining obligations under these contracts of $0.6 million . |
LEGAL AND REGULATORY MATTERS
LEGAL AND REGULATORY MATTERS | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
LEGAL AND REGULATORY MATTERS | LEGAL AND REGULATORY MATTERS 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 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 days period, the FDA can review and approve the ANDA, but 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 generic products division is typically subject to patent infringement litigation brought by branded pharmaceutical manufacturers in connection with the Company’s Paragraph IV certifications seeking an order delaying the approval of the Company’s ANDA until expiration of the patent(s) at issue in the litigation. Likewise, the Company’s branded products division is currently involved in patent infringement litigation against generic drug manufacturers who have filed Paragraph IV certifications to market their generic drugs prior to expiration of the Company’s patents at issue in the litigation. The uncertainties inherent in patent litigation make the outcome of such litigation difficult to predict. For the Company’s generic products division, the potential consequences in the event of an unfavorable outcome in such litigation include delaying 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 we are found to infringe a valid, enforceable patent. For the Company’s branded products division, 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. Although the outcome and costs of the asserted and unasserted claims is difficult to predict, based on the information presently known to management, the Company does not currently expect the ultimate liability, if any, for such matters to have a material adverse effect on its business, financial condition, results of operations, or cash flows. Patent Infringement Litigation Endo Pharmaceuticals Inc. and Grunenthal GmbH v. Impax Laboratories, Inc. and ThoRx Laboratories, Inc. (Oxymorphone hydrochloride); Endo Pharmaceuticals Inc. and Grunenthal GmbH v. Impax Laboratories, Inc. (Oxymorphone hydrochloride) In November 2012, Endo Pharmaceuticals, Inc. and Grunenthal GmbH (collectively, “Endo”) filed suit against ThoRx Laboratories, Inc., a wholly owned subsidiary of the Company (“ThoRx”), and the Company in the U.S. District Court for the Southern District of New York alleging patent infringement based on the filing of ThoRx’s ANDA relating to Oxymorphone hydrochloride, Extended Release tablets, 5 mg, 7.5 mg, 10 mg, 15 mg, 20 mg, 30 mg and 40 mg, generic to Opana ER®. In January 2013, Endo filed a separate suit against the Company in the U.S. District Court for the Southern District of New York alleging patent infringement based on the filing of the Company’s ANDA relating to the same products. ThoRx and the Company filed an answer and counterclaims to the November 2012 suit and the Company filed an answer and counterclaims with respect to the January 2013 suit. A bench trial was completed in April 2015. In June 2016, the Court entered an amended judgment in both cases that the products described in the Company’s and ThoRx’s ANDAs would, if marketed, infringe certain claims of the patents asserted by Endo and Grunenthal. The Court also found that the asserted claims of patents owned by Endo were not invalid, but that the asserted claims of patents owned by Grunenthal were invalid. As a result, the Court enjoined the Company and ThoRx from marketing their products until expiration of the Endo patents in 2023. The Company and ThoRx are appealing the Court’s judgment. In November 2014, Endo Pharmaceuticals Inc. and Mallinckrodt LLC filed suit against the Company in the U.S. District Court for the District of Delaware making additional allegations of patent infringement based on the filing of the Company’s Oxymorphone hydrochloride ANDA described above. Also in November 2014, Endo and Mallinckrodt filed a separate suit in the U.S. District Court for the District of Delaware making additional allegations of patent infringement based on the filing of the ThoRx Oxymorphone hydrochloride ANDA described above. ThoRx and the Company filed an answer and counterclaim to those suits in which they are named as a defendant. The cases are currently stayed pending the outcome of further proceedings in related cases in these District of Delaware cases and/or an appellate decision in the New York proceedings described above. In May 2016, Endo Pharmaceuticals Inc. filed suit against the Company in the U.S. District Court for the District of New Jersey, alleging that the Company’s marketed oxymorphone hydrochloride tablets infringe certain patents owned by Endo. Endo’s complaint also alleges that the Company and Endo entered into a settlement and license agreement with respect to these products, but that the Company later breached that contract and breached its implied duty of good faith and fair dealing with respect to that agreement. Endo filed an amended complaint on August 1, 2016 and the Company filed a motion to dismiss the complaint. On October 25, 2016, that motion was granted in part and denied in part. On October 31, 2016, the Company received a letter from Endo purporting to terminate the settlement and license agreement for material breach. Impax Laboratories Inc., et al. v. Lannett Holdings, Inc. and Lannett Company (Zomig®) In July 2014, the Company filed suit against Lannett Holdings, Inc. and Lannett Company (collectively, “Lannett”) in the United States District Court for the District of Delaware, alleging patent infringement based on the filing of the Lannett ANDA relating to Zolmitriptan Nasal Spray, 5mg, generic to Zomig® Nasal Spray. Lannett filed an answer and counterclaims alleging non-infringement and invalidity in September 2014, and the Company filed an answer to the counterclaims in October 2014. Trial occurred in early September 2016. Post-trial briefing will be completed by December 12, 2016. Lannett has indicated that they will not sell their generic product to the Zomig® Nasal Spray before March 31, 2017, and the Court has indicated that it will render its bench trial decision on or before that date. On July 28, 2015, Lannett filed petitions for Inter Partes Review (“IPR”) of U.S. Patent Nos. 6,750,237 and 7,220,767 related to the product in the U.S. Patent and Trademark Office before the Patent Trial and Appeal Board (“PTAB”). Patent owner filed its preliminary responses in these PTAB proceedings on November 4, 2015. In January and February 2016, the PTAB denied Lannett’s petitions, declining to institute IPR proceedings with respect to the patents. Impax Laboratories Inc., et al. v. Par Pharmaceutical, Inc. (Zomig®) On September 23, 2016, the Company filed suit against Par Pharmaceutical, Inc. (“Par”) in the United States District Court for the District of Delaware, alleging patent infringement based on the filing of the Par ANDA relating to Zolmitriptan Nasal Spray, 2.5 mg and 5 mg, generic to Zomig® Nasal Spray. On October 12, 2016, the parties entered into a joint stipulation to stay the case pending the outcome of the Lannett matter described above, which was subsequently approved by the Court. As part of the joint stipulation, Par agreed to toll the 30-month stay until a final decision in the Lannett matter was rendered by the United States District Court for the District of Delaware. No trial date has been set. Impax Laboratories Inc., et al. v. Actavis Laboratories, Inc. and Actavis Pharma Inc. (Rytary ® ) In September 2015, the Company filed suit against Actavis Laboratories, Inc. and Actavis Pharma Inc. (collectively, “Actavis”) in the United States District Court for the District of New Jersey, alleging patent infringement based on the filing of the Actavis ANDA relating to carbidopa and levodopa extended release capsules, generic to Rytary ® . Actavis filed an answer and counterclaims on November 19, 2015. Discovery is proceeding. A claim construction hearing is expected by December 2016 and trial is scheduled for September 2017. Other Litigation Related to the Company’s Business Solodyn ® Antitrust Class Actions From July 2013 to January 2016, 18 complaints were filed as class actions on behalf of direct and indirect purchasers, as well as by certain direct purchasers against manufacturers of the brand drug Solodyn® and its generic equivalents, including the Company. On July 22, 2013, Plaintiff United Food and Commercial Workers Local 1776 & Participating Employers Health and Welfare Fund, an indirect purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On July 23, 2013, Plaintiff Rochester Drug Co-Operative, Inc., a direct purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On August 1, 2013, Plaintiff International Union of Operating Engineers Local 132 Health and Welfare Fund, an indirect purchaser, filed a class action complaint in the United States District Court for the Northern District of California on behalf of itself and others similarly situated. On August 29, 2013, this Plaintiff withdrew its complaint from the United States District Court for the Northern District of California, and on August 30, 2013, re-filed the same complaint in the United States Court for the Eastern District of Pennsylvania, on behalf of itself and others similarly situated. On August 9, 2013, Plaintiff Local 274 Health & Welfare Fund, an indirect purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On August 12, 2013, Plaintiff Sheet Metal Workers Local No. 25 Health & Welfare Fund, an indirect purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On August 27, 2013, Plaintiff Fraternal Order of Police, Fort Lauderdale Lodge 31, Insurance Trust Fund, an indirect purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On August 29, 2013, Plaintiff Heather Morgan, an indirect purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On August 30, 2013, Plaintiff Plumbers & Pipefitters Local 178 Health & Welfare Fund, an indirect purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On September 9, 2013, Plaintiff Ahold USA, Inc., a direct purchaser, filed a class action complaint in the United States District Court for the District of Massachusetts on behalf of itself and others similarly situated. On September 24, 2013, Plaintiff City of Providence, Rhode Island, an indirect purchaser, filed a class action complaint in the United States District Court for the District of Arizona on behalf of itself and others similarly situated. On October 2, 2013, Plaintiff International Union of Operating Engineers Stationary Engineers Local 39 Health & Welfare Trust Fund, an indirect purchaser, filed a class action complaint in the United States District Court for the District of Massachusetts on behalf of itself and others similarly situated. On October 7, 2013, Painters District Council No. 30 Health and Welfare Fund, an indirect purchaser, filed a class action complaint in the United States District Court for the District of Massachusetts on behalf of itself and others similarly situated. On October 25, 2013, Plaintiff Man-U Service Contract Trust Fund, an indirect purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On March 13, 2014, Plaintiff Allied Services Division Welfare Fund, an indirect purchaser, filed a class action complaint in the United States District Court for the District of Massachusetts on behalf of itself and others similarly situated. On March 19, 2014, Plaintiff NECA-IBEW Welfare Trust Fund, an indirect purchaser, filed a class action complaint in the United States District Court for the District of Massachusetts on behalf of itself and others similarly situated. On February 25, 2014, the United States Judicial Panel on Multidistrict Litigation ordered the pending actions transferred to the District of Massachusetts for coordinated pretrial proceedings, as In Re Solodyn (Minocycline Hydrochloride) Antitrust Litigation. On March 26, 2015, Walgreen Co., The Kruger Co., Safeway Inc., HEB Grocery Company L.P., Albertson’s LLC, direct purchasers, filed a separate complaint in the United States District Court for the Middle District of Pennsylvania. On April 8, 2015, the Judicial Panel on Multi-District Litigation ordered the action be transferred to the District of Massachusetts, to be coordinated or consolidated with the coordinated proceedings. The original complaint filed by the plaintiffs asserted claims only against defendant Medicis. On October 5, 2015, the plaintiffs filed an amended complaint asserting claims against the Company and the other generic defendants. On April 16, 2015, Rite Aid Corporation and Rite Aid Hdqtrs. Corp, direct purchasers, filed a separate complaint in the United States District Court for the Middle District of Pennsylvania. On May 1, 2015, the Judicial Panel on Multi-District Litigation ordered the action be transferred to the District of Massachusetts, to be coordinated or consolidated with the coordinated proceedings. The original complaint filed by the plaintiffs asserted claims only against defendant Medicis. On October 5, 2015, the plaintiffs filed an amended complaint asserting claims against the Company and the other generic defendants. On January 25, 2016, CVS Pharmacy, Inc., a direct purchaser, filed a separate complaint in the United States District Court for the Middle District of Pennsylvania. On February 11, 2016, the Judicial Panel on Multi-District Litigation ordered the action to be transferred to the District of Massachusetts to be coordinated or consolidated with the coordinated proceedings. The consolidated amended complaints allege that Medicis engaged in anticompetitive schemes by, among other things, filing frivolous patent litigation lawsuits, submitting frivolous Citizen Petitions, and entering into anticompetitive settlement agreements with several generic manufacturers, including the Company, to delay generic competition of Solodyn® 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 August 14, 2015, the Court granted in part and denied in part defendants’ motion to dismiss the consolidated amended complaints. Discovery is ongoing. Trial is set for March 22, 2018. Opana ER® FTC Antitrust Suit As previously disclosed, on February 25, 2014, the Company received a Civil Investigative Demand ("CID") from the FTC concerning its investigation into the drug Opana® ER and its generic equivalents. According to the FTC, the investigation relates to whether Endo Pharmaceuticals, Inc. (“Endo”) and the Company have engaged or are engaged in unfair methods of competition in or affecting commerce by (i) entering into agreements regarding Opana® ER or its generic equivalents and/or (ii) engaging in other conduct regarding the regulatory filings, sale or marketing of Opana® ER or its generic equivalents. On March 30, 2016, the FTC filed a complaint against the Company, Endo, and others in the United States District Court for the Eastern District of Pennsylvania, alleging that the Company and Endo violated antitrust laws when they entered into a June 2010 co-promotion and development agreement and a June 2010 settlement agreement that resolved patent litigation in connection with the submission of the Company’s ANDA for generic original Opana® ER. In July 2016, the defendants filed a motion to dismiss the complaint, and a motion to sever the claims regarding Opana® ER from claims with respect to a separate settlement agreement that is challenged by the FTC. On October 20, 2016, the Court granted the motion to sever, formally terminating the suit against the Company, with an order that the FTC re-file no later than November 3, 2016 and dismissed the motion to dismiss as moot. On October 25, 2016, the FTC filed a notice of voluntary dismissal. On October 26, 2016, the Company and Endo filed a Declaratory Judgment complaint against the FTC in the Eastern District of Pennsylvania seeking resolution of the legal issues that were previously subject to the companies’ motion to dismiss. Opana ER® Antitrust Class Actions From June 2014 to February 2016, 14 complaints were filed as class actions on behalf of direct and end-payor (indirect) purchasers, as well as by certain direct purchasers, against the manufacturer of the brand drug Opana ER® and the Company. On June 4, 2014, Plaintiff Fraternal Order of Police, Miami Lodge 20, Insurance Trust Fund, an indirect purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On June 4, 2014, Plaintiff Rochester Drug Co-Operative, Inc., a direct purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On June 6, 2014, Plaintiff Value Drug Company, a direct purchaser, filed a class action complaint in the United States District Court for the Northern District of California on behalf of itself and others similarly situated. On June 26, 2014, this Plaintiff withdrew its complaint from the United States District Court for the Northern District of California, and on July 16, 2014, re-filed the same complaint in the United States District Court for the Northern District of Illinois, on behalf of itself and others similarly situated. On June 19, 2014, Plaintiff Wisconsin Masons’ Health Care Fund, an indirect purchaser, filed a class action complaint in the United States District Court for the Northern District of Illinois on behalf of itself and others similarly situated. On July 17, 2014, Plaintiff Massachusetts Bricklayers, an indirect purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On August 11, 2014, Plaintiff Pennsylvania Employees Benefit Trust Fund, an indirect purchaser, filed a class action complaint in the United States District Court for the Northern District of Illinois on behalf of itself and others similarly situated. On September 19, 2014, Plaintiff Meijer Inc., a direct purchaser, filed a class action complaint in the United States District Court for the Northern District of Illinois on behalf of itself and others similarly situated. On October 3, 2014, Plaintiff International Union of Operating Engineers, Local 138 Welfare Fund, an indirect purchaser, filed a class action complaint in the United States District Court for the Northern District of Illinois on behalf of itself and others similarly situated. On November 17, 2014, Louisiana Health Service & Indemnity Company d/b/a Blue Cross and Blue Shield of Louisiana, an indirect purchaser, filed a class action complaint in the United Stated District Court for the Middle District of Louisiana on behalf of itself and others similarly situated. On December 19, 2014, Plaintiff Kim Mahaffay, an indirect purchaser, filed a class action complaint in the Superior Court of the State of California, Alameda County, on behalf of herself and others similarly situated. On January 27, 2015, the Defendants removed the action to the United States District Court for the Northern District of California. On January 12, 2015, Plaintiff Plumbers & Pipefitters Local 178 Health & Welfare Trust Fund, an indirect purchaser, filed a class action complaint in the United States District Court for the Northern District of Illinois on behalf of itself and others similarly situated. On December 12, 2014, the United States Judicial Panel on Multidistrict Litigation ordered the pending actions transferred to the Northern District of Illinois for coordinated pretrial proceedings, as In Re Opana ER Antitrust Litigation. On March 26, 2015 Walgreen Co., The Kruger Co., Safeway Inc., HEB Grocery Company L.P., Albertson’s LLC, direct purchasers, filed a separate complaint in the United States District Court for the Northern District of Illinois. On April 23, 2015, Rite Aid Corporation and Rite Aid Hdqtrs. Corp, direct purchasers, filed a separate complaint in the United States District Court for the Northern District of Illinois. In each case, the complaints allege that Endo engaged in an anticompetitive scheme by, among other things, entering into an anticompetitive settlement agreement with the Company 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. Consolidated amended complaints were filed on May 4, 2015 by direct purchaser plaintiffs and end-payor (indirect) purchaser plaintiffs. On July 3, 2015, defendants filed motions to dismiss the consolidated amended complaints, as well as the complaints of the “Opt-Out Plaintiffs” (Walgreen Co., The Kruger Co., Safeway Inc., HEB Grocery Company L.P., Albertson’s LLC, Rite Aid Corporation and Rite Aid Hdqtrs. Corp.). On February 1, 2016, CVS Pharmacy, Inc. filed a complaint in the United States District Court for the Northern District of Illinois. The parties agreed that CVS Pharmacy, Inc. would be bound by the court’s ruling on the defendants’ motion to dismiss the Opt-Out Plaintiffs’ complaints. On February 10, 2016, the court granted in part and denied in part defendants’ motion to dismiss the end-payor purchaser plaintiffs’ consolidated amended complaint, and denied defendants’ motion to dismiss the direct purchaser plaintiffs’ consolidated amended complaint. The end-payor purchaser plaintiffs have filed a second consolidated amended complaint and the Company has moved to dismiss certain state law claims. On February 25, 2016, the court granted defendants’ motion to dismiss the Opt-Out Plaintiffs’ complaints, with leave to amend. The Opt-Out Plaintiffs and CVS Pharmacy, Inc. have filed amended complaints and the Company has filed its answer. Discovery is ongoing. No trial date has been scheduled. Civil Investigation Demand from the Attorney General of the State of Alaska On February 10, 2015, the Company received three CIDs from the Office of the Attorney General of the State of Alaska (“Alaska AG”) concerning its investigations into the drugs Adderall XR ® , Effexor XR ® and Opana ® ER (each a “Product” and collectively, the “Products”) and their generic equivalents. According to the Alaska AG, the investigation is to determine whether the Company may have violated Alaskan state law by entering into settlement agreements with the respective brand name manufacturer for each of the foregoing Products that delayed generic entry of such Product into the marketplace. The Company has cooperated with the Alaska AG in producing documents and information in response to the CIDs. To the knowledge of the Company, no proceedings have been initiated against the Company at this time; however no assurance can be given as to the timing or outcome of this investigation. United States Department of Justice Investigations Previously on November 6, 2014, the Company disclosed that one of its sales representatives received a grand jury subpoena from the Antitrust Division of the United States Justice Department (the “Justice Department”). In connection with this same investigation, on March 13, 2015, the Company received a grand jury subpoena from the Justice Department requesting the production of information and documents regarding the sales, marketing, and pricing of certain generic prescription medications. In particular, the Justice Department’s investigation currently focuses on four generic medications: digoxin tablets, terbutaline sulfate tablets, prilocaine/lidocaine cream, and calcipotriene topical solution. The Company has been cooperating and intends to continue cooperating with the investigation. However, no assurance can be given as to the timing or outcome of the investigation. Attorney General of the State of Connecticut Interrogatories and Subpoena Duces Tecum On July 14, 2014, the Company received a subpoena and interrogatories (the “Subpoena”) from the State of Connecticut Attorney General (“Connecticut AG”) concerning its investigation into sales of the Company’s generic product, digoxin. According to the Connecticut AG, the investigation is to determine whether anyone engaged in a contract, combination or conspiracy in restraint of trade or commerce which has the effect of (i) fixing, controlling or maintaining prices or (ii) allocating or dividing customers or territories relating to the sale of digoxin in violation of Connecticut state antitrust law. The Company intends to cooperate with the Connecticut AG in producing documents and information in response to the Subpoena. To the knowledge of the Company, no proceedings by the Connecticut AG have been initiated against the Company at this time; however no assurance can be given as to the timing or outcome of this investigation. In re Generic Digoxin and Doxycycline Class Action From March 2016 to October 2016, 21 complaints were filed as class actions on behalf of direct and indirect purchasers against manufacturers of generic digoxin and doxycycline and the Company. On March 2, 2016, Plaintiff International Union of Operating Engineers Local 30 Benefits Fund, an indirect purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. The plaintiff filed an amended complaint on June 9, 2016. On March 25, 2016, Plaintiff Tulsa Firefighters Health and Welfare Trust, an indirect purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On March 25, 2016, Plaintiff NECA-IBEW Welfare Trust Fund, an indirect purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On April 4, 2016, Plaintiff Pipe Trade Services MN, an indirect purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On April 25, 2016, Plaintiff Edward Carpinelli, an indirect purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On April 27, 2016, Plaintiff Fraternal Order of Police, Miami Lodge 20, Insurance Trust Fund, an indirect purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On May 2, 2016, Plaintiff Nina Diamond, an indirect purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On May 5, 2016, Plaintiff UFCW Local 1500 Welfare Fund, an indirect purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On May 6, 2016, Plaintiff Minnesota Laborers Health and Welfare Fund, an indirect purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On May 12, 2016, Plaintiff The City of Providence, Rhode Island, an indirect purchaser, filed a class action complaint in the United States District Court for the District of Rhode Island on behalf of itself and others similarly situated. On May 18, 2016, Plaintiff KPH Healthcare Services, Inc. a/k/a Kinney Drugs, Inc., a direct purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On May 19, 2016, Plaintiff Philadelphia Federation of Teachers Health and Welfare Fund, an indirect purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On June 8, 2016, Plaintiff United Food & Commercial Workers and Employers Arizona Health and Welfare Trust, an indirect purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On June 17, 2016, Plaintiff Ottis McCrary, an indirect purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On June 20, 2016, Plaintiff Rochester Drug Co-Operative, Inc., a direct purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On June 27, 2016, Plaintiff César Castillo Inc., a direct purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On June 29, 2016, Plaintiff Plumbers & Pipefitters Local 33 Health and Welfare Fund, an indirect purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On July 1, 2016, Plaintiff Plumbers & Pipefitters Local 178 Health and Welfare Trust Fund, an indirect purchaser, filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of itself and others similarly situated. On July 15, 2016, Plaint |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION The Company has two reportable segments, Impax Generics and Impax Specialty Pharma. Impax Generics develops, manufactures, sells, and distributes generic pharmaceutical products, primarily through the following sales channels: the Impax Generics sales channel for sales of generic prescription products directly to wholesalers, large retail drug chains, and others; the Private Label Product sales channel for generic over-the-counter and prescription products sold to unrelated third-party customers who, in turn, sell the products under their own label; the Rx Partner sales channel for generic prescription products sold through unrelated third-party pharmaceutical entities under their own label pursuant to alliance agreements; and the OTC Partner sales channel for over-the-counter products sold through unrelated third-party pharmaceutical entities under their own labels pursuant to alliance and supply agreements. Revenues from the “Impax Generics” sales channel and the “Private Label” sales channel are reported under the caption “Impax Generics sales, net” in “Note 23. Supplementary Financial Information.” Revenues from the “OTC Partner” sales channel are reported under the caption “Other Revenues” in “Note 23. Supplementary Financial Information.” Impax Specialty Pharma is engaged in the development, sale and distribution of proprietary brand pharmaceutical products that the Company believes represent improvements to already-approved pharmaceutical products addressing central nervous system (“CNS”) disorders and other select specialty segments. Impax Specialty Pharma currently has one internally developed branded pharmaceutical product, Rytary® (IPX066), 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 and/or manganese intoxication, which was approved by the FDA on January 7, 2015 and which the Company launched in April 2015. In November 2015, the European Commission granted marketing authorization for NUMIENT™ (IPX066) (referred to as Rytary® in the United States). The review of the NUMIENT™ application was conducted under the centralized licensing procedure as a therapeutic innovation, and authorization is applicable in all 28 member states of the European Union, as well as Iceland, Liechtenstein and Norway. Impax Specialty Pharma is also engaged in the sale and distribution of four other branded products including Zomig® (zolmitriptan) products, indicated for the treatment of migraine headaches, under the terms of the AZ Agreement with AstraZeneca in the United States and in certain U.S. territories, and Emverm ® (mebendazole) 100 mg chewable tablets, indicated for the treatment of pinworm, whipworm, common roundworm, common hookworm, and American hookworm in single or mixed infections. Revenues from Impax-labeled branded products are reported under the caption “Impax Specialty Pharma sales, net” in “Note 23. Supplementary Financial Information.” Finally, the Company generated revenue in Impax Specialty Pharma from research and development services provided under a development and license agreement with another unrelated third-party pharmaceutical company (which was terminated by mutual agreement of the parties effective December 23, 2015), and reports such revenue under the caption “Other Revenues” in “Note 23. Supplementary Financial Information.” Impax Specialty Pharma also has a number of product candidates that are in varying stages of development. The Company’s chief operating decision maker evaluates the financial performance of the Company’s segments based upon segment income (loss) before income taxes. Items below income (loss) from operations are not reported by segment, since they are excluded from the measure of segment profitability reviewed by the Company’s chief operating decision maker. Additionally, general and administrative expenses, certain selling expenses, certain litigation settlements, and non-operating income and expenses are included below 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 maker. The accounting policies for the Company’s segments are the same as those described above in the discussion of "Revenue Recognition" in “Note 4. Summary of Significant Accounting Policies.” The Company has no inter-segment revenue. The tables below present segment information reconciled to total Company financial results, with segment operating income or loss including gross profit less direct research and development expenses and direct selling expenses as well as any litigation settlements, to the extent specifically identified by segment (in thousands): Three Months Ended September 30, 2016 Impax Impax Corporate Total Revenues, net $ 175,320 $ 52,589 $ — $ 227,909 Cost of revenues $ 115,020 $ 21,853 $ — $ 136,873 Cost of revenues impairment charges $ 256,462 $ — $ — $ 256,462 Selling, general and administrative $ 6,103 $ 16,358 $ 32,577 $ 55,038 Research and development $ 15,375 $ 4,740 $ — $ 20,115 In-process research and development impairment charges $ 15,543 $ 13,227 $ — $ 28,770 Patent litigation expense $ 147 $ 3,132 $ — $ 3,279 Loss before income taxes $ (233,330 ) $ (6,721 ) $ (43,817 ) $ (283,868 ) Three Months Ended September 30, 2015 Impax Impax Corporate Total Revenues, net $ 180,666 $ 40,433 $ — $ 221,099 Cost of revenues $ 112,716 $ 14,834 $ — $ 127,550 Selling, general and administrative $ 5,103 $ 11,418 $ 29,786 $ 46,307 Research and development $ 14,346 $ 4,285 $ — $ 18,631 Patent litigation expense $ 397 $ 655 $ — $ 1,052 Income before income taxes $ 48,104 $ 9,241 $ 3,987 $ 61,332 Nine Months Ended September 30, 2016 Impax Impax Corporate Total Revenues, net $ 467,094 $ 158,913 $ — $ 626,007 Cost of revenues $ 307,936 $ 49,916 $ — $ 357,852 Cost of revenues impairment charges $ 258,007 $ — $ — $ 258,007 Selling, general and administrative $ 12,442 $ 46,309 $ 85,493 $ 144,244 Research and development $ 46,113 $ 13,824 $ — $ 59,937 In-process research and development impairment charges $ 16,489 $ 13,227 $ — $ 29,716 Patent litigation expense $ 416 $ 6,111 $ — $ 6,527 (Loss) income before income taxes $ (174,309 ) $ 29,526 $ (160,529 ) $ (305,312 ) Nine Months Ended September 30, 2015 Impax Impax Corporate Total Revenues, net $ 484,086 $ 94,291 $ — $ 578,377 Cost of revenues $ 299,596 $ 41,147 $ — $ 340,743 Selling, general and administrative $ 16,673 $ 39,186 $ 88,917 $ 144,776 Research and development $ 38,100 $ 12,488 $ — $ 50,588 Patent litigation expense $ 2,507 $ 999 $ — $ 3,506 Income (loss) before income taxes $ 127,210 $ 471 $ (81,602 ) $ 46,079 Foreign Operations The Company’s wholly-owned subsidiary, Impax Laboratories (Taiwan) Inc., has constructed a facility in Taiwan which is utilized for manufacturing, research and development, warehouse, and administrative functions, with $150.6 million and $131.6 million of net carrying value of assets, composed principally of a building and equipment, included in the Company's consolidated balance sheets at September 30, 2016 and December 31, 2015 , respectively. |
SUPPLEMENTARY FINANCIAL INFORMA
SUPPLEMENTARY FINANCIAL INFORMATION (Unaudited) | 9 Months Ended |
Sep. 30, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
SUPPLEMENTARY FINANCIAL INFORMATION (UNAUDITED) | SUPPLEMENTARY FINANCIAL INFORMATION (Unaudited) Selected financial information for the quarterly period noted is as follows: (in thousands, except share and per share amounts) Quarter Ended March 31, 2016 Quarter Ended June 30, 2016 Quarter Ended September 30, 2016 Revenue: Impax Generic Product sales, gross $ 611,281 $ 531,226 $ 651,372 Less: Chargebacks 217,354 197,864 254,681 Rebates 185,476 178,097 163,340 Product Returns 11,913 10,237 16,151 Other credits 29,354 25,075 48,607 Impax Generic Product sales, net 167,184 119,953 168,593 Rx Partner 2,835 1,669 6,672 Other Revenues 60 73 55 Impax Generic Division revenues, net 170,079 121,695 175,320 Impax Specialty Pharma sales, gross 82,073 81,254 77,841 Less: Chargebacks 6,111 8,826 5,439 Rebates 2,853 2,430 3,556 Product Returns 1,508 1,279 574 Other credits 16,172 17,824 15,683 Impax Specialty Pharma sales, net 55,429 50,895 52,589 Other Revenues — — — Impax Specialty Pharma revenues, net 55,429 50,895 52,589 Total revenues 225,508 172,590 227,909 Gross profit (loss) 102,590 72,984 (165,426 ) Net loss $ (10,408 ) $ (2,701 ) $ (179,337 ) Net loss per common share: Basic $ (0.15 ) $ (0.04 ) $ (2.51 ) Diluted $ (0.15 ) $ (0.04 ) $ (2.51 ) Weighted-average common shares outstanding: Basic 70,665,394 71,100,123 71,331,247 Diluted 70,665,394 71,100,123 71,331,247 (in thousands, except share and per share amounts) Quarter Ended March 31, 2015 Quarter Ended June 30, 2015 Quarter Ended September 30, 2015 Revenue: Impax Generic Product sales, gross $ 355,321 $ 572,079 $ 565,261 Less: Chargebacks 126,607 228,977 212,588 Rebates 83,130 139,477 141,646 Product Returns 6,427 7,528 6,276 Other credits 13,198 24,824 26,295 Impax Generic Product sales, net 125,959 171,273 178,456 Rx Partner 2,239 2,579 1,957 Other Revenues 543 827 253 Impax Generic Division revenues, net 128,741 174,679 180,666 Impax Specialty Pharma sales, gross 29,219 65,269 69,286 Less: Chargebacks 5,561 4,452 5,893 Rebates 2,132 2,970 1,078 Product Returns 2,620 6,763 2,824 Other credits 4,778 11,809 19,285 Impax Specialty Pharma sales, net 14,128 39,275 40,206 Other Revenues 227 228 227 Impax Specialty Pharma revenues, net 14,355 39,503 40,433 Total revenues 143,096 214,182 221,099 Gross profit 59,234 84,851 93,549 Net (loss) income $ (6,333 ) $ (1,852 ) $ 35,755 Net (loss) income per common share: Basic $ (0.09 ) $ (0.03 ) $ 0.51 Diluted $ (0.09 ) $ (0.03 ) $ 0.49 Weighted-average common shares outstanding: Basic 68,967,875 69,338,789 69,820,348 Diluted 68,967,875 69,338,789 72,777,746 |
SUMMARY OF SIGNIFICANT ACCOUN30
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Revenue Recognition | Revenue Recognition The Company recognizes revenue when the earnings process is complete, which under SEC Staff Accounting Bulletin No. 104, Topic No. 13, “Revenue Recognition” (“SAB 104”), is when revenue is realized or realizable and earned, there is persuasive evidence a revenue arrangement exists, delivery of goods or services has occurred, the sales price is fixed or determinable, and collectability is reasonably assured. The Company accounts for material revenue arrangements which contain multiple deliverables in accordance with FASB ASC Topic 605-25, Revenue Recognition - Multiple-Element Arrangements ("ASC 605-25"), which addresses the determination of whether an arrangement involving multiple deliverables contains more than one unit of accounting. A delivered item within an arrangement is considered a separate unit of accounting only if both of the following criteria are met: • the delivered item has value to the customer on a stand-alone basis; and • if the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item is considered probable and substantially in the control of the vendor. Under ASC 605-25, if both of the criteria above are not met, then separate accounting for the individual deliverables is not appropriate. Revenue recognition for arrangements with multiple deliverables constituting a single unit of accounting is recognized generally over the greater of the term of the arrangement or the expected period of performance, either on a straight-line basis or on a modified proportional performance method. The Company accounts for milestones related to research and development activities in accordance with FASB ASC Topic 605-28, Revenue Recognition - Milestone Method ("ASC 605-28"). ASC 605-28 allows for the recognition of consideration, which is contingent on the achievement of a substantive milestone, in its entirety in the period the milestone is achieved. A milestone is considered to be substantive if all of the following criteria are met: • the milestone is commensurate with either (1) the performance required to achieve the milestone or (2) the enhancement of the value of the delivered items resulting from the performance required to achieve the milestone; • the milestone relates solely to past performance; and • the milestone payment is reasonable relative to all of the deliverables and payment terms within the agreement. Impax Generics revenues, net and Impax Specialty Pharma revenues, net The Impax Generics revenues, net and Impax Specialty Pharma revenues, net include revenue recognized related to shipments of generic and branded pharmaceutical products to the Company’s customers, primarily drug wholesalers and retail chains. Gross sales revenue is recognized at the time title and risk of loss passes to the customer, which is generally when product is received by the customer. Net revenues may include deductions from the gross sales price related to estimates for chargebacks, rebates, distribution service fees, returns, shelf-stock adjustments, and other pricing adjustments. The Company records an estimate for these deductions in the same period when revenue is recognized. A description of each of these gross-to-net deductions follows. • Chargebacks The Company has agreements establishing contract prices for certain products with certain indirect customers, such as managed care organizations, hospitals and government agencies who purchase products from drug wholesalers. The contract prices are lower than the prices the customer would otherwise pay to the wholesaler, and the price difference is referred to as a chargeback, which generally takes the form of a credit memo issued by the Company to reduce the invoiced gross selling price charged to the wholesaler. An estimated accrued provision for chargeback deductions is recognized at the time of product shipment. The primary factors considered when estimating the provision for chargebacks are the average historical chargeback credits given, the mix of products shipped, and the amount of inventory on hand at the major drug wholesalers with whom the Company does business. The Company also monitors actual chargebacks granted and compares them to the estimated provision for chargebacks to assess the reasonableness of the chargeback reserve at each quarterly balance sheet date. • Rebates The Company maintains various rebate programs with its customers in an effort to maintain a competitive position in the marketplace and to promote sales and customer loyalty. The rebates generally take the form of a credit memo to reduce the invoiced gross selling price charged to a customer for products shipped. An estimated accrued provision for rebate deductions is recognized at the time of product shipment. The primary factors the Company considers when estimating the provision for rebates are the average historical experience of aggregate credits issued, the mix of products shipped and the historical relationship of rebates as a percentage of total gross product sales, the contract terms and conditions of the various rebate programs in effect at the time of shipment, and the amount of inventory on hand at the major drug wholesalers with whom the Company does business. The Company also monitors actual rebates granted and compares them to the estimated provision for rebates to assess the reasonableness of the rebate reserve at each quarterly balance sheet date. • Distribution Service Fees The Company pays distribution service fees to several of its wholesaler customers related to sales of its Impax Products. The wholesalers are generally obligated to provide the Company with periodic outbound sales information as well as inventory levels of the Company’s Impax Products held in their warehouses. Additionally, the wholesalers have agreed to manage the variability of their purchases and inventory levels within specified days on hand limits. An accrued provision for distribution service fees is recognized at the time products are shipped to wholesalers. • Returns The Company allows its customers to return product if approved by authorized personnel in writing or by telephone with the lot number and expiration date accompanying any request and if such products are returned within six months prior to or until twelve months following, the product’s expiration date. The Company estimates and recognizes an accrued provision for product returns as a percentage of gross sales based upon historical experience. The product return reserve is estimated using a historical lag period, which is the time between when the product is sold and when it is ultimately returned, and estimated return rates which may be adjusted based on various assumptions including: changes to internal policies and procedures, business practices, commercial terms with customers, and the competitive position of each product; the amount of inventory in the wholesale and retail supply chain; the introduction of new products; and changes in market sales information. The Company also considers other factors, including significant market changes which may impact future expected returns and actual product returns. The Company monitors actual returns on a quarterly basis and may record specific provisions for returns it believes are not covered by historical percentages. • Shelf-Stock Adjustments Based upon competitive market conditions, the Company may reduce the selling price of certain Impax Generics division products. The Company may issue a credit against the sales amount to a customer based upon their remaining inventory of the product in question, provided the customer agrees to continue to make future purchases of product from the Company. This type of customer credit is referred to as a shelf-stock adjustment, which is the difference between the initial sales price and the revised lower sales price, multiplied by an estimate of the number of product units on hand at a given date. Decreases in selling prices are discretionary decisions made by the Company in response to market conditions, including estimated launch dates of competing products and declines in market price. The Company records an estimate for shelf-stock adjustments in the period it agrees to grant such a credit memo to a customer. • Cash Discounts The Company offers cash discounts to its customers, generally 2% to 3% of the gross selling price, as an incentive for paying within invoice terms, which generally range from 30 to 90 days. An estimate of cash discounts is recorded in the same period when revenue is recognized. • Medicaid and Other U.S. Government Pricing Programs As required by law, the Company provides a rebate on drugs dispensed under the Medicaid program, Medicare Part D, TRICARE, and other U.S. government pricing programs. The Company determines its estimated government rebate accrual primarily based on historical experience of claims submitted by the various states and other jurisdictions and any new information regarding changes in the various programs which may impact the Company’s estimate of government rebates. In determining the appropriate accrual amount, the Company considers historical payment rates and processing lag for outstanding claims and payments. The Company records estimates for government rebates as a deduction from gross sales, with a corresponding adjustment to accrued liabilities. • Rx Partner and OTC Partner The Rx Partner and OTC Partner contracts include revenue recognized under alliance and collaboration agreements between the Company and unrelated third-party pharmaceutical companies. The Company has entered into these alliance agreements to develop marketing and/or distribution relationships with its partners to fully leverage its technology platform. The Rx Partners and OTC Partners alliance agreements obligate the Company to deliver multiple goods and/or services over extended periods. Such deliverables include manufactured pharmaceutical products, exclusive and semi-exclusive marketing rights, distribution licenses, and research and development services. In exchange for these deliverables the Company receives payments from its agreement partners for product shipments and research and development services, and may also receive other payments including royalties, profit sharing payments, and upfront and periodic milestone payments. Revenue received from the alliance agreement partners for product shipments under these agreements is not subject to deductions for chargebacks, rebates, product returns, and other pricing adjustments. Royalty and profit sharing amounts the Company receives under these agreements are calculated by the respective agreement partner, with such royalty and profit share amounts generally based upon estimates of net product sales or gross profit which include estimates of deductions for chargebacks, rebates, product returns, and other adjustments the alliance agreement partners may negotiate with their respective customers. The Company records the agreement partner's adjustments to such estimated amounts in the period the agreement partner reports the amounts to the Company. The Company applies the guidance of ASC 605-25 to the Strategic Alliance Agreement, as amended, with Teva Pharmaceuticals USA, Inc., an affiliate of Teva Pharmaceutical Industries Limited (the “Teva Agreement”). The Company looks to the underlying delivery of goods and/or services which give rise to the payment of consideration under the Teva Agreement to determine the appropriate revenue recognition. The Company initially defers consideration received as a result of research and development-related activities performed under the Teva Agreement. The Company recognizes deferred revenue on a straight-line basis over the expected period of performance for such services. Consideration received as a result of the manufacture and delivery of products under the Teva Agreement is recognized at the time title and risk of loss passes to the customer, which is generally when product is received by Teva. The Company recognizes profit share revenue in the period earned. OTC Partner revenue is related to agreements with Pfizer, Inc., formerly Wyeth LLC (“Pfizer”) and L. Perrigo Company (“Perrigo”) with respect to the supply of the Company's over-the-counter pharmaceutical product Loratadine and Pseudoephedrine Sulfate 5 mg/120 mg 12-hour Extended Release Tablets (the "D12 Product"). The OTC Partner sales channel is no longer a core area of the business, and the over-the-counter pharmaceutical products the Company sells through this sales channel are older products which are now only sold to Pfizer and Perrigo. The Company is currently only required to manufacture the over-the-counter pharmaceutical products under its agreements with Pfizer and Perrigo. The Company recognizes profit share revenue in the period earned. • Research Partner The Research Partner contract revenue results from development agreements the Company enters into with unrelated third-party pharmaceutical companies. The development agreements generally obligate the Company to provide research and development services over multiple periods. In exchange for this service, the Company generally receives upfront payments upon signing of each development agreement and is eligible to receive contingent milestone payments, payment of which is based upon the achievement of contractually specified events. Additionally, the Company may also receive royalty payments from the sale, if any, of a successfully developed and commercialized product under one of these development agreements. The Company recognizes revenue received from the achievement of contingent research and development milestones in the period such payment is earned. Royalty revenue, if any, will be recognized as current period revenue when earned. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk are cash, cash equivalents, and accounts receivable. The Company limits its credit risk associated with cash and cash equivalents by placing its investments with high quality money market funds, corporate debt, and short-term commercial paper and in securities backed by the U.S. Government. The Company limits its credit risk with respect to accounts receivable by performing credit evaluations when deemed necessary. The Company does not require collateral to secure amounts owed to it by its customers. In July 2015, the Company received an unsolicited offer from Turing Pharmaceuticals AG (“Turing”) to purchase the U.S. rights to Daraprim®, one of the marketed products acquired in the Tower Acquisition, as well as the active pharmaceutical ingredient for the product and the finished goods inventory on hand. Pursuant to the terms of the Asset Purchase Agreement between the Company and Turing dated August 7, 2015 (the “Turing APA”), the Company also granted a limited license to sell the existing Daraprim® product under the Company’s labeler code with the Company’s trade dress. The sale closed on August 7, 2015. In accordance with the terms of the Turing APA and in accordance with federal laws and regulations, the Company receives, and is initially responsible for processing and paying (subject to reimbursement by Turing), all chargebacks and rebates resulting from utilization by Medicaid, Medicare and other federal, state and local governmental programs, health plans and other health care providers for product sold under the Company’s labeler code. Under the terms of the Turing APA, Turing is responsible for liabilities related to chargebacks and rebates that arise as a result of Turing’s marketing or selling related activities in connection with Daraprim®. |
Recent Accounting Pronouncements | RECENT ACCOUNTING PRONOUNCEMENTS In May 2014, the FASB issued Accounting Standards Update ("ASU") 2014-09, “Revenue from Contracts with Customers” (Topic 606) regarding the accounting for and disclosures of revenue recognition, with an effective date for annual and interim periods beginning after December 15, 2016. This update provides a single comprehensive model for accounting for revenue from contracts with customers. The model requires that revenue recognized reflect the actual consideration to which the entity expects to be entitled in exchange for the goods or services defined in the contract, including in situations with multiple performance obligations. In July 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” which deferred the effective date of the previously issued revenue recognition guidance by one year. The guidance will be effective for annual and interim periods beginning after December 15, 2017. In April 2016 and May 2016, the FASB issued ASU 2016-10, "Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing" and ASU 2016-12, "Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients," respectively. Both of these updates provide improvements and clarification to the previously issued revenue recognition guidance. The guidance can be applied using one of two methods: retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application. The Company is currently evaluating the effect that this guidance may have on its consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): “Simplifying the Measurement of Inventory,” with guidance regarding the accounting for and measurement of inventory. The update requires that inventory measured using first-in, first-out ("FIFO") shall be measured at the lower of cost and net realizable value. When there is evidence that the net realizable value of inventory is lower than its cost, the difference shall be recognized as a loss in earnings in the period in which it occurs. The guidance will be effective for annual and interim periods beginning after December 15, 2016. The Company is currently evaluating the effect that this guidance may have on its consolidated financial statements. In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): “Simplifying the Accounting for Measurement-Period Adjustments,” with guidance regarding the accounting for and disclosure of measurement-period adjustments that occur in periods after a business combination is consummated. This update requires that the acquirer recognize measurement-period adjustments in the reporting period in which they are determined and, as such, eliminates the previous requirement to retrospectively account for these adjustments. This update also requires an entity to present separately on the face of the income statement, or disclose in the notes, the amount recorded in the current-period income statement that would have been recorded in previous reporting periods if the adjustments had been recognized as of the acquisition date. The effective date for annual and interim periods begins after December 15, 2015. The Company adopted this guidance during 2016, and it did not have a material effect on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), with guidance regarding the accounting for and disclosure of leases. The update requires lessees to recognize all leases, including operating leases, with a term greater than 12 months on the balance sheet. This update also requires lessees and lessors to disclose key information about their leasing transactions. The guidance will be effective for annual and interim periods beginning after December 15, 2018. The Company is currently evaluating the effect that this guidance may have on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-06, Contingent Put and Call Options in Debt Instruments (Topic 815), with guidance regarding the accounting for embedded derivatives related to debt contracts. The update clarifies that determining whether the economic characteristics of a put or call are clearly and closely related to its debt host requires only an assessment of the four-step decision sequence outlined in FASB ASC paragraph 815-15-25-24. The update also indicates that entities are not required to separately assess whether the contingency itself is clearly and closely related. The guidance will be effective for annual and interim periods beginning after December 15, 2016. The Company is currently evaluating the effect that this guidance may have on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718), with guidance regarding the simplification of accounting for share-based payment award transactions. The update changes the accounting for such areas as the accounting and cash flow classification for excess tax benefits and deficiencies; forfeitures; and tax withholding requirements and cash flow classification. The guidance will be effective for annual and interim periods beginning after December 15, 2016. The Company is currently evaluating the effect that this guidance may have on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, with guidance intended to reduce the diversity in practice regarding how certain cash receipts and cash payments are presented and classified within the statement of cash flows. The update addresses eight specific cash flow issues including debt prepayment or debt extinguishment costs, the settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies (COLIs) (including bank-owned life insurance policies (BOLIs)), distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the predominance principle. The guidance will be effective for annual and interim periods beginning after December 15, 2017. The Company is currently evaluating the effect that this guidance may have on its consolidated financial statements. |
BUSINESS ACQUISITIONS (Tables)
BUSINESS ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Teva Transaction | |
Business Acquisition [Line Items] | |
Schedule of Business Acquisitions, by Acquisition | The following is a preliminary estimate of the purchase price for the Teva Transaction (in thousands) as of the closing date of August 3, 2016: Estimated Fair Value Purchase price per the APAs $ 575,800 Upfront payment pursuant to Termination Agreement 10,000 Total cash consideration 585,800 Fair value of contingent consideration pursuant to Termination Agreement (1) 30,100 Total consideration transferred $ 615,900 (1) The contingent consideration arrangement pursuant to the Termination Agreement potentially requires the Company to pay up to $40.0 million of additional consideration to Teva upon the achievement of specified commercialization events related to methylphenidate hydrochloride. The $30.1 million fair value of the potential contingent consideration payments recognized on the acquisition date was estimated by applying a probability-weighted expected return methodology. |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following is a preliminary estimate of the fair value of the intangible and tangible assets acquired in connection with the Teva Transaction on the closing date of August 3, 2016 (in thousands): Estimated Fair Value Intangible assets $ 613,032 Inventory - raw materials 2,868 Total assets acquired $ 615,900 |
Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination | The following identifies the Company’s preliminary allocations of purchase price to intangible assets, including the weighted-average amortization period, in total and by major intangible asset class as of the closing date. See also "Note 11. Intangible Assets and Goodwill" for a discussion on a non-cash impairment charge recorded during the third quarter of 2016 related to the intangible assets acquired in the Teva Transaction: Estimated Fair Value Weighted-Average Estimated Useful Life Marketed product rights $ 461,152 19 years Acquired IPR&D product rights (1) 151,880 n/a Total intangible assets $ 613,032 (1) "IPR&D" refers to the Company's in-process research and development product rights. Pursuant to the Termination Agreement, Teva returned to the Company its full commercial rights to its pending ANDA for the generic equivalent to Concerta ® (methylphenidate hydrochloride), a product the Company previously partnered with Teva USA under a Strategic Alliance Agreement dated June 27, 2001, as amended. As a result, the Company recognized an intangible asset of $78.1 million related to the reacquired in-process research and development product right. The Company engaged a third-party valuation specialist to measure the value of the reacquired product right using a discounted cash flow analysis. The asset was determined to be indefinite-lived based on the market participant methodology prescribed in ASC 805. |
Business Acquisition, Pro Forma Information | The unaudited pro forma combined results of operations for the three and nine months ended September 30, 2016 and 2015 (assuming the closing of the Teva Transaction occurred on January 1, 2015) are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Total revenues $ 242,647 $ 262,381 $ 729,171 $ 702,224 Net (loss) income (177,379 ) 43,600 (167,505 ) 50,535 |
Tower And Lineage | |
Business Acquisition [Line Items] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following tables summarize the final fair values of the tangible and identifiable intangible assets acquired and liabilities assumed in the transaction at the closing date, net of cash acquired of $41.5 million (in thousands): Accounts receivable (1) $ 56,851 Inventory 31,259 Income tax receivable and other prepaid expenses 2,407 Property, plant and equipment 27,540 Intangible assets 632,600 Intangible assets held for sale 4,000 Goodwill 180,808 Deferred income taxes 37,041 Other non-current assets 3,844 Total assets acquired 976,350 Current liabilities 67,706 Deferred tax liabilities 210,005 Other non-current liabilities 7,291 Total liabilities assumed 285,002 Cash paid, net of cash acquired (2) $ 691,348 (1) The accounts receivable acquired in the Tower Acquisition had a fair value of $56.9 million , net of an allowance for doubtful accounts of $9.0 million , which represented the Company’s best estimate on March 9, 2015 (the closing date of the transaction) of the contractual cash flows not expected to be collected by the acquired companies. (2) The initial net purchase price of $697.2 million was subject to post-closing working capital adjustments, which resulted in the return of $5.9 million to the Company during the third quarter of 2015. |
Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination | The following table identifies the Company’s allocations, by category, of the Tower purchase price to the intangible assets acquired as of the closing date: Estimated Fair Weighted-Average (years) Marketed product rights $ 381,100 13 Royalty rights 80,800 12 Acquired IPR&D product rights 170,700 n/a Total intangible assets $ 632,600 |
Business Acquisition, Pro Forma Information | The following table reflects the unaudited pro forma combined results of operations for the nine months ended September 30, 2015 (assuming the closing of the Tower Acquisition occurred on January 1, 2014) (in thousands): Nine Months Ended September 30, 2015 Total revenues $ 610,814 Net income $ 40,007 |
FAIR VALUE MEASUREMENT AND FI32
FAIR VALUE MEASUREMENT AND FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The carrying amounts and fair values of the Company’s financial instruments as of September 30, 2016 and December 31, 2015 are indicated below (in thousands): As of September 30, 2016 Fair Value Measurement Based on Carrying Fair Value Quoted Prices in Active Markets Significant Significant Unobservable Assets Deferred Compensation Plan assets (1) $ 32,050 $ 32,050 $ — $ 32,050 $ — Liabilities Term Loan Facility due August 2021, current portion (2) $ 20,000 $ 20,000 $ — $ 20,000 $ — Term Loan Facility due August 2021, long-term portion (2) $ 380,000 $ 380,000 $ — $ 380,000 $ — 2% Convertible senior notes due June 2022 (3) $ 600,000 $ 532,692 $ 532,692 $ — $ — Deferred Compensation Plan liabilities (1) $ 27,860 $ 27,860 $ — $ 27,860 $ — Contingent consideration (4) $ 30,100 $ 30,100 $ — $ — $ 30,100 As of December 31, 2015 Fair Value Measurement Based on Carrying Fair Value Quoted Prices in Active Markets Significant Significant Unobservable Assets Deferred Compensation Plan assets (1) $ 30,726 $ 30,726 $ — $ 30,726 $ — Liabilities 2% Convertible senior notes due June 2022 (3) $ 600,000 $ 602,250 $ 602,250 $ — $ — Deferred Compensation Plan liabilities (1) $ 25,581 $ 25,581 $ — $ 25,581 $ — (1) The Deferred Compensation Plan liabilities are non-current liabilities recorded at the value of the amount owed to the plan participants, with changes in value recognized as compensation expense in the Company’s consolidated statements of operations. The calculation of the Deferred Compensation Plan obligation is derived from observable market data by reference to hypothetical investments selected by the participants and is included in the line item captioned “Other non-current liabilities” on the Company’s consolidated balance sheets. The Company invests participant contributions in corporate-owned life insurance (“COLI”) policies, for which the cash surrender value is included in the line item captioned “Other non-current assets” on the Company’s consolidated balance sheets. (2) The difference between the amount shown as the carrying value in the above tables and the amount shown on the Company’s consolidated balance sheets at September 30, 2016 and December 31, 2015 represents the unaccreted discount related to deferred debt issuance costs. (3) The difference between the amount shown as the carrying value in the above tables and the amount shown on the Company’s consolidated balance sheets at September 30, 2016 and December 31, 2015 represents the unaccreted discounts related to deferred debt issuance costs and bifurcation of the conversion feature of the notes. (4) The contingent consideration liability is a non-current liability representing future consideration potentially payable to Teva upon the achievement of specified commercialization events related to methylphenidate hydrochloride in accordance with the Termination Agreement related to the Teva Transaction as described in "Note 2. Business Acquisitions". A discounted cash flow valuation model was used to value the contingent consideration as of September 30, 2016. The valuation is based on significant unobservable inputs, including the probability and timing of successful product launch and the expected number of competitors at the time of launch and the launch anniversary date. The Company conducts a quarterly review of the underlying inputs and assumptions and significant changes in unobservable inputs could result in material changes to the contingent consideration liability. Changes in the value of the contingent consideration liability are included in "Other income (expense)" on the Company's consolidated statements of operations. A 5% increase or decrease in the probability of successful product launch would cause the fair value of the contingent consideration to both decrease and increase by $1.6 million , respectively. An increase or decrease in the number of competitors at the date of the product launch or the first anniversary would cause the fair value of the contingent consideration to decrease by $13.0 million and increase by $5.0 million , respectively. The maximum aggregate amount in contingent consideration payments the Company could be expected to make to Teva in accordance with the Termination Agreement related to methylphenidate hydrochloride is $40.0 million . |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Receivables [Abstract] | |
Schedule of Accounts, Notes, Loans and Financing Receivable | The composition of accounts receivable, net is as follows (in thousands): September 30, 2016 December 31, 2015 Gross accounts receivable (1) $ 755,859 $ 738,730 Less: Rebate reserve (295,489 ) (265,229 ) Less: Chargeback reserve (127,251 ) (102,630 ) Less: Distribution services reserve (16,529 ) (12,576 ) Less: Discount reserve (15,743 ) (18,657 ) Less: Uncollectible accounts reserve (2) (61,257 ) (15,187 ) Accounts receivable, net $ 239,590 $ 324,451 (1) Includes estimated $48.0 million and $40.6 million as of September 30, 2016 and December 31, 2015 , respectively, receivable due from Turing for reimbursement of Daraprim® chargebacks and Medicaid rebate liabilities. (2) As a result of the uncertainty of collection that developed since the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, the Company recorded a reserve of $48.0 million as of March 31, 2016, which represents the full amount of the estimated receivable due from Turing. See "Note 4. Summary of Significant Accounting Policies - Concentration of Credit Risk" for additional information regarding the Turing receivable. |
Allowance for Credit Losses on Financing Receivables | A roll-forward of the rebate and chargeback reserves activity for the nine months ended September 30, 2016 and the year ended December 31, 2015 is as follows (in thousands): Rebate reserve Nine Months Ended September 30, 2016 Year Ended December 31, 2015 Beginning balance $ 265,229 $ 88,812 Acquired balances — 75,447 Provision recorded during the period for Impax Generics rebates 526,913 571,642 Credits issued during the period for Impax Generics rebates (496,653 ) (470,672 ) Ending balance $ 295,489 $ 265,229 The payment mechanisms for rebates in the Impax Generics and Impax Specialty Pharma divisions are different, which impacts the location on the Company's consolidated balance sheets. Impax Specialty Pharma rebates are classified as "Accrued expenses" on the Company's consolidated balance sheets. Chargeback reserve Nine Months Ended September 30, 2016 Year Ended December 31, 2015 Beginning balance $ 102,630 $ 43,125 Acquired balances — 24,532 Provision recorded during the period 690,275 833,157 Credits issued during the period (665,654 ) (798,184 ) Ending balance $ 127,251 $ 102,630 |
INVENTORY (Tables)
INVENTORY (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current | Inventory, net of carrying value reserves, at September 30, 2016 and December 31, 2015 consisted of the following (in thousands): September 30, 2016 December 31, 2015 Raw materials $ 51,806 $ 52,366 Work in-process 5,959 4,417 Finished goods 121,087 82,311 Total inventory 178,852 139,094 Less: Non-current inventory 11,298 13,512 Total inventory-current $ 167,554 $ 125,582 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, plant and equipment, net of accumulated depreciation, consists of the following (in thousands): September 30, 2016 December 31, 2015 Land $ 5,603 $ 5,773 Buildings and improvements 173,637 165,322 Equipment 143,914 135,998 Office furniture and equipment 15,018 14,548 Construction-in-progress 41,641 25,659 Property, plant and equipment, gross 379,813 347,300 Less: Accumulated depreciation (152,225 ) (133,144 ) Property, plant and equipment, net $ 227,588 $ 214,156 |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | The following tables show the gross carrying values and accumulated amortization, where applicable, of the Company’s intangible assets by type for the consolidated balance sheets presented (in thousands): September 30, 2016 Gross Carrying Value Accumulated Amortization Intangible Assets, Net Amortized intangible assets: Marketed product rights $ 760,981 $ (122,359 ) $ 638,622 Royalties 339 (339 ) — 761,320 (122,698 ) 638,622 Non-amortized intangible assets: Acquired IPR&D product rights 244,803 — 244,803 Acquired future royalty rights 7,800 — 7,800 252,603 — 252,603 Total intangible assets $ 1,013,923 $ (122,698 ) $ 891,225 December 31, 2015 Gross Carrying Value Accumulated Amortization Intangible Assets, Net Amortized intangible assets: Marketed product rights $ 458,675 $ (82,906 ) $ 375,769 Royalties 2,200 (189 ) 2,011 460,875 (83,095 ) 377,780 Non-amortized intangible assets: Acquired IPR&D product rights 145,640 — 145,640 Acquired future royalty rights 78,600 — 78,600 224,240 — 224,240 Total intangible assets $ 685,115 $ (83,095 ) $ 602,020 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Liabilities | The following table sets forth the Company’s accrued expenses (in thousands): September 30, 2016 December 31, 2015 Payroll-related expenses $ 29,761 $ 37,419 Product returns 70,282 48,950 Accrued shelf stock 9,614 6,619 Government rebates (1) 79,775 91,717 Legal and professional fees 14,633 5,929 Income taxes payable — 830 Physician detailing sales force fees — 1,132 Interest payable 3,500 500 Estimated Teva and Allergan chargebacks and rebates (2) 17,627 — Other 9,989 11,615 Total accrued expenses $ 235,181 $ 204,711 (1) Includes estimated $14.5 million and $40.6 million as of September 30, 2016 and December 31, 2015 , respectively, of liabilities for Daraprim® chargebacks and rebates resulting from utilization by Medicaid, Medicare and other federal, state and local governmental programs, health plans and other health care providers for product sold under the Company’s labeler code, which amounts are subject to reimbursement by Turing in accordance with the terms of the Company's purchase agreement with Turing. The Company made payments of $33.5 million on Turing's behalf during the first three quarters of 2016. See "Note 4. Summary of Significant Accounting Policies - Concentration of Credit Risk" for additional information related to the Turing receivable. (2) As discussed in "Note 2. Business Acquisitions," pursuant to certain agreed upon transition related services by and among the Company, Teva and Allergan after the closing of the Teva Transaction, the Company agreed to manage the payment process for certain commercial chargebacks and rebates on behalf of Teva and Allergan related to products each of Teva and Allergan sold into the channel prior to the Company's acquisition of the products. On August 18, 2016, the Company received a payment totaling $42.4 million from Teva and Allergan, which represented their combined estimate of the amount of commercial chargebacks and rebates to be paid by the Company on their behalf to wholesalers who purchased product from Teva and Allergan prior to the closing. Pursuant to the agreed upon transition services, Teva and Allergan are obligated to reimburse the Company for additional payments related to chargebacks and rebates for products they sold into the channel prior to the closing and made on their behalf in excess of the $42.4 million . If the total payments made by the Company on behalf of Teva and Allergan are less than $42.4 million , the Company is obligated to refund the difference to Teva and/or Allergan. As of September 30, 2016, the Company had paid $24.8 million related to chargebacks and rebates as described above and $17.6 million remained in accrued expenses on the Company's consolidated balance sheet. |
Schedule of Product Warranty Liability | A roll-forward of the return reserve activity for the nine months ended September 30, 2016 and the year ended December 31, 2015 is as follows (in thousands): Returns Reserve Nine Months Ended September 30, 2016 Year Ended December 31, 2015 Beginning balance $ 48,950 $ 27,174 Acquired balances — 11,364 Provision related to sales recorded in the period 41,662 43,967 Credits issued during the period (20,330 ) (33,555 ) Ending balance $ 70,282 $ 48,950 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Stockholders' Equity Note [Abstract] | |
Common Stock Reserved for Future Issuance | In addition, the Company had reserved for issuance the following amounts of shares of its common stock for the purposes described below as of September 30, 2016 (in thousands): Shares issued 74,174 Stock options outstanding (1) 2,470 Conversion of Notes payable (2) 9,471 Warrants outstanding (see below) 9,471 Total shares of common stock issued and reserved for issuance 95,586 (1) See “Note 16. Share-based Compensation.” (2) See “Note 13. Debt.” |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following is a reconciliation of basic and diluted net (loss) income per share of common stock for the three and nine months ended September 30, 2016 and 2015 (in thousands, except per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Basic (Loss) Earnings Per Common Share: Net (loss) income $ (179,337 ) $ 35,755 $ (192,446 ) $ 27,570 Weighted-average common shares outstanding 71,331 69,820 71,033 69,379 Basic (loss) earnings per share $ (2.51 ) $ 0.51 $ (2.71 ) $ 0.40 Diluted (Loss) Earnings Per Common Share: Net (loss) income $ (179,337 ) $ 35,755 $ (192,446 ) $ 27,570 Add-back of interest expense on outstanding convertible notes payable, net of tax — (1) — (2) — (1) — (2) Adjusted net (loss) income $ (179,337 ) $ 35,755 $ (192,446 ) $ 27,570 Weighted-average common shares outstanding 71,331 69,820 71,033 69,379 Weighted-average incremental shares related to assumed exercise of warrants and stock options, vesting of non-vested shares and ESPP share issuance — (3) 2,958 (4) — (3) 3,170 (4) Weighted-average incremental shares assuming conversion of outstanding notes payable — (1) — (2) — (1) — (2) Diluted weighted-average common shares outstanding 71,331 (3) 72,778 (5) 71,033 (3) 72,549 (5) Diluted net (loss) income per share $ (2.51 ) $ 0.49 $ (2.71 ) $ 0.38 (1) For the three and nine month periods ended September 30, 2016 , the Company incurred a net loss, which cannot be diluted, so basic and diluted loss per common share were the same. Accordingly, there were no numerator or denominator adjustments related to the Company's outstanding Notes. (2) The add-back of interest expense incurred on the Company’s outstanding Notes, net of tax, to the numerator and the weighted-average incremental shares assuming conversion of the outstanding Notes to the denominator were excluded from the calculation of diluted EPS for the period ended September 30, 2015 because the Company was required to settle the conversion of the Notes in cash. See “Note 13. Debt” and “Note 14. Stockholders’ Equity” for additional information. (3) For the three and nine month periods ended September 30, 2016 , the Company incurred a net loss, which cannot be diluted, so basic and diluted loss per common share were the same. As of September 30, 2016 , shares issuable but not included in the Company's calculation of diluted EPS, which could potentially dilute future earnings, included 9.47 million warrants outstanding, 9.47 million shares for conversion of outstanding Notes payable, 2.47 million stock options outstanding and 2.60 million non-vested restricted stock awards. (4) The 9.47 million warrants outstanding have been excluded from the denominator of the diluted EPS calculation under the treasury stock method as of September 30, 2015 because the weighted-average exercise price of the warrants exceeded the average market price of the Company’s common stock for the periods presented and to do so would be anti-dilutive. (5) As of September 30, 2015 , shares issuable but not included in the Company's calculation of diluted EPS, which could potentially dilute future earnings, included 9.47 million warrants outstanding and 9.47 million shares for conversion of outstanding convertible notes payable. In addition, for the three and nine month periods ended September 30, 2015 , the Company excluded 0.4 million and 0.3 million , respectively, of shares issuable upon the exercise of stock options and vesting of non-vested restricted stock awards from the computation of diluted net income per common share under the treasury stock method. |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Share-based Compensation, Stock Options, Activity | The stock option activity for all of the Company’s equity compensation plans noted above is summarized as follows: Stock Options Number of Weighted- Outstanding at December 31, 2015 2,405,371 $ 21.39 Options granted 552,180 $ 12.52 Options exercised (464,950 ) $ 19.37 Options forfeited (22,266 ) $ 38.10 Outstanding at September 30, 2016 2,470,335 $ 23.94 Options exercisable at September 30, 2016 1,453,277 $ 17.43 |
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity | A summary of the non-vested restricted stock awards is as follows: Restricted Stock Awards Number of Weighted- Non-vested at December 31, 2015 2,146,498 $ 33.20 Granted 1,181,068 $ 32.20 Vested (528,396 ) $ 31.14 Forfeited (199,509 ) $ 32.74 Non-vested at September 30, 2016 2,599,661 $ 33.20 |
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs | The amount of share-based compensation expense recognized by the Company is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Manufacturing expenses $ 1,331 $ 1,436 $ 4,579 $ 3,674 Research and development 1,312 1,755 4,259 4,486 Selling, general and administrative 5,070 5,101 14,537 13,691 Total $ 7,713 $ 8,292 $ 23,375 $ 21,851 |
RESTRUCTURINGS (Tables)
RESTRUCTURINGS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Restructuring and Related Activities [Abstract] | |
Summary of Total Estimated Charges to be Incurred by Type | The following is a summary of the total estimated charges to be incurred by major type of cost (in millions): Type of Cost Amount Expected to be Incurred Employee retention and severance payments $ 13.7 Technical transfer of products 12.6 Asset impairment and accelerated depreciation charges 18.0 Facilities lease terminations and asset retirement obligations 1.0 Legal and professional fees 0.3 Total estimated restructuring charges $ 45.6 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The tables below present segment information reconciled to total Company financial results, with segment operating income or loss including gross profit less direct research and development expenses and direct selling expenses as well as any litigation settlements, to the extent specifically identified by segment (in thousands): Three Months Ended September 30, 2016 Impax Impax Corporate Total Revenues, net $ 175,320 $ 52,589 $ — $ 227,909 Cost of revenues $ 115,020 $ 21,853 $ — $ 136,873 Cost of revenues impairment charges $ 256,462 $ — $ — $ 256,462 Selling, general and administrative $ 6,103 $ 16,358 $ 32,577 $ 55,038 Research and development $ 15,375 $ 4,740 $ — $ 20,115 In-process research and development impairment charges $ 15,543 $ 13,227 $ — $ 28,770 Patent litigation expense $ 147 $ 3,132 $ — $ 3,279 Loss before income taxes $ (233,330 ) $ (6,721 ) $ (43,817 ) $ (283,868 ) Three Months Ended September 30, 2015 Impax Impax Corporate Total Revenues, net $ 180,666 $ 40,433 $ — $ 221,099 Cost of revenues $ 112,716 $ 14,834 $ — $ 127,550 Selling, general and administrative $ 5,103 $ 11,418 $ 29,786 $ 46,307 Research and development $ 14,346 $ 4,285 $ — $ 18,631 Patent litigation expense $ 397 $ 655 $ — $ 1,052 Income before income taxes $ 48,104 $ 9,241 $ 3,987 $ 61,332 Nine Months Ended September 30, 2016 Impax Impax Corporate Total Revenues, net $ 467,094 $ 158,913 $ — $ 626,007 Cost of revenues $ 307,936 $ 49,916 $ — $ 357,852 Cost of revenues impairment charges $ 258,007 $ — $ — $ 258,007 Selling, general and administrative $ 12,442 $ 46,309 $ 85,493 $ 144,244 Research and development $ 46,113 $ 13,824 $ — $ 59,937 In-process research and development impairment charges $ 16,489 $ 13,227 $ — $ 29,716 Patent litigation expense $ 416 $ 6,111 $ — $ 6,527 (Loss) income before income taxes $ (174,309 ) $ 29,526 $ (160,529 ) $ (305,312 ) Nine Months Ended September 30, 2015 Impax Impax Corporate Total Revenues, net $ 484,086 $ 94,291 $ — $ 578,377 Cost of revenues $ 299,596 $ 41,147 $ — $ 340,743 Selling, general and administrative $ 16,673 $ 39,186 $ 88,917 $ 144,776 Research and development $ 38,100 $ 12,488 $ — $ 50,588 Patent litigation expense $ 2,507 $ 999 $ — $ 3,506 Income (loss) before income taxes $ 127,210 $ 471 $ (81,602 ) $ 46,079 |
SUPPLEMENTARY FINANCIAL INFOR43
SUPPLEMENTARY FINANCIAL INFORMATION (Unaudited) (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | Selected financial information for the quarterly period noted is as follows: (in thousands, except share and per share amounts) Quarter Ended March 31, 2016 Quarter Ended June 30, 2016 Quarter Ended September 30, 2016 Revenue: Impax Generic Product sales, gross $ 611,281 $ 531,226 $ 651,372 Less: Chargebacks 217,354 197,864 254,681 Rebates 185,476 178,097 163,340 Product Returns 11,913 10,237 16,151 Other credits 29,354 25,075 48,607 Impax Generic Product sales, net 167,184 119,953 168,593 Rx Partner 2,835 1,669 6,672 Other Revenues 60 73 55 Impax Generic Division revenues, net 170,079 121,695 175,320 Impax Specialty Pharma sales, gross 82,073 81,254 77,841 Less: Chargebacks 6,111 8,826 5,439 Rebates 2,853 2,430 3,556 Product Returns 1,508 1,279 574 Other credits 16,172 17,824 15,683 Impax Specialty Pharma sales, net 55,429 50,895 52,589 Other Revenues — — — Impax Specialty Pharma revenues, net 55,429 50,895 52,589 Total revenues 225,508 172,590 227,909 Gross profit (loss) 102,590 72,984 (165,426 ) Net loss $ (10,408 ) $ (2,701 ) $ (179,337 ) Net loss per common share: Basic $ (0.15 ) $ (0.04 ) $ (2.51 ) Diluted $ (0.15 ) $ (0.04 ) $ (2.51 ) Weighted-average common shares outstanding: Basic 70,665,394 71,100,123 71,331,247 Diluted 70,665,394 71,100,123 71,331,247 (in thousands, except share and per share amounts) Quarter Ended March 31, 2015 Quarter Ended June 30, 2015 Quarter Ended September 30, 2015 Revenue: Impax Generic Product sales, gross $ 355,321 $ 572,079 $ 565,261 Less: Chargebacks 126,607 228,977 212,588 Rebates 83,130 139,477 141,646 Product Returns 6,427 7,528 6,276 Other credits 13,198 24,824 26,295 Impax Generic Product sales, net 125,959 171,273 178,456 Rx Partner 2,239 2,579 1,957 Other Revenues 543 827 253 Impax Generic Division revenues, net 128,741 174,679 180,666 Impax Specialty Pharma sales, gross 29,219 65,269 69,286 Less: Chargebacks 5,561 4,452 5,893 Rebates 2,132 2,970 1,078 Product Returns 2,620 6,763 2,824 Other credits 4,778 11,809 19,285 Impax Specialty Pharma sales, net 14,128 39,275 40,206 Other Revenues 227 228 227 Impax Specialty Pharma revenues, net 14,355 39,503 40,433 Total revenues 143,096 214,182 221,099 Gross profit 59,234 84,851 93,549 Net (loss) income $ (6,333 ) $ (1,852 ) $ 35,755 Net (loss) income per common share: Basic $ (0.09 ) $ (0.03 ) $ 0.51 Diluted $ (0.09 ) $ (0.03 ) $ 0.49 Weighted-average common shares outstanding: Basic 68,967,875 69,338,789 69,820,348 Diluted 68,967,875 69,338,789 72,777,746 |
DESCRIPTION OF BUSINESS (Detail
DESCRIPTION OF BUSINESS (Details) | 9 Months Ended |
Sep. 30, 2016segmentsales_channelfacilitypropertyproduct | |
Business Acquisition [Line Items] | |
Number of reportable segments | segment | 2 |
Number of channels | sales_channel | 4 |
Number of internally developed branded pharmaceutical product candidate | 1 |
Number of other branded products | 4 |
California | |
Business Acquisition [Line Items] | |
Number of owned properties | property | 5 |
Hayward California | |
Business Acquisition [Line Items] | |
Number of leased properties | facility | 2 |
BUSINESS ACQUISITIONS (Details)
BUSINESS ACQUISITIONS (Details) | Aug. 18, 2016USD ($) | Aug. 03, 2016USD ($) | Mar. 09, 2015USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2015USD ($)position |
Acquired Finite-Lived Intangible Assets [Line Items] | |||||||||||||
Business combination, contingent consideration liability | $ 30,100,000 | $ 30,100,000 | |||||||||||
Rebates and chargebacks | 17,627,000 | 17,627,000 | $ 0 | $ 0 | |||||||||
Fair value of contingent consideration pursuant to Termination Agreement | $ 30,100,000 | ||||||||||||
Acquired IPR&D product rights | 252,603,000 | 252,603,000 | 224,240,000 | 224,240,000 | |||||||||
Total revenues | 227,909,000 | $ 172,590,000 | $ 225,508,000 | $ 221,099,000 | $ 214,182,000 | $ 143,096,000 | 626,007,000 | $ 578,377,000 | |||||
Net (loss) income | (179,337,000) | (2,701,000) | (10,408,000) | 35,755,000 | (1,852,000) | (6,333,000) | (192,446,000) | 27,570,000 | |||||
Cost of revenues impairment charges | 256,462,000 | 0 | 258,007,000 | 0 | |||||||||
Goodwill | 208,382,000 | 208,382,000 | 210,166,000 | 210,166,000 | |||||||||
Impax Specialty Pharma | |||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||||||||||
Total revenues | 52,589,000 | 50,895,000 | 55,429,000 | 40,433,000 | 39,503,000 | 14,355,000 | 158,913,000 | 94,291,000 | |||||
Goodwill | 59,700,000 | 59,700,000 | |||||||||||
Impax Generics | |||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||||||||||
Total revenues | 175,320,000 | $ 121,695,000 | $ 170,079,000 | 180,666,000 | $ 174,679,000 | $ 128,741,000 | 467,094,000 | 484,086,000 | |||||
Goodwill | 148,700,000 | 148,700,000 | |||||||||||
Marketed product rights | |||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||||||||||
Fair value inputs, discount rate | 15.00% | ||||||||||||
Acquired IPR&D product rights | |||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||||||||||
Fair value inputs, discount rate | 16.00% | ||||||||||||
Teva Transaction | |||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||||||||||
Payments to acquire businesses, gross | 585,800,000 | ||||||||||||
Business combination, acquisition related costs | 3,600,000 | ||||||||||||
Chargeback reserve acquired balances | $ 42,400,000 | ||||||||||||
Chargeback and reserve payments | 24,800,000 | ||||||||||||
Business combination, consideration transferred | 615,900,000 | ||||||||||||
Rebates and chargebacks | $ 17,600,000 | ||||||||||||
Fair value of contingent consideration pursuant to Termination Agreement | $ 30,100,000 | ||||||||||||
Total revenues | 11,400,000 | 11,400,000 | |||||||||||
Net (loss) income | (162,000,000) | (162,000,000) | |||||||||||
Cost of revenues impairment charges | 251,000,000 | 251,000,000 | |||||||||||
Teva Transaction | Marketed product rights | |||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||||||||||
Fair value inputs, discount rate | 6.90% | ||||||||||||
Tower And Lineage | |||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||||||||||
Business combination, acquisition related costs | 12,200,000 | $ 10,900,000 | |||||||||||
Business combination, cash acquired and other working capital adjustments | $ 41,500,000 | ||||||||||||
Business combination, consideration transferred | 691,300,000 | 697,200,000 | |||||||||||
Severance costs | $ 2,400,000 | ||||||||||||
Business combination, number of positions eliminated | position | 10 | ||||||||||||
Cash acquired from acquisition | 41,500,000 | ||||||||||||
Business combination, acquired receivables, fair value | 56,900,000 | ||||||||||||
Business combination, acquired receivables, estimated uncollectible | 9,000,000 | ||||||||||||
Business combination, provisional information, initial accounting incomplete, adjustment, consideration transferred | 5,900,000 | ||||||||||||
Goodwill | 180,808,000 | ||||||||||||
Severance and retention costs | 3,400,000 | ||||||||||||
Tower And Lineage | Term Loan | |||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||||||||||
Line of credit facility, commitment fee amount | 2,300,000 | ||||||||||||
Tower And Lineage | Term Loan | Wells Fargo Bank, N.A. | |||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||||||||||
Long-term debt | $ 435,000,000 | 435,000,000 | |||||||||||
Tower And Lineage | Fair Value Adjustment to Inventory | |||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||||||||||
Assets, fair value adjustment | 6,100,000 | ||||||||||||
Tower And Lineage | Impax Specialty Pharma | |||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||||||||||
Goodwill | 59,700,000 | ||||||||||||
Tower And Lineage | Impax Generics | |||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||||||||||
Goodwill | $ 121,100,000 | ||||||||||||
General and Administrative Expense | Teva Transaction | |||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||||||||||
Business combination, acquisition related costs | 1,600,000 | 2,900,000 | |||||||||||
General and Administrative Expense | Tower And Lineage | |||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||||||||||
Business combination, acquisition related costs | $ 6,800,000 | ||||||||||||
Maximum | Teva Transaction | |||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||||||||||
Business combination, contingent consideration liability | $ 40,000,000 | ||||||||||||
Business combination, contingent consideration arrangements, range of outcomes, value, high | 40,000,000 | ||||||||||||
Revolving Credit Facility | Term Loan | |||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||||||||||
Long-term debt | $ 389,300,000 | $ 389,300,000 | |||||||||||
Revolving Credit Facility | Teva Transaction | Term Loan | |||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||||||||||
Proceeds from issuance of debt | 400,000,000 | ||||||||||||
Reacquired In Process Research and Development | Teva Transaction | |||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||||||||||
Acquired IPR&D product rights | 78,100,000 | ||||||||||||
Acquired IPR&D product rights | Teva Transaction | |||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||||||||||
Acquired IPR&D product rights | $ 151,880,000 |
BUSINESS ACQUISITIONS - Purchas
BUSINESS ACQUISITIONS - Purchase Price Allocation - Teva (Details) $ in Thousands | Aug. 03, 2016USD ($) |
Business Acquisition [Line Items] | |
Fair value of contingent consideration pursuant to Termination Agreement | $ 30,100 |
Teva Transaction | |
Business Acquisition [Line Items] | |
Purchase price per the APAs | 575,800 |
Upfront payment pursuant to Termination Agreement | 10,000 |
Total cash consideration | 585,800 |
Fair value of contingent consideration pursuant to Termination Agreement | 30,100 |
Total consideration transferred | $ 615,900 |
BUSINESS ACQUISTIONS - Fair Val
BUSINESS ACQUISTIONS - Fair Values of Tangible and Identifiable Intangible Assets Acquired and Liabilities Assumed - Teva (Details) - Teva Transaction | Aug. 03, 2016USD ($) |
Business Acquisition [Line Items] | |
Intangible assets | $ 613,032 |
Inventory - raw materials | 2,868 |
Total assets acquired | $ 615,900 |
BUSINESS ACQUISITIONS - Acquire
BUSINESS ACQUISITIONS - Acquired Intangible Assets - Teva (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2016 | Aug. 03, 2016 | Dec. 31, 2015 | |
Business Acquisition [Line Items] | |||
Marketed product rights | $ 761,320 | $ 460,875 | |
Acquired IPR&D product rights | 252,603 | 224,240 | |
Total intangible assets, net | $ 891,225 | 602,020 | |
Weighted-Average Estimated Useful Life (years) | 12 years 1 month | ||
Teva Transaction | |||
Business Acquisition [Line Items] | |||
Total intangible assets, net | $ 613,032 | ||
Marketed product rights | |||
Business Acquisition [Line Items] | |||
Marketed product rights | $ 760,981 | $ 458,675 | |
Marketed product rights | Teva Transaction | |||
Business Acquisition [Line Items] | |||
Marketed product rights | 461,152 | ||
Weighted-Average Estimated Useful Life (years) | 19 years | ||
Acquired IPR&D product rights | Teva Transaction | |||
Business Acquisition [Line Items] | |||
Acquired IPR&D product rights | 151,880 | ||
Reacquired In Process Research and Development | Teva Transaction | |||
Business Acquisition [Line Items] | |||
Acquired IPR&D product rights | $ 78,100 |
BUSINESS ACQUISITIONS - The Una
BUSINESS ACQUISITIONS - The Unaudited Condensed Pro Forma Consolidated Statements of Operations - Teva (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Business Acquisition [Line Items] | ||||
Selling, general and administrative | $ 55,038 | $ 46,307 | $ 144,244 | $ 144,776 |
Teva Transaction | ||||
Business Acquisition [Line Items] | ||||
Total revenues | 242,647 | 262,381 | 729,171 | 702,224 |
Net (loss) income | (177,379) | $ 43,600 | (167,505) | $ 50,535 |
Acquisition-related Costs | ||||
Business Acquisition [Line Items] | ||||
Selling, general and administrative | $ 1,700 | $ 2,900 |
BUSINESS ACQUISTIONS - Fair V50
BUSINESS ACQUISTIONS - Fair Values of Tangible and Identifiable Intangible Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Mar. 09, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 |
Restructuring Cost and Reserve [Line Items] | ||||
Goodwill | $ 208,382 | $ 210,166 | ||
Cash paid, net of cash acquired | $ 585,800 | $ 691,348 | ||
Tower And Lineage | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Accounts receivable | $ 56,851 | |||
Inventory | 31,259 | |||
Income tax receivable and other prepaid expenses | 2,407 | |||
Property, plant and equipment | 27,540 | |||
Intangible assets | 632,600 | |||
Goodwill | 180,808 | |||
Deferred income taxes | 37,041 | |||
Other non-current assets | 3,844 | |||
Total assets acquired | 976,350 | |||
Current liabilities | 67,706 | |||
Deferred tax liabilities | 210,005 | |||
Other non-current liabilities | 7,291 | |||
Total liabilities assumed | 285,002 | |||
Cash paid, net of cash acquired | 691,348 | |||
Discontinued Operations, Held-for-sale | Tower And Lineage | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Intangible assets | $ 4,000 |
BUSINESS ACQUISITIONS - Acqui51
BUSINESS ACQUISITIONS - Acquired Intangible Assets (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Amortized intangible assets: | |
Weighted-Average Estimated Useful Life (years) | 12 years 1 month |
Tower And Lineage | |
Amortized intangible assets: | |
Estimated Fair Value | $ 632,600 |
Weighted-Average Estimated Useful Life (years) | |
Marketed product rights | Tower And Lineage | |
Amortized intangible assets: | |
Estimated Fair Value | $ 381,100 |
Weighted-Average Estimated Useful Life (years) | 13 years |
Royalty rights | Tower And Lineage | |
Amortized intangible assets: | |
Estimated Fair Value | $ 80,800 |
Weighted-Average Estimated Useful Life (years) | 12 years |
Acquired IPR&D product rights | Tower And Lineage | |
Amortized intangible assets: | |
Estimated Fair Value | $ 170,700 |
BUSINESS ACQUISITIONS - The U52
BUSINESS ACQUISITIONS - The Unaudited Condensed Pro Forma Consolidated Statements of Operations (Details) - Tower And Lineage $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Business Acquisition [Line Items] | |
Total revenues | $ 610,814 |
Net income | $ 40,007 |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) | Sep. 30, 2016 |
Prohealth Biotech | |
Schedule of Equity Method Investments [Line Items] | |
Equity method investment, ownership percentage | 57.54% |
SUMMARY OF SIGNIFICANT ACCOUN54
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | May 02, 2016 | Sep. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Oct. 28, 2016 | Dec. 31, 2015 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Accounts receivable, increase (decrease) | $ (36,818,000) | $ 25,180,000 | ||||||
Accounts receivable, gross, current | $ 755,859,000 | 755,859,000 | $ 738,730,000 | |||||
Accrued liabilities, current | 235,181,000 | 235,181,000 | 204,711,000 | |||||
Reserve for Turing receivable | 48,043,000 | 0 | ||||||
Turing Pharmaceuticals AG | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Loss contingency, damages sought, value | $ 40,400,000 | |||||||
Daraprim | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Accrued liabilities, current | 14,500,000 | 14,500,000 | ||||||
Turing Pharmaceuticals AG | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Accounts receivable, net | 14,500,000 | 14,500,000 | $ 40,600,000 | |||||
Accounts receivable, increase (decrease) | 7,400,000 | |||||||
Accounts receivable, gross, current | 48,000,000 | 48,000,000 | ||||||
Accounts receivable, payments made on behalf of counterparty | 33,500,000 | |||||||
Reserve for Turing receivable | $ 0 | $ 48,000,000 | $ 0 | 48,043,000 | $ 0 | |||
Reserve for Turing receivable, period increase (decrease) | 0 | |||||||
Turing Pharmaceuticals AG | Subsequent Event | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Accounts receivable, payments made on behalf of counterparty | $ 33,600,000 | |||||||
Overdue Unpaid Invoices from Turing Pharmaceuticals AG | Chargeback and Medical Rebates | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Accounts receivable, estimated balance | $ 40,400,000 | |||||||
Minimum | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Cash discount, discount rate | 2.00% | |||||||
Cash discount, invoice terms | 30 days | |||||||
Maximum | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Cash discount, discount rate | 3.00% | |||||||
Cash discount, invoice terms | 90 days |
FAIR VALUE MEASUREMENT AND FI55
FAIR VALUE MEASUREMENT AND FINANCIAL INSTRUMENTS (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2016 | Aug. 03, 2016 | Dec. 31, 2015 | |
Assets | |||
Deferred Compensation Plan assets | $ 32,050,000 | $ 30,726,000 | |
Liabilities | |||
Term Loan Facility due August 2021, current portion, Carrying Amount | 17,708,000 | 0 | |
Term Loan Facility due August 2021, current portion, Fair Value | 20,000,000 | ||
Term Loan Facility due August 2021, long-term portion, Carrying Amount | 812,375,000 | 424,595,000 | |
Term Loan Facility due August 2021, long-term portion, Fair Value | 380,000,000 | ||
Deferred Compensation Plan liabilities | 27,860,000 | 25,581,000 | |
Contingent consideration | 30,100,000 | ||
Contingent consideration, Fair Value | 30,100,000 | ||
Decrease in value from change in 5% probability of successful product launch | 1,600,000 | ||
Increase in value from change in 5% probability of successful product launch | 1,600,000 | ||
Decrease in value from decrease in competitors | 13,000,000 | ||
Increase in values from increase in competitors | 5,000,000 | ||
2% Convertible senior notes due June 2022 | |||
Liabilities | |||
2% Convertible senior notes due June 2022, Carrying Amount | 600,000,000 | 600,000,000 | |
2% convertible senior notes due June 2022, Fair Value | 532,692,000 | 602,250,000 | |
Quoted Prices in Active Markets (Level 1) | |||
Assets | |||
Deferred Compensation Plan assets | 0 | 0 | |
Liabilities | |||
Term Loan Facility due August 2021, current portion, Fair Value | 0 | ||
Term Loan Facility due August 2021, long-term portion, Fair Value | 0 | ||
Deferred Compensation Plan liabilities | 0 | 0 | |
Contingent consideration, Fair Value | 0 | ||
Quoted Prices in Active Markets (Level 1) | 2% Convertible senior notes due June 2022 | |||
Liabilities | |||
2% convertible senior notes due June 2022, Fair Value | 532,692,000 | 602,250,000 | |
Significant Other Observable Inputs (Level 2) | |||
Assets | |||
Deferred Compensation Plan assets | 32,050,000 | 30,726,000 | |
Liabilities | |||
Term Loan Facility due August 2021, current portion, Fair Value | 20,000,000 | ||
Term Loan Facility due August 2021, long-term portion, Fair Value | 380,000,000 | ||
Deferred Compensation Plan liabilities | 27,860,000 | 25,581,000 | |
Contingent consideration, Fair Value | 0 | ||
Significant Other Observable Inputs (Level 2) | 2% Convertible senior notes due June 2022 | |||
Liabilities | |||
2% convertible senior notes due June 2022, Fair Value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | |||
Assets | |||
Deferred Compensation Plan assets | 0 | 0 | |
Liabilities | |||
Term Loan Facility due August 2021, current portion, Fair Value | 0 | ||
Term Loan Facility due August 2021, long-term portion, Fair Value | 0 | ||
Deferred Compensation Plan liabilities | 0 | 0 | |
Contingent consideration, Fair Value | 30,100,000 | ||
Significant Unobservable Inputs (Level 3) | 2% Convertible senior notes due June 2022 | |||
Liabilities | |||
2% convertible senior notes due June 2022, Fair Value | 0 | $ 0 | |
Teva Transaction | Maximum | |||
Liabilities | |||
Contingent consideration | $ 40,000,000 | ||
Maximum contingent consideration payments | $ 40,000,000 | ||
Term Loan | |||
Liabilities | |||
Term Loan Facility due August 2021, current portion, Carrying Amount | 20,000,000 | ||
Term Loan Facility due August 2021, long-term portion, Carrying Amount | $ 380,000,000 |
FAIR VALUE MEASUREMENT AND FI56
FAIR VALUE MEASUREMENT AND FINANCIAL INSTRUMENTS-PHANTOM (Details) | Sep. 30, 2016 | Dec. 31, 2015 |
Convertible Debt Securities | Quoted Prices in Active Markets (Level 1) | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Debt instrument, interest rate, stated percentage | 2.00% | 2.00% |
SHORT-TERM INVESTMENTS (Details
SHORT-TERM INVESTMENTS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Investments Schedule [Abstract] | ||||
Maturities of short-term investments | $ 200,100,000 | $ 0 | $ 200,064,000 | |
Short-term investments | $ 0 | $ 0 |
ACCOUNTS RECEIVABLE, Compositio
ACCOUNTS RECEIVABLE, Composition of Accounts Receivable Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross accounts receivable | $ 755,859 | $ 755,859 | $ 738,730 | |||
Less: Rebate reserve | (295,489) | (295,489) | (265,229) | |||
Less: Chargeback reserve | (127,251) | (127,251) | (102,630) | |||
Less: Distribution services reserve | (16,529) | (16,529) | (12,576) | |||
Less: Discount reserve | (15,743) | (15,743) | (18,657) | |||
Less: Uncollectible accounts reserve | (61,257) | (61,257) | (15,187) | |||
Accounts receivable, net | 239,590 | 239,590 | 324,451 | |||
Reserve for Turing receivable | 48,043 | $ 0 | ||||
Receivable from Turing Pharmaceuticals AG | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross accounts receivable | 48,000 | 48,000 | $ 40,600 | |||
Turing Pharmaceuticals AG | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross accounts receivable | 48,000 | 48,000 | ||||
Reserve for Turing receivable | $ 0 | $ 48,000 | $ 0 | $ 48,043 | $ 0 |
ACCOUNTS RECEIVABLE, Roll Forwa
ACCOUNTS RECEIVABLE, Roll Forward of the Rebate Reserves Activity (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Rebate reserve | ||
Beginning balance | $ 265,229 | |
Ending balance | 295,489 | $ 265,229 |
Rebate reserve | ||
Rebate reserve | ||
Beginning balance | 265,229 | 88,812 |
Acquired balances | 0 | 75,447 |
Provision recorded during the period for Impax Generics rebates | 526,913 | 571,642 |
Credits issued during the period | (496,653) | (470,672) |
Ending balance | $ 295,489 | $ 265,229 |
ACCOUNTS RECEIVABLE, Roll For60
ACCOUNTS RECEIVABLE, Roll Forward of the Chargeback Reserves Activity (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Chargeback reserve | ||
Beginning balance | $ 102,630 | |
Ending balance | 127,251 | $ 102,630 |
Chargeback reserve | ||
Chargeback reserve | ||
Beginning balance | 102,630 | 43,125 |
Acquired balances | 0 | 24,532 |
Provision recorded during the period | 690,275 | 833,157 |
Credits issued during the period | (665,654) | (798,184) |
Ending balance | $ 127,251 | $ 102,630 |
INVENTORY, Net of Carrying Valu
INVENTORY, Net of Carrying Value Reserves (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 51,806 | $ 52,366 |
Work in-process | 5,959 | 4,417 |
Finished goods | 121,087 | 82,311 |
Total inventory | 178,852 | 139,094 |
Less: Non-current inventory | 11,298 | 13,512 |
Total inventory-current | $ 167,554 | $ 125,582 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Inventory [Line Items] | ||
Inventory valuation reserves | $ 39 | $ 24.1 |
Unapproved Inventory | ||
Inventory [Line Items] | ||
Unapproved product inventory, net | $ 13 | $ 8.7 |
Raw Materials | ||
Inventory [Line Items] | ||
Inventory turnover period, minimum life | 3 years | |
Inventory turnover period, maximum life | 5 years | |
Finished Goods | ||
Inventory [Line Items] | ||
Inventory turnover period, maximum life | 2 years |
PROPERTY, PLANT AND EQUIPMENT,
PROPERTY, PLANT AND EQUIPMENT, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Abstract] | ||
Land | $ 5,603 | $ 5,773 |
Buildings and improvements | 173,637 | 165,322 |
Equipment | 143,914 | 135,998 |
Office furniture and equipment | 15,018 | 14,548 |
Construction-in-progress | 41,641 | 25,659 |
Property, plant and equipment, gross | 379,813 | 347,300 |
Less: Accumulated depreciation | (152,225) | (133,144) |
Property, plant and equipment, net | $ 227,588 | $ 214,156 |
PROPERTY, PLANT AND EQUIPMENT64
PROPERTY, PLANT AND EQUIPMENT, SCHEDULE (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 21.8 | $ 19.2 |
Property, plant and equipment unpaid vendor invoices excluded from statement of cash flows | $ 3.5 | $ 1 |
INTANGIBLE ASSETS AND GOODWILL,
INTANGIBLE ASSETS AND GOODWILL, Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Aug. 03, 2016 | Dec. 31, 2015 |
Amortized intangible assets: | |||
Gross Carrying Value | $ 761,320 | $ 460,875 | |
Accumulated Amortization | (122,698) | (83,095) | |
Intangible Assets, Net | 638,622 | 377,780 | |
Non-amortized intangible assets: | |||
Gross Carrying value | 252,603 | 224,240 | |
Total intangible assets, gross | 1,013,923 | 685,115 | |
Total intangible assets, net | 891,225 | 602,020 | |
Acquired IPR&D product rights | |||
Non-amortized intangible assets: | |||
Gross Carrying value | 244,803 | 145,640 | |
Acquired future royalty rights | |||
Non-amortized intangible assets: | |||
Gross Carrying value | 7,800 | $ 70,800 | 78,600 |
Marketed product rights | |||
Amortized intangible assets: | |||
Gross Carrying Value | 760,981 | 458,675 | |
Accumulated Amortization | (122,359) | (82,906) | |
Intangible Assets, Net | 638,622 | 375,769 | |
Royalties | |||
Amortized intangible assets: | |||
Gross Carrying Value | 339 | 2,200 | |
Accumulated Amortization | (339) | (189) | |
Intangible Assets, Net | $ 0 | $ 2,011 |
INTANGIBLE ASSETS AND GOODWIL66
INTANGIBLE ASSETS AND GOODWILL (Details) $ in Thousands | Aug. 03, 2016USD ($)product | Sep. 30, 2016USD ($)product | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | Mar. 09, 2015USD ($) |
Amortized intangible assets: | |||||||||
Carrying value | $ 252,603 | $ 252,603 | $ 224,240 | ||||||
Gross Carrying Value | 761,320 | 761,320 | 460,875 | ||||||
Intangible asset impairment charges | 287,723 | $ 0 | |||||||
Intangible assets, net | $ 891,225 | 891,225 | 602,020 | ||||||
Number of products launched | product | 2 | ||||||||
Indefinite-lived Assets Reclassified to Finite-lived Assets | $ 11,000 | ||||||||
Cost of revenues impairment charges | 256,462 | $ 0 | 258,007 | 0 | |||||
Impairment of Intangible Assets, Finite-lived | 34,200 | ||||||||
Amortization of intangible assets | 18,400 | $ 10,300 | 39,600 | $ 27,200 | |||||
Goodwill | 208,382 | 208,382 | 210,166 | ||||||
Minimum | |||||||||
Expected Amortization Expense | |||||||||
2,016 | 56,600 | 56,600 | |||||||
2,017 | 37,700 | 37,700 | |||||||
2,018 | 37,700 | 37,700 | |||||||
2,019 | 37,700 | 37,700 | |||||||
2,020 | 37,700 | 37,700 | |||||||
Maximum | |||||||||
Expected Amortization Expense | |||||||||
2,016 | 87,400 | 87,400 | |||||||
2,017 | 58,800 | 58,800 | |||||||
2,018 | 58,800 | 58,800 | |||||||
2,019 | 58,800 | 58,800 | |||||||
2,020 | 58,800 | 58,800 | |||||||
Impax Generics | |||||||||
Amortized intangible assets: | |||||||||
Goodwill | 148,700 | 148,700 | |||||||
Impax Specialty Pharma | |||||||||
Amortized intangible assets: | |||||||||
Goodwill | 59,700 | 59,700 | |||||||
Marketed Product Rights | |||||||||
Amortized intangible assets: | |||||||||
Gross Carrying Value | $ 760,981 | 760,981 | 458,675 | ||||||
Finite-lived intangible assets, number of products impaired | product | 3 | ||||||||
In Process Research and Development | |||||||||
Amortized intangible assets: | |||||||||
Finite-lived intangible assets, number of products impaired | product | 2 | ||||||||
Third Party Partnered Marketed Product Rights | |||||||||
Amortized intangible assets: | |||||||||
Finite-lived intangible assets, number of products impaired | product | 1 | ||||||||
Acquired future royalty rights | |||||||||
Amortized intangible assets: | |||||||||
Carrying value | $ 70,800 | $ 7,800 | 7,800 | 78,600 | |||||
IPR&D Product Rights | |||||||||
Amortized intangible assets: | |||||||||
Carrying value | 244,803 | 244,803 | 145,640 | ||||||
Cost of Sales | |||||||||
Amortized intangible assets: | |||||||||
Intangible asset impairment charges | $ 1,500 | ||||||||
Research and Development Expense | In Process Research and Development | |||||||||
Amortized intangible assets: | |||||||||
Impairment of intangible assets, indefinite-lived | 1,000 | ||||||||
Cost of Revenues Impairment Charges | Marketed Product Rights | |||||||||
Amortized intangible assets: | |||||||||
Impairment of Intangible Assets, Finite-lived | 8,500 | ||||||||
Cost of Revenues Impairment Charges | In Process Research and Development | |||||||||
Amortized intangible assets: | |||||||||
Impairment of Intangible Assets, Finite-lived | $ 25,700 | ||||||||
Tower And Lineage | |||||||||
Amortized intangible assets: | |||||||||
Goodwill | $ 180,808 | ||||||||
Tower And Lineage | Impax Generics | |||||||||
Amortized intangible assets: | |||||||||
Goodwill | 121,100 | ||||||||
Tower And Lineage | Impax Specialty Pharma | |||||||||
Amortized intangible assets: | |||||||||
Goodwill | $ 59,700 | ||||||||
Tower And Lineage | Marketed Product Rights | |||||||||
Amortized intangible assets: | |||||||||
Finite-lived intangible assets, number of products impaired | product | 2 | ||||||||
Tower And Lineage | IPR&D Product Rights | |||||||||
Amortized intangible assets: | |||||||||
Indefinite-lived intangible assets, number of products impaired | product | 1 | ||||||||
Teva Transaction | |||||||||
Amortized intangible assets: | |||||||||
Intangible assets, net | 613,032 | ||||||||
Cost of revenues impairment charges | $ 251,000 | $ 251,000 | |||||||
Teva Transaction | Marketed Product Rights | |||||||||
Amortized intangible assets: | |||||||||
Gross Carrying Value | 461,152 | ||||||||
Teva Transaction | In Process Research and Development | |||||||||
Amortized intangible assets: | |||||||||
Carrying value | $ 151,880 | ||||||||
Indefinite-lived Intangible Assets, Asset Ownership Percent | 50.00% | ||||||||
Indefinite-lived Intangible Assets, Percent of Gross Profit Paid Out Upon Sale | 50.00% | ||||||||
Teva Transaction | Cost of Sales | |||||||||
Amortized intangible assets: | |||||||||
Cost of revenues impairment charges | 248,000 | ||||||||
Teva Transaction | Research and Development Expense | |||||||||
Amortized intangible assets: | |||||||||
Cost of revenues impairment charges | $ 3,000 | ||||||||
EMVERM | Marketed Product Rights | |||||||||
Amortized intangible assets: | |||||||||
Gross Carrying Value | $ 86,300 | ||||||||
Finite-lived intangible assets, useful life | 9 years | ||||||||
EMVERM | In Process Research and Development | |||||||||
Amortized intangible assets: | |||||||||
Carrying value | 82,800 | ||||||||
Fair value | $ 82,800 | ||||||||
Teva | |||||||||
Amortized intangible assets: | |||||||||
Milestone payment, capitalized | $ 3,500 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Aug. 18, 2016 | Sep. 30, 2016 | Dec. 31, 2015 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Payroll-related expenses | $ 29,761 | $ 37,419 | |
Product returns | 70,282 | 48,950 | |
Accrued shelf stock | 9,614 | 6,619 | |
Government rebates | 79,775 | 91,717 | |
Legal and professional fees | 14,633 | 5,929 | |
Income taxes payable | 0 | 830 | |
Physician detailing sales force fees | 0 | 1,132 | |
Interest payable | 3,500 | 500 | |
Estimated Teva and Allergan chargebacks and rebates | 17,627 | 0 | |
Other | 9,989 | 11,615 | |
Total accrued expenses | 235,181 | 204,711 | |
Turing Pharmaceuticals AG | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Accounts receivable, net | 14,500 | $ 40,600 | |
Accounts receivable, payments made on behalf of counterparty | $ 33,500 | ||
Teva Transaction | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Estimated Teva and Allergan chargebacks and rebates | $ 17,600 | ||
Acquired balances | 42,400 | ||
Chargeback and reserve payments | $ 24,800 |
ACCRUED EXPENSES, Product Retur
ACCRUED EXPENSES, Product Returns (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Beginning balance | $ 48,950 | |
Ending balance | 70,282 | $ 48,950 |
Returns Reserve | ||
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Beginning balance | 48,950 | 27,174 |
Acquired balances | 0 | 11,364 |
Provision related to sales recorded in the period | 41,662 | 43,967 |
Credits issued during the period | (20,330) | (33,555) |
Ending balance | $ 70,282 | $ 48,950 |
DEBT (Details)
DEBT (Details) | Aug. 03, 2016USD ($) | Jun. 30, 2015USD ($) | Sep. 30, 2016USD ($)$ / shares | Sep. 30, 2016USD ($)$ / shares | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Sep. 30, 2016USD ($)day$ / shares | Sep. 30, 2015USD ($) | Aug. 02, 2016USD ($) | Dec. 31, 2015USD ($) | Mar. 31, 2015USD ($) | Mar. 09, 2015USD ($) |
Debt Instrument [Line Items] | |||||||||||||
Long-term debt, current | $ 17,708,000 | $ 17,708,000 | $ 17,708,000 | $ 0 | |||||||||
Long-term debt, excluding current maturities | 812,375,000 | 812,375,000 | 812,375,000 | 424,595,000 | |||||||||
Proceeds from convertible debt | $ 436,400,000 | $ 600,000,000 | 0 | $ 600,000,000 | |||||||||
Convertible debt, noncurrent | 440,800,000 | 440,800,000 | 440,800,000 | 424,600,000 | |||||||||
Repayments of long-term debt | 0 | 435,000,000 | |||||||||||
Cash paid for interest | 8,206,000 | 9,843,000 | |||||||||||
Gains (losses) on extinguishment of debt | 0 | $ 0 | 0 | (16,903,000) | |||||||||
Term Loan | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term debt, current | 20,000,000 | 20,000,000 | 20,000,000 | ||||||||||
Long-term debt, excluding current maturities | 380,000,000 | 380,000,000 | 380,000,000 | ||||||||||
Conversion Option | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Derivative liability, fair value, gross liability | 167,000,000 | 167,000,000 | $ 167,000,000 | ||||||||||
Revolving Credit Facility | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Line of credit facility, current borrowing capacity | $ 200,000,000 | $ 100,000,000 | |||||||||||
Debt instrument, covenant, leverage ratio, maximum | 5 | ||||||||||||
Debt Issuance Costs, Line of Credit Arrangements, Gross | 300,000 | 300,000 | 300,000 | ||||||||||
Revolving Credit Facility | Term Loan | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Line of credit facility, current borrowing capacity | $ 400,000,000 | ||||||||||||
Interest expense, debt | 2,600,000 | ||||||||||||
Debt instrument, increase, accrued interest | 2,200,000 | ||||||||||||
Accretion expense | 400,000 | ||||||||||||
Long-term debt | 389,300,000 | 389,300,000 | 389,300,000 | ||||||||||
Long-term debt, current | 17,700,000 | 17,700,000 | 17,700,000 | ||||||||||
Long-term debt, excluding current maturities | $ 371,600,000 | 371,600,000 | 371,600,000 | ||||||||||
Debt Instrument, Periodic Payment, Principal | 5,000,000 | ||||||||||||
Letter of Credit | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Line of credit facility, current borrowing capacity | $ 12,500,000 | ||||||||||||
Barclays Senior Credit Facilities | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt instrument, unamortized discount | 17,800,000 | 17,800,000 | 17,800,000 | ||||||||||
Barclays Senior Credit Facilities | Revolver | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Line of credit facility, maximum borrowing capacity | $ 50,000,000 | ||||||||||||
Barclays Senior Credit Facilities | Term Loan | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest expense, debt | 10,700,000 | ||||||||||||
Accretion expense | 900,000 | ||||||||||||
Long-term debt | $ 435,000,000 | ||||||||||||
Repayments of long-term debt | 435,000,000 | ||||||||||||
Cash paid for interest | $ 1,400,000 | $ 9,800,000 | $ 12,800,000 | ||||||||||
Gains (losses) on extinguishment of debt | $ (16,900,000) | ||||||||||||
Debt instrument, fee amount | $ 2,300,000 | ||||||||||||
Convertible Debt | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest expense, debt | 8,500,000 | 25,300,000 | |||||||||||
Debt instrument, increase, accrued interest | 3,000,000 | 9,000,000 | |||||||||||
Accretion expense | $ 5,500,000 | $ 16,300,000 | |||||||||||
Debt instrument, interest rate, stated percentage | 2.00% | 2.00% | 2.00% | 2.00% | 2.00% | 2.00% | |||||||
Conversion of stock, conversion ratio | 0.0157858 | ||||||||||||
Debt instrument, convertible, conversion price (in dollars per share) | $ / shares | $ 63.35 | $ 63.35 | $ 63.35 | ||||||||||
Debt instrument, convertible, threshold trading days | day | 20 | ||||||||||||
Debt instrument, convertible, threshold consecutive trading days | 30 days | ||||||||||||
Debt instrument, convertible, threshold percentage of stock price trigger | 130.00% | ||||||||||||
Debt issuance cost | $ 18,700,000 | $ 18,700,000 | $ 18,700,000 | ||||||||||
Interest payable | $ 3,500,000 | $ 3,500,000 | $ 3,500,000 | $ 500,000 | |||||||||
Convertible Debt | Conversion Circumstance 2 | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt instrument, convertible, threshold trading days | day | 5 | ||||||||||||
Debt instrument, convertible, threshold consecutive trading days | 10 days | ||||||||||||
Debt instrument, convertible, threshold percentage of stock price trigger | 98.00% | ||||||||||||
London Interbank Offered Rate (LIBOR) | Revolving Credit Facility | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt instrument, increase or decrease in basis spread | 0.25% | ||||||||||||
Maximum | Revolving Credit Facility | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Line of credit facility, commitment fee percentage | 0.50% | ||||||||||||
Minimum | Revolving Credit Facility | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Line of credit facility, commitment fee percentage | 0.375% | ||||||||||||
Teva Transaction | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Cash | $ 196,400,000 | ||||||||||||
Teva Transaction | Revolving Credit Facility | Term Loan | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Proceeds from issuance of debt | 400,000,000 | ||||||||||||
Debt issuance cost | 11,000,000 | ||||||||||||
Debt Issuance Costs, Line of Credit Arrangements, Gross | $ 800,000 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Class of Stock [Line Items] | ||||
Preferred stock, shares authorized (in shares) | 2,000,000 | 2,000,000 | 2,000,000 | |
Preferred stock, par or stated value per share (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | |
Preferred stock, shares issued (in shares) | 0 | 0 | 0 | |
Preferred stock, shares outstanding (in shares) | 0 | 0 | 0 | |
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 | 150,000,000 | |
Common stock, par or stated value per share (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | |
Common stock, shares, issued (in shares) | 74,174,083 | 74,174,083 | 72,926,205 | |
Common stock, shares outstanding (in shares) | 73,930,354 | 73,930,354 | 72,682,476 | |
Payments for hedge, financing activities | $ 0 | $ 147,000 | ||
Change in fair value of derivative asset and liability | $ 4,000 | |||
Convertible Debt | ||||
Class of Stock [Line Items] | ||||
Debt instrument, convertible, number of equity instruments (in shares) | 600,000 | |||
Payments for hedge, financing activities | $ 147,000 | |||
Debt instrument, convertible, number of shares common stock per call option, ratio (in shares) | 15.7858 | 15.7858 | ||
Debt instrument, convertible, conversion price (in dollars per share) | $ 63.35 | $ 63.35 | ||
Warrant | ||||
Class of Stock [Line Items] | ||||
Debt conversion, converted instrument, warrants or options issued (in shares) | 9,471,000 | |||
Proceeds from warrant exercises | $ 88,300 | |||
Investment warrants, exercise price (in dollars per share) | $ 81.277 | |||
Adjustments to additional paid in capital, equity component of convertible debt | $ 21,000 |
STOCKHOLDERS' EQUITY, Common St
STOCKHOLDERS' EQUITY, Common Stock Reserved for Future Issuance (Details) - shares | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Class of Stock [Line Items] | ||
Shares issued (in shares) | 74,174,083 | 72,926,205 |
Total shares of common stock issued and reserved for issuance (in shares) | 95,586,000 | |
Warrant | ||
Class of Stock [Line Items] | ||
Stock options and warrants outstanding (in shares) | 9,471,000 | |
Warrant | ||
Class of Stock [Line Items] | ||
Conversion of Notes payable (in shares) | 9,471,000 | |
Employee Stock Option | ||
Class of Stock [Line Items] | ||
Stock options and warrants outstanding (in shares) | 2,470,000 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Warrant | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) | 9,470 | 9,470 | |
Convertible Debt Securities | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) | 9,470 | ||
Employee Stock Option | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) | 400 | 2,470 | |
Restricted Stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) | 2,600 | 300 |
EARNINGS PER SHARE, Reconciliat
EARNINGS PER SHARE, Reconciliation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Earnings Per Share [Abstract] | ||||||||
Net (loss) income | $ (179,337) | $ (2,701) | $ (10,408) | $ 35,755 | $ (1,852) | $ (6,333) | $ (192,446) | $ 27,570 |
Weighted-average common shares outstanding (in shares) | 71,331,247 | 71,100,123 | 70,665,394 | 69,820,348 | 69,338,789 | 68,967,875 | 71,033,346 | 69,378,792 |
Basic (loss) earnings per share (in dollars per share) | $ (2.51) | $ (0.04) | $ (0.15) | $ 0.51 | $ (0.03) | $ (0.09) | $ (2.71) | $ 0.40 |
Add-back of interest expense on outstanding convertible notes payable, net of tax | $ 0 | $ 0 | $ 0 | $ 0 | ||||
Adjusted net (loss) income | $ (179,337) | $ 35,755 | $ (192,446) | $ 27,570 | ||||
Weighted-average incremental shares related to assumed exercise of warrants and stock options, vesting of non-vested shares and ESPP share issuance (in shares) | 0 | 2,958,000 | 0 | 3,170,000 | ||||
Weighted-average incremental shares assuming conversion of outstanding notes payable (in shares) | 0 | 0 | 0 | 0 | ||||
Diluted weighted-average common shares outstanding (in shares) | 71,331,247 | 71,100,123 | 70,665,394 | 72,777,746 | 69,338,789 | 68,967,875 | 71,033,346 | 72,548,557 |
Diluted net income per share (in dollars per share) | $ (2.51) | $ (0.04) | $ (0.15) | $ 0.49 | $ (0.03) | $ (0.09) | $ (2.71) | $ 0.38 |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Millions | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation arrangement by share-based payment award, options, outstanding, number (in shares) | 2,470,335 | 2,405,371 | |
Share-based compensation arrangement by share-based payment award, options, outstanding, weighted average remaining contractual term | 7 years 2 months 27 days | ||
Share-based compensation arrangement by share-based payment award, options, exercisable, weighted average remaining contractual term | 5 years 6 months | ||
Share-based compensation arrangement by share-based payment award, options, outstanding, intrinsic value | $ 12 | ||
Share-based compensation arrangement by share-based payment award, options, exercisable, intrinsic value | $ 11.5 | ||
Share-based compensation arrangement by share-based payment award, options, vested and expected to vest, outstanding, number (in shares) | 2,186,970 | ||
Share-based compensation arrangement by share-based payment award, number of shares available for grant (in shares) | 1,520,062 | ||
Employee service share-based compensation, nonvested awards, compensation cost not yet recognized | $ 73.4 | ||
Employee service share-based compensation, nonvested awards, compensation cost not yet recognized, period for recognition | 2 years 2 months 12 days | ||
Share-based compensation arrangement by share-based payment award, options, exercises in period, intrinsic value | $ 5.6 | $ 33 | |
Share-based compensation arrangement by share-based payment award, fair value assumptions, expected dividend rate | 0.00% | ||
Stock Options And Restricted Stock Awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation arrangement by share-based payment award, expiration period | 10 years | ||
Stock Options And Restricted Stock Awards | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation arrangement by share-based payment award, award vesting period | 3 years | ||
Stock Options And Restricted Stock Awards | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation arrangement by share-based payment award, award vesting period | 4 years | ||
Restricted Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation arrangement by share-based payment award, equity instruments other than options, aggregate intrinsic value, outstanding | $ 61.6 | ||
Share based compensation arrangement by share-based payment award equity instruments other than options vested and expected to vest outstanding, number (in shares) | 2,301,462 | ||
Shares Paid for Tax Withholding for Share Based Compensation | 179,018 | ||
Share-based compensation arrangement by share-based payment award, equity instruments other than options, vested in period, weighted average grant date fair value (in dollars per share) | $ 32.30 | ||
Share-based compensation arrangement by share-based payment award, equity instruments other than options, vested in period, fair value | $ 16.4 | $ 9 | |
Restricted Stock Awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation arrangement by share-based payment award, equity instruments other than options, nonvested, number (in shares) | 2,599,661 | 2,146,498 | |
Share-based compensation arrangement by share-based payment award, equity instruments other than options, vested in period (in shares) | 528,396 | ||
The 1999 Equity Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation arrangement by share-based payment award, number of additional shares authorized (in shares) | 5,000,000 | ||
Share-based compensation arrangement by share-based payment award, options, outstanding, number (in shares) | 938 | 10,938 | |
Share-based compensation arrangement by share-based payment award, number of shares available for grant (in shares) | 296,921 | ||
Amended and Restated 2002 Equity Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation arrangement by share-based payment award, number of additional shares authorized (in shares) | 15,950,000 | ||
Share-based compensation arrangement by share-based payment award, options, outstanding, number (in shares) | 2,469,397 | 2,394,433 | |
Share-based compensation arrangement by share-based payment award, number of shares available for grant (in shares) | 1,160,413 | ||
Amended and Restated 2002 Equity Incentive Plan | Restricted Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation arrangement by share-based payment award, equity instruments other than options, nonvested, number (in shares) | 2,599,661 | 2,146,498 | |
The ESPP Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation arrangement by share-based payment award, number of shares available for grant (in shares) | 62,728 |
SHARE-BASED COMPENSATION, Summa
SHARE-BASED COMPENSATION, Summary of Stock Option Activity (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2016 | |
Number of Shares Under Option | ||
Outstanding at December 31, 2015 (in shares) | 2,405,371 | |
Options granted (in shares) | 552,180 | |
Options exercised (in shares) | (464,950) | |
Options forfeited (in shares) | (22,266) | |
Outstanding at September 30, 2016 (in shares) | 2,470,335 | |
Options exercisable at September 30, 2016 (in shares) | 1,453,277 | |
Weighted- Average Exercise Price per Share | ||
Outstanding at December 31, 2015 (in dollars per share) | $ 21.39 | |
Options granted (in dollars per share) | 12.52 | |
Options exercised (in dollars per share) | 19.37 | |
Options forfeited (in dollars per share) | 38.10 | |
Outstanding at September 30, 2016 (in dollars per share) | $ 21.39 | $ 23.94 |
Options exercisable at September 30, 2016 (in dollars per share) | $ 17.43 |
SHARE-BASED COMPENSATION, Sum76
SHARE-BASED COMPENSATION, Summary of Non-vested Restricted Stock Awards (Details) - Restricted Stock Awards | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Number of Restricted Stock Awards | |
Non-vested at December 31, 2015 (in shares) | shares | 2,146,498 |
Granted (in shares) | shares | 1,181,068 |
Vested (in shares) | shares | (528,396) |
Forfeited (in shares) | shares | (199,509) |
Non-vested at September 30, 2016 (in shares) | shares | 2,599,661 |
Weighted- Average Grant Date Fair Value | |
Non-vested at December 31, 2015 (in dollars per share) | $ / shares | $ 33.20 |
Granted (in dollars per share) | $ / shares | 32.20 |
Vested (in dollars per share) | $ / shares | 31.14 |
Forfeited (in dollars per share) | $ / shares | 32.74 |
Non-vested at September 30, 2016 (in dollars per share) | $ / shares | $ 33.20 |
SHARE-BASED COMPENSATION, Share
SHARE-BASED COMPENSATION, Share-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expense | $ 7,713 | $ 8,292 | $ 23,375 | $ 21,851 |
Manufacturing expenses | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expense | 1,331 | 1,436 | 4,579 | 3,674 |
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expense | 1,312 | 1,755 | 4,259 | 4,486 |
Selling, general and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expense | $ 5,070 | $ 5,101 | $ 14,537 | $ 13,691 |
RESTRUCTURINGS (Details)
RESTRUCTURINGS (Details) $ in Millions | Sep. 30, 2016USD ($) | Mar. 31, 2016 | Sep. 30, 2016USD ($) | Dec. 31, 2015USD ($)position | Jun. 30, 2015USD ($)position | Jun. 30, 2016USD ($) | Sep. 30, 2016USD ($)position |
Employee retention and severance payments | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Severance costs | $ 4.5 | ||||||
Employee retention and severance payments | Cost of Sales | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Severance costs | $ 1.9 | ||||||
Technical transfer of products | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring and related cost, incurred cost | 1.9 | 3.5 | |||||
Legal and professional fees | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring and related cost, incurred cost | 0.1 | 0.2 | |||||
Accelerated Depreciation | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring and related cost, accelerated depreciation | 1.5 | 3.8 | |||||
Reserve for Impairment of Intangible Assets | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring and related cost, incurred cost | 8.5 | $ 8.5 | |||||
Accrued Expenses | Employee retention and severance payments | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Severance costs | $ 4.5 | ||||||
Manufacturing and Packaging Site | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring and related cost, estimated completion period | 2 years | ||||||
Restructuring and related cost, expected number of positions eliminated | position | 183 | ||||||
Aggregate pre-tax charges estimated next two fiscal years, amount | $ 45.6 | ||||||
Manufacturing and Packaging Site | Employee retention and severance payments | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring and related cost, expected cost | 13.7 | 13.7 | 13.7 | ||||
Manufacturing and Packaging Site | Technical transfer of products | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring and related cost, expected cost | 12.6 | 12.6 | 12.6 | ||||
Manufacturing and Packaging Site | Asset impairment and accelerated depreciation charges | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring and related cost, expected cost | 18 | 18 | 18 | ||||
Manufacturing and Packaging Site | Facilities lease terminations and asset retirement obligations | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring and related cost, expected cost | 1 | 1 | 1 | ||||
Manufacturing and Packaging Site | Legal and professional fees | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring and related cost, expected cost | $ 0.3 | $ 0.3 | 0.3 | ||||
Technical Operations and R&D | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Severance costs | $ 2.5 | ||||||
Restructuring and related cost, number of positions eliminated | position | 27 | ||||||
Payments for restructuring | $ 2 | ||||||
Packaging and Distribution Operations | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring and related cost, incurred cost | $ 2.6 | ||||||
Restructuring and related cost, number of positions eliminated | position | 93 | ||||||
Payments for restructuring | $ 2.6 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Effective income tax rate reconciliation, percent | 37.00% | 40.00% | ||
Income tax expense (benefit) | $ 104,531,000 | $ (25,577,000) | $ 112,866,000 | $ (18,509,000) |
Tax credit carryforward, valuation allowance | $ 0 | 0 | ||
Deferred income taxes and tax credits | 0 | |||
Turing Pharmaceuticals AG | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Income tax expense (benefit) | $ 17,400,000 |
ALLIANCE AND COLLABORATION AG80
ALLIANCE AND COLLABORATION AGREEMENTS (Details) | Jun. 30, 2016USD ($) | Dec. 23, 2015USD ($) | May 31, 2016USD ($) | Apr. 30, 2013USD ($) | Jun. 30, 2012USD ($)product | Mar. 31, 2012USD ($)agreement | Jun. 30, 2010USD ($) | Dec. 31, 2009USD ($) | Sep. 30, 2009USD ($) | Mar. 31, 2009USD ($) | Dec. 31, 2008USD ($) | Nov. 30, 2008product | Jun. 30, 2002 | Sep. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Dec. 31, 2014USD ($) | Mar. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Mar. 31, 2013USD ($) | Dec. 31, 2012 | Sep. 30, 2009payment | Sep. 30, 2016USD ($)product | Sep. 30, 2015USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2012USD ($)product | Dec. 31, 2011product | Mar. 31, 2011USD ($) | Dec. 31, 2010USD ($) | Dec. 31, 2015USD ($) | Jan. 31, 2012 |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Accrued profit sharing and royalty expenses | $ 19,759,000 | $ 19,759,000 | $ 65,725,000 | |||||||||||||||||||||||||||||
Research and development | 20,115,000 | $ 18,631,000 | $ 59,937,000 | $ 50,588,000 | ||||||||||||||||||||||||||||
Products Approved | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Number of products | product | 4 | |||||||||||||||||||||||||||||||
Tolmar Incorporated | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Number of loan agreements (or more) | agreement | 1 | |||||||||||||||||||||||||||||||
Maximum loan amount pursuant to loan and security agreement | $ 15,000,000 | |||||||||||||||||||||||||||||||
Payments received | $ 15,000,000 | |||||||||||||||||||||||||||||||
Teva | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Milestone payment, paid | $ 3,500,000 | |||||||||||||||||||||||||||||||
Specified Threshold | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Product sales | $ 100,000,000 | |||||||||||||||||||||||||||||||
Shire Laboratories Incorporated | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Accrued profit sharing and royalty expenses | 7,200,000 | 15,400,000 | 7,200,000 | 15,400,000 | ||||||||||||||||||||||||||||
Tolmar Incorporated | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Accrued profit sharing and royalty expenses | 32,200,000 | 35,400,000 | $ 32,200,000 | 35,400,000 | ||||||||||||||||||||||||||||
Number of products | product | 11 | |||||||||||||||||||||||||||||||
Collaborative arrangement up front payment | $ 21,000,000 | |||||||||||||||||||||||||||||||
Tolmar Incorporated | Products Approved | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Number of products | product | 10 | |||||||||||||||||||||||||||||||
Tolmar Incorporated | Products in Development | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Number of products | product | 2 | |||||||||||||||||||||||||||||||
Research and development | $ 1,550,000 | |||||||||||||||||||||||||||||||
Tolmar Incorporated | Up-front Payment Arrangement | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Collaborative arrangement up front payment | $ 21,000,000 | |||||||||||||||||||||||||||||||
Tolmar Incorporated | Milestone Payments | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Collaborative arrangement required payment net | $ 5,000,000 | $ 12,000,000 | 1,000,000 | |||||||||||||||||||||||||||||
Research and development | 1,000,000 | |||||||||||||||||||||||||||||||
Tolmar Incorporated | Milestone Payments | Diclofenac Sodium Gel | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Collaborative arrangement required payment net | $ 2,000,000 | |||||||||||||||||||||||||||||||
Teva Pharmaceutical Industries Limited | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Service agreement term | 10 years | |||||||||||||||||||||||||||||||
Pfizer Incorporated | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Service agreement term | 15 years | |||||||||||||||||||||||||||||||
Valeant Pharmaceuticals International | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Number of products | product | 5 | |||||||||||||||||||||||||||||||
Period after the first commercial sale of the advanced form of SOLODYN product the company Is receiving royalty fee income | 8 years | |||||||||||||||||||||||||||||||
Valeant Pharmaceuticals International | Products Approved | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Number of products | product | 1 | |||||||||||||||||||||||||||||||
Valeant Pharmaceuticals International | Products in Development | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Number of products | payment | 2 | |||||||||||||||||||||||||||||||
Valeant Pharmaceuticals International | Generic Products | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Number of products | product | 4 | 4 | ||||||||||||||||||||||||||||||
Valeant Pharmaceuticals International | Branded Advanced Form of Solodyn Product | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Number of products | product | 1 | |||||||||||||||||||||||||||||||
Valeant Pharmaceuticals International | Up-front Payment Arrangement | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Collaborative arrangement contingent payments received and potentially to be received | $ 40,000,000 | |||||||||||||||||||||||||||||||
Valeant Pharmaceuticals International | Milestone Payments | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Collaborative arrangement maximum contingent payments amount | $ 8,000,000 | |||||||||||||||||||||||||||||||
Collaborative arrangement contingent payments received and potentially to be received | $ 2,000,000 | $ 5,000,000 | $ 5,000,000 | $ 3,000,000 | ||||||||||||||||||||||||||||
Valeant Pharmaceuticals International | Milestone Payment Arrangement | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Collaborative arrangement contingent payments received and potentially to be received | $ 15,000,000 | $ 12,000,000 | ||||||||||||||||||||||||||||||
Endo Pharmaceuticals Incorporation | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Gain (loss) related to litigation settlement | $ 102,000,000 | |||||||||||||||||||||||||||||||
Deferred revenue estimated period of recognition | 112 months | |||||||||||||||||||||||||||||||
Litigation settlement, amount | $ 102,000,000 | |||||||||||||||||||||||||||||||
Endo Pharmaceuticals Incorporation | Up-front Payment Arrangement | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Deferred revenue, additions | $ 10,000,000 | |||||||||||||||||||||||||||||||
Deferred revenue | 0 | $ 0 | $ 0 | |||||||||||||||||||||||||||||
Endo Pharmaceuticals Incorporation | Milestone Payments | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Collaborative arrangement maximum contingent payments amount | $ 30,000,000 | |||||||||||||||||||||||||||||||
Astra Zeneca | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Collaborative Arrangement Reduced Royalty, Amount | $ 30,000,000 | |||||||||||||||||||||||||||||||
Collaborative arrangement copromotion service fee percentage | 100.00% | |||||||||||||||||||||||||||||||
Collaborative arrangement quarterly payments made | $ 43,600,000 | |||||||||||||||||||||||||||||||
Accrued royalties | $ 12,700,000 | $ 11,500,000 | 12,700,000 | $ 11,500,000 | ||||||||||||||||||||||||||||
DURECT Corporation | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Collaborative arrangement up front payment | $ 2,000,000 | |||||||||||||||||||||||||||||||
Collaborative arrangement maximum contingent payments amount | $ 61,000,000 | |||||||||||||||||||||||||||||||
Other Income | Shire Laboratories Incorporated | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Gain (loss) related to litigation settlement | $ 48,000,000 | |||||||||||||||||||||||||||||||
Acceptance Of Regulatory Filings For Substantive Review | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Completion period | 2 months | |||||||||||||||||||||||||||||||
Minimum | Tolmar Product Rights | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Finite-lived intangible assets, useful life | 5 years | |||||||||||||||||||||||||||||||
Minimum | IND-enabling Animal Studies for New Development Candidate | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Completion period | 12 months | |||||||||||||||||||||||||||||||
Minimum | Phase 1 Trials | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Completion period | 1 year | |||||||||||||||||||||||||||||||
Minimum | Phase 2 Trials | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Completion period | 1 year | |||||||||||||||||||||||||||||||
Minimum | Phase 3 Trials | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Completion period | 2 years | |||||||||||||||||||||||||||||||
Minimum | Bioequivalence Studies | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Completion period | 3 months | |||||||||||||||||||||||||||||||
Minimum | Preparation And Submission Of Regulatory Filings | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Completion period | 6 months | |||||||||||||||||||||||||||||||
Minimum | Potential Marketing Approval One | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Completion period | 1 year | |||||||||||||||||||||||||||||||
Minimum | Potential Marketing Approval Two | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Completion period | 1 year | |||||||||||||||||||||||||||||||
Maximum | Tolmar Product Rights | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Finite-lived intangible assets, useful life | 12 years | |||||||||||||||||||||||||||||||
Maximum | IND-enabling Animal Studies for New Development Candidate | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Completion period | 18 months | |||||||||||||||||||||||||||||||
Maximum | Phase 1 Trials | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Completion period | 2 years | |||||||||||||||||||||||||||||||
Maximum | Phase 2 Trials | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Completion period | 3 years | |||||||||||||||||||||||||||||||
Maximum | Phase 3 Trials | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Completion period | 4 years | |||||||||||||||||||||||||||||||
Maximum | Bioequivalence Studies | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Completion period | 1 year | |||||||||||||||||||||||||||||||
Maximum | Preparation And Submission Of Regulatory Filings | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Completion period | 12 months | |||||||||||||||||||||||||||||||
Maximum | Potential Marketing Approval One | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Completion period | 3 years | |||||||||||||||||||||||||||||||
Maximum | Potential Marketing Approval Two | ||||||||||||||||||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||||||||||||||||||||||
Completion period | 3 years |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Purchase commitment, remaining minimum amount committed | $ 113.5 |
Purchase commitment period (less than) | 1 year |
Contractual obligation | $ 0.6 |
LEGAL AND REGULATORY MATTERS (D
LEGAL AND REGULATORY MATTERS (Details) $ in Millions | May 02, 2016USD ($) | Jul. 31, 2016complaint | Sep. 30, 2016 | Feb. 29, 2016complaint | Jan. 31, 2016complaint |
Loss Contingencies [Line Items] | |||||
Loss contingency patent infringement period within which patent holder may file suit for patent infringement | 45 days | ||||
Loss contingency patent infringement litigation maximum stay period for approval of abbreviated new drug application | 30 months | ||||
Solodyn | |||||
Loss Contingencies [Line Items] | |||||
Number of class action complaints | 18 | ||||
Opana ER | |||||
Loss Contingencies [Line Items] | |||||
Number of class action complaints | 14 | ||||
Generic Drug Pricing Class Action | |||||
Loss Contingencies [Line Items] | |||||
Number of class action complaints | 21 | ||||
Turing Pharmaceuticals AG | |||||
Loss Contingencies [Line Items] | |||||
Chargebacks not reimbursed for (in excess of) | $ | $ 40.4 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016USD ($)segmentproduct | Dec. 31, 2015USD ($) | |
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Number of reportable segments | segment | 2 | |
Number of internally developed branded pharmaceutical product candidate | product | 1 | |
Number of products sold and distributed | product | 4 | |
Assets | $ | $ 2,119,656 | $ 1,922,487 |
Taiwan Facility | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Assets | $ | $ 150,600 | $ 131,600 |
SEGMENT INFORMATION, Segment In
SEGMENT INFORMATION, Segment Information Reconciled to Consolidated Financial Results (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment Reporting Information [Line Items] | ||||||||
Revenues, net | $ 227,909 | $ 172,590 | $ 225,508 | $ 221,099 | $ 214,182 | $ 143,096 | $ 626,007 | $ 578,377 |
Cost of revenues | 136,873 | 127,550 | 357,852 | 340,743 | ||||
Cost of revenues impairment charges | 256,462 | 0 | 258,007 | 0 | ||||
Selling, general and administrative | 55,038 | 46,307 | 144,244 | 144,776 | ||||
Research and development | 20,115 | 18,631 | 59,937 | 50,588 | ||||
In-process research and development impairment charges | 28,770 | 0 | 29,716 | 0 | ||||
Patent litigation expense | 3,279 | 1,052 | 6,527 | 3,506 | ||||
(Loss) income before income taxes | (283,868) | 61,332 | (305,312) | 46,079 | ||||
Corporate and Other | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Cost of revenues impairment charges | 0 | 0 | ||||||
Selling, general and administrative | 32,577 | 29,786 | 85,493 | 88,917 | ||||
In-process research and development impairment charges | 0 | 0 | ||||||
(Loss) income before income taxes | (43,817) | 3,987 | (160,529) | (81,602) | ||||
Impax Generics | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Revenues, net | 175,320 | 121,695 | 170,079 | 180,666 | 174,679 | 128,741 | 467,094 | 484,086 |
Impax Generics | Operating Segments | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Revenues, net | 175,320 | 180,666 | 467,094 | 484,086 | ||||
Cost of revenues | 115,020 | 112,716 | 307,936 | 299,596 | ||||
Cost of revenues impairment charges | 256,462 | 258,007 | ||||||
Selling, general and administrative | 6,103 | 5,103 | 12,442 | 16,673 | ||||
Research and development | 15,375 | 14,346 | 46,113 | 38,100 | ||||
In-process research and development impairment charges | 15,543 | 16,489 | ||||||
Patent litigation expense | 147 | 397 | 416 | 2,507 | ||||
(Loss) income before income taxes | (233,330) | 48,104 | (174,309) | 127,210 | ||||
Impax Specialty Pharma | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Revenues, net | 52,589 | $ 50,895 | $ 55,429 | 40,433 | $ 39,503 | $ 14,355 | 158,913 | 94,291 |
Impax Specialty Pharma | Operating Segments | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Revenues, net | 52,589 | 40,433 | 158,913 | 94,291 | ||||
Cost of revenues | 21,853 | 14,834 | 49,916 | 41,147 | ||||
Cost of revenues impairment charges | 0 | 0 | ||||||
Selling, general and administrative | 16,358 | 11,418 | 46,309 | 39,186 | ||||
Research and development | 4,740 | 4,285 | 13,824 | 12,488 | ||||
In-process research and development impairment charges | 13,227 | 13,227 | ||||||
Patent litigation expense | 3,132 | 655 | 6,111 | 999 | ||||
(Loss) income before income taxes | $ (6,721) | $ 9,241 | $ 29,526 | $ 471 |
SUPPLEMENTARY FINANCIAL INFOR85
SUPPLEMENTARY FINANCIAL INFORMATION (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Less: | |||||||||
Total revenues | $ 227,909 | $ 172,590 | $ 225,508 | $ 221,099 | $ 214,182 | $ 143,096 | $ 626,007 | $ 578,377 | |
Gross profit (loss) | (165,426) | 72,984 | 102,590 | 93,549 | 84,851 | 59,234 | 10,148 | 237,634 | |
Net (loss) income | $ (179,337) | $ (2,701) | $ (10,408) | $ 35,755 | $ (1,852) | $ (6,333) | $ (192,446) | $ 27,570 | |
Net loss per common share: | |||||||||
Basic (in dollars per share) | $ (2.51) | $ (0.04) | $ (0.15) | $ 0.51 | $ (0.03) | $ (0.09) | $ (2.71) | $ 0.40 | |
Diluted (in dollars per share) | $ (2.51) | $ (0.04) | $ (0.15) | $ 0.49 | $ (0.03) | $ (0.09) | $ (2.71) | $ 0.38 | |
Weighted-average common shares outstanding: | |||||||||
Basic (in shares) | 71,331,247 | 71,100,123 | 70,665,394 | 69,820,348 | 69,338,789 | 68,967,875 | 71,033,346 | 69,378,792 | |
Diluted (in shares) | 71,331,247 | 71,100,123 | 70,665,394 | 72,777,746 | 69,338,789 | 68,967,875 | 71,033,346 | 72,548,557 | |
Impax Generics | |||||||||
Revenue: | |||||||||
Impax sales, gross | $ 651,372 | $ 531,226 | $ 611,281 | $ 565,261 | $ 572,079 | $ 355,321 | |||
Less: | |||||||||
Product Returns | 16,151 | 10,237 | 11,913 | 6,276 | 7,528 | 6,427 | |||
Impax product sales, net | 168,593 | 119,953 | 167,184 | 178,456 | 171,273 | 125,959 | |||
Total revenues | 175,320 | 121,695 | 170,079 | 180,666 | 174,679 | 128,741 | $ 467,094 | $ 484,086 | |
Impax Specialty Pharma | |||||||||
Revenue: | |||||||||
Impax sales, gross | 77,841 | 81,254 | 82,073 | 69,286 | 65,269 | 29,219 | |||
Less: | |||||||||
Product Returns | 574 | 1,279 | 1,508 | 2,824 | 6,763 | 2,620 | |||
Impax product sales, net | 52,589 | 50,895 | 55,429 | 40,206 | 39,275 | 14,128 | |||
Total revenues | 52,589 | 50,895 | 55,429 | 40,433 | 39,503 | 14,355 | 158,913 | $ 94,291 | |
Rx Partner | Impax Generics | |||||||||
Less: | |||||||||
Other Revenues | 6,672 | 1,669 | 2,835 | 1,957 | 2,579 | 2,239 | |||
Other Revenues | Impax Generics | |||||||||
Less: | |||||||||
Other Revenues | 55 | 73 | 60 | 253 | 827 | 543 | |||
Other Revenues | Impax Specialty Pharma | |||||||||
Less: | |||||||||
Other Revenues | 0 | 0 | 0 | 227 | 228 | 227 | |||
Chargebacks | |||||||||
Less: | |||||||||
Sales Allowances | 690,275 | $ 833,157 | |||||||
Chargebacks | Impax Generics | |||||||||
Less: | |||||||||
Sales Allowances | 254,681 | 197,864 | 217,354 | 212,588 | 228,977 | 126,607 | |||
Chargebacks | Impax Specialty Pharma | |||||||||
Less: | |||||||||
Sales Allowances | 5,439 | 8,826 | 6,111 | 5,893 | 4,452 | 5,561 | |||
Rebates | |||||||||
Less: | |||||||||
Sales Allowances | $ 526,913 | $ 571,642 | |||||||
Rebates | Impax Generics | |||||||||
Less: | |||||||||
Sales Allowances | 163,340 | 178,097 | 185,476 | 141,646 | 139,477 | 83,130 | |||
Rebates | Impax Specialty Pharma | |||||||||
Less: | |||||||||
Sales Allowances | 3,556 | 2,430 | 2,853 | 1,078 | 2,970 | 2,132 | |||
Other credits | Impax Generics | |||||||||
Less: | |||||||||
Sales Allowances | 48,607 | 25,075 | 29,354 | 26,295 | 24,824 | 13,198 | |||
Other credits | Impax Specialty Pharma | |||||||||
Less: | |||||||||
Sales Allowances | $ 15,683 | $ 17,824 | $ 16,172 | $ 19,285 | $ 11,809 | $ 4,778 |