Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2022 | Aug. 01, 2022 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-31812 | |
Entity Registrant Name | ANI PHARMACEUTICALS, INC | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 58-2301143 | |
Entity Address, Address Line One | 210 Main Street West | |
Entity Address, City or Town | Baudette | |
Entity Address, State or Province | MN | |
Entity Address, Postal Zip Code | 56623 | |
City Area Code | 218 | |
Local Phone Number | 634-3500 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | ANIP | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001023024 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 17,426,034 | |
Class C Special Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 10,864 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Current Assets | ||
Cash and cash equivalents | $ 63,385 | $ 100,300 |
Accounts receivable, net of $150,428 and $105,260 of adjustments for chargebacks and other allowances at June 30, 2022 and December 31, 2021, respectively | 150,410 | 128,526 |
Inventories, net | 92,545 | 81,693 |
Prepaid income taxes | 2,013 | 3,667 |
Assets held-for-sale | 8,020 | |
Prepaid expenses and other current assets | 6,026 | 7,589 |
Total Current Assets | 322,399 | 321,775 |
Property and equipment | 71,042 | 75,627 |
Accumulated depreciation | (27,271) | (22,956) |
Property and equipment, net | 43,771 | 52,671 |
Restricted cash | 5,001 | 5,001 |
Deferred tax assets, net of deferred tax liabilities and valuation allowance | 76,587 | 67,936 |
Intangible assets, net | 269,593 | 294,122 |
Goodwill | 28,221 | 27,888 |
Derivatives and other non-current assets | 5,762 | 2,205 |
Total Assets | 751,334 | 771,598 |
Current Liabilities | ||
Current debt, net of deferred financing costs | 850 | 850 |
Accounts payable | 27,641 | 22,967 |
Accrued royalties | 6,295 | 6,225 |
Accrued compensation and related expenses | 5,682 | 8,522 |
Accrued government rebates | 9,440 | 5,492 |
Returned goods reserve | 34,899 | 35,831 |
Accrued expenses and other | 11,505 | 7,650 |
Total Current Liabilities | 96,312 | 87,537 |
Non-current Liabilities | ||
Non-current debt, net of deferred financing costs and current component | 286,095 | 286,520 |
Non-current contingent consideration | 30,958 | 31,000 |
Derivatives and other non-current liabilities | 1,011 | 7,801 |
Total Liabilities | 414,376 | 412,858 |
Commitments and Contingencies (Note 12) | ||
Mezzanine Equity | ||
Convertible Preferred Stock, Series A, $0.0001 par value, 1,666,667 shares authorized; 25,000 shares issued and outstanding at June 30, 2022 and December 31, 2021 | 24,850 | 24,850 |
Stockholders' Equity | ||
Common Stock, $0.0001 par value, 33,333,334 shares authorized; 17,566,363 shares issued and 17,447,658 outstanding at June 30, 2022; 16,912,401 shares issued and 16,829,739 shares outstanding at December 31, 2021 | 1 | 1 |
Class C Special Stock, $0.0001 par value, 781,281 shares authorized; 10,864 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively | ||
Preferred Stock, $0.0001 par value, 1,666,667 shares authorized; 0 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively | ||
Treasury stock, 139,112 shares of common stock, at cost, at June 30, 2022 and 82,662 shares of common stock, at cost, at December 31, 2021 | (4,736) | (3,135) |
Additional paid-in capital | 395,043 | 387,844 |
Accumulated deficit | (83,630) | (47,765) |
Accumulated other comprehensive income/(loss), net of tax | 5,430 | (3,055) |
Total Stockholders' Equity | 312,108 | 333,890 |
Total Liabilities, Mezzanine Equity, and Stockholders' Equity | $ 751,334 | $ 771,598 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Adjustments for chargebacks and other allowances | $ 150,428 | $ 105,260 |
Preferred Stock, Par or Stated Value Per Share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 1,666,667 | 1,666,667 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Treasury Stock, Common, Shares | 139,112 | 82,662 |
Convertible Preferred Stock | ||
Convertible Preferred Stock, Par Value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Convertible Preferred Stock, Shares Authorized | 1,666,667 | 1,666,667 |
Convertible Preferred Stock, Shares Issued | 25,000 | 25,000 |
Convertible Preferred Stock, Shares Outstanding | 25,000 | 25,000 |
Common Stock | ||
Common Stock, Par Value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common Stock, Authorized Shares | 33,333,334 | 33,333,334 |
Common Stock, Issued Shares | 17,566,363 | 16,912,401 |
Common Stock, Outstanding Shares | 17,427,252 | 16,829,739 |
Class C Special Stock | ||
Common Stock, Par Value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common Stock, Authorized Shares | 781,281 | 781,281 |
Common Stock, Issued Shares | 10,864 | 10,864 |
Common Stock, Outstanding Shares | 10,864 | 10,864 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Condensed Consolidated Statements of Operations | ||||
Net Revenues | $ 73,855 | $ 48,625 | $ 138,332 | $ 103,146 |
Operating Expenses | ||||
Cost of sales (excluding depreciation and amortization) | 35,294 | 22,314 | 69,565 | 42,299 |
Research and development | 4,165 | 2,805 | 9,439 | 5,773 |
Selling, general, and administrative | 31,958 | 18,820 | 60,775 | 36,407 |
Depreciation and amortization | 13,764 | 11,324 | 28,321 | 22,222 |
Contingent consideration fair value adjustment | (1,095) | (342) | 0 | |
Legal settlement expense | 8,400 | 0 | 8,400 | |
Purified Cortrophin Gel pre-launch charges | 515 | 0 | 553 | |
Restructuring activities | 2,570 | 2,570 | 0 | |
Intangible asset impairment charge | 112 | 0 | 112 | 0 |
Total Operating Expenses | 86,768 | 64,178 | 170,440 | 115,654 |
Operating Loss | (12,913) | (15,553) | (32,108) | (12,508) |
Other Expense, net | ||||
Interest expense, net | (6,669) | (2,531) | (13,282) | (4,985) |
Other income/(expense), net | 764 | (67) | 675 | (582) |
Loss Before Benefit for Income Taxes | (18,818) | (18,151) | (44,715) | (18,075) |
Benefit for income taxes | 3,895 | 4,045 | 9,662 | 4,055 |
Net Loss | (14,923) | (14,106) | (35,053) | (14,020) |
Dividends on Series A convertible preferred stock | (407) | (812) | 0 | |
Net Loss Available to Common Shareholders | $ (15,330) | $ (14,106) | $ (35,865) | $ (14,020) |
Basic and Diluted Loss Per Share: | ||||
Basic Loss Per Share | $ (0.94) | $ (1.17) | $ (2.21) | $ (1.16) |
Diluted Loss Per Share | $ (0.94) | $ (1.17) | $ (2.21) | $ (1.16) |
Basic Weighted-Average Shares Outstanding | 16,272 | 12,085 | 16,205 | 12,045 |
Diluted Weighted-Average Shares Outstanding | 16,272 | 12,085 | 16,205 | 12,045 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income(Loss) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Condensed Consolidated Statements of Comprehensive Income/(Loss) | ||||
Net loss | $ (14,923) | $ (14,106) | $ (35,053) | $ (14,020) |
Other comprehensive income/(loss), net of tax: | ||||
Gains/(losses) on interest rate swap, net of tax | 2,718 | (401) | 8,485 | 6,004 |
Total other comprehensive income/(loss), net of tax | 2,718 | (401) | 8,485 | 6,004 |
Total comprehensive loss, net of tax | $ (12,205) | $ (14,507) | $ (26,568) | $ (8,016) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Mezzanine Equity and Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Common Stock | Class C Special Stock | Additional Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Gain/(Loss), Net of Tax | Accumulated Deficit | Total |
Balance at Dec. 31, 2020 | $ 1 | $ 214,354 | $ (2,246) | $ (11,437) | $ (4,972) | $ 195,700 | |
Balance (in shares) at Dec. 31, 2020 | 12,430 | 76 | |||||
Increase (decrease) in Stockholders' Equity | |||||||
Stock-based Compensation Expense | 4,713 | 4,713 | |||||
Treasury Stock Purchases for Restricted Stock Vests | $ (816) | (816) | |||||
Treasury Stock Purchases for Restricted Stock Vests (in shares) | 25 | ||||||
Issuance of Restricted Stock Awards (in shares) | 457 | ||||||
Issuance of Common Shares upon Stock Option and ESPP Exercise | 337 | 337 | |||||
Issuance of Common Shares upon Stock Option and ESPP Exercise (in shares) | 12 | ||||||
Restricted Stock Awards Forfeitures | (1) | (1) | |||||
Restricted Stock Awards Forfeitures (in shares) | (73) | (21) | |||||
Other Comprehensive Income | 6,004 | 6,004 | |||||
Net Loss | (14,020) | (14,020) | |||||
Balance at Jun. 30, 2021 | $ 1 | 219,403 | $ (3,062) | (5,433) | (18,992) | 191,917 | |
Balance (in shares) at Jun. 30, 2021 | 12,826 | 80 | |||||
Balance at Mar. 31, 2021 | $ 1 | 216,223 | $ (2,594) | (5,032) | (4,886) | 203,712 | |
Balance (in shares) at Mar. 31, 2021 | 12,830 | 86 | |||||
Increase (decrease) in Stockholders' Equity | |||||||
Stock-based Compensation Expense | 2,844 | 2,844 | |||||
Treasury Stock Purchases for Restricted Stock Vests | $ (468) | (468) | |||||
Treasury Stock Purchases for Restricted Stock Vests (in shares) | 15 | ||||||
Issuance of Restricted Stock Awards (in shares) | 19 | ||||||
Issuance of Common Shares upon Stock Option and ESPP Exercise | 337 | 337 | |||||
Issuance of Common Shares upon Stock Option and ESPP Exercise (in shares) | 12 | ||||||
Restricted Stock Awards Forfeitures | (1) | (1) | |||||
Restricted Stock Awards Forfeitures (in shares) | (35) | (21) | |||||
Other Comprehensive Income | (401) | (401) | |||||
Net Loss | (14,106) | (14,106) | |||||
Balance at Jun. 30, 2021 | $ 1 | 219,403 | $ (3,062) | (5,433) | (18,992) | 191,917 | |
Balance (in shares) at Jun. 30, 2021 | 12,826 | 80 | |||||
Balance at Dec. 31, 2021 | $ 1 | 387,844 | $ (3,135) | (3,055) | (47,765) | 333,890 | |
Balance (in shares) at Dec. 31, 2021 | 16,913 | 83 | |||||
Balance, permanent and temporary equity, beginning balance at Dec. 31, 2021 | 358,740 | ||||||
Increase (decrease) in Stockholders' Equity | |||||||
Stock-based Compensation Expense | 6,993 | 6,993 | |||||
Treasury Stock Purchases for Restricted Stock Vests | $ (1,601) | (1,601) | |||||
Treasury Stock Purchases for Restricted Stock Vests (in shares) | 56 | ||||||
Issuance of Restricted Stock Awards (in shares) | 669 | ||||||
Issuance of Common Shares upon Stock Option and ESPP Exercise | 206 | 206 | |||||
Issuance of Common Shares upon Stock Option and ESPP Exercise (in shares) | 8 | ||||||
Dividends on Series A Convertible Preferred Stock | (812) | (812) | |||||
Restricted Stock Awards Forfeitures (in shares) | (24) | ||||||
Other Comprehensive Income | 8,485 | 8,485 | |||||
Net Loss | (35,053) | (35,053) | |||||
Balance, permanent and temporary equity, end balance at Jun. 30, 2022 | 336,958 | ||||||
Balance at Jun. 30, 2022 | $ 1 | 395,043 | $ (4,736) | 5,430 | (83,630) | 312,108 | |
Balance (in shares) at Jun. 30, 2022 | 17,566 | 139 | |||||
Balance at Mar. 31, 2022 | $ 1 | 391,084 | $ (4,253) | 2,712 | (68,300) | ||
Balance (in shares) at Mar. 31, 2022 | 17,374 | 123 | |||||
Balance, permanent and temporary equity, beginning balance at Mar. 31, 2022 | 346,094 | ||||||
Increase (decrease) in Stockholders' Equity | |||||||
Stock-based Compensation Expense | 3,756 | 3,756 | |||||
Treasury Stock Purchases for Restricted Stock Vests | $ (483) | (483) | |||||
Treasury Stock Purchases for Restricted Stock Vests (in shares) | 16 | ||||||
Issuance of Restricted Stock Awards | $ 0 | $ 0 | 0 | $ 0 | 0 | 0 | 0 |
Issuance of Restricted Stock Awards (in shares) | 208 | ||||||
Issuance of Common Shares upon Stock Option and ESPP Exercise | 203 | 203 | |||||
Issuance of Common Shares upon Stock Option and ESPP Exercise (in shares) | 8 | ||||||
Dividends on Series A Convertible Preferred Stock | (407) | (407) | |||||
Restricted Stock Awards Forfeitures (in shares) | (24) | ||||||
Other Comprehensive Income | 2,718 | 2,718 | |||||
Net Loss | (14,923) | (14,923) | |||||
Balance, permanent and temporary equity, end balance at Jun. 30, 2022 | 336,958 | ||||||
Balance at Jun. 30, 2022 | $ 1 | $ 395,043 | $ (4,736) | $ 5,430 | $ (83,630) | $ 312,108 | |
Balance (in shares) at Jun. 30, 2022 | 17,566 | 139 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Mezzanine Equity and Stockholders' Equity-Mezzanine - USD ($) $ in Thousands | Convertible Preferred Stock | Total |
Balance at Dec. 31, 2021 | $ 24,850 | $ 24,850 |
Balance (in shares) at Dec. 31, 2021 | 25,000 | |
Balance at Jun. 30, 2022 | $ 24,850 | 24,850 |
Balance (in shares) at Jun. 30, 2022 | 25,000 | |
Balance at Mar. 31, 2022 | $ 24,850 | |
Balance (in shares) at Mar. 31, 2022 | 25,000 | |
Increase (decrease) in temporary equity | ||
Issuance of Restricted Stock Awards | $ 0 | 0 |
Issuance of Restricted Stock Awards (in shares) | 0 | |
Balance at Jun. 30, 2022 | $ 24,850 | $ 24,850 |
Balance (in shares) at Jun. 30, 2022 | 25,000 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Cash Flows From Operating Activities | ||
Net loss | $ (35,053) | $ (14,020) |
Adjustments to reconcile net (loss)/income to net cash and cash equivalents (used in)/provided by operating activities: | ||
Stock-based compensation | 6,993 | 4,713 |
Deferred taxes | (11,378) | (6,676) |
Depreciation and amortization | 28,731 | 22,222 |
Non-cash interest | 1,969 | 1,141 |
Contingent consideration fair value adjustment | (342) | 0 |
Asset impairment charges | 575 | 0 |
Gain on sale of ANDAs | (750) | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (21,884) | 3,145 |
Inventories, net | (10,852) | 2,823 |
Prepaid expenses and other current assets | 1,563 | 1,202 |
Accounts payable | 4,047 | 1,688 |
Accrued royalties | 70 | (1,719) |
Current income taxes payable, net | 1,654 | (6,281) |
Accrued government rebates | 3,948 | 914 |
Returned goods reserve | (903) | 4,754 |
Accrued expenses, accrued compensation, and other | 1,186 | 7,003 |
Net Cash and Cash Equivalents (Used in)/Provided by Operating Activities | (30,426) | 20,909 |
Cash Flows From Investing Activities | ||
Acquisition of Novitium Pharma LLC, net of cash acquired | (33) | 0 |
Acquisition of product rights, IPR&D, and other related assets | (229) | (21,057) |
Acquisition of property and equipment, net | (3,270) | (1,630) |
Proceeds from the sale of long-lived assets | 750 | 0 |
Net Cash and Cash Equivalents Used in Investing Activities | (2,782) | (22,687) |
Cash Flows From Financing Activities | ||
Payments on borrowings under credit agreements | (1,500) | (5,206) |
Borrowings under Revolver agreement | 0 | 24,000 |
Series A convertible preferred stock dividends paid | (812) | 0 |
Proceeds from stock option exercises and ESPP purchases | 206 | 336 |
Payments of debt issuance costs | 0 | (141) |
Treasury stock purchases for restricted stock vests | (1,601) | (816) |
Net Cash and Cash Equivalents (Used in)/Provided by Financing Activities | (3,707) | 18,173 |
Net Change in Cash and Cash Equivalents | (36,915) | 16,395 |
Cash and cash equivalents, beginning of period | 105,301 | 12,867 |
Cash and cash equivalents, end of period | 68,386 | 29,262 |
Reconciliation of cash, cash equivalents, and restricted cash, beginning of period | ||
Cash and cash equivalents | 100,300 | 7,864 |
Restricted cash | 5,001 | 5,003 |
Cash and cash equivalents, beginning of period | 105,301 | 12,867 |
Reconciliation of cash, cash equivalents, and restricted cash, end of period | ||
Cash and cash equivalents | 63,385 | 24,261 |
Restricted cash | 5,001 | 5,001 |
Cash and cash equivalents, end of period | 68,386 | 29,262 |
Supplemental disclosure for cash flow information: | ||
Cash paid for interest, net of amounts capitalized | 11,400 | 3,953 |
Cash paid for income taxes | 124 | 8,360 |
Supplemental non-cash investing and financing activities: | ||
Debt issuance costs in accrued expenses | 0 | 81 |
Property and equipment purchased and included in accounts payable | $ 779 | $ 119 |
BUSINESS, PRESENTATION, AND REC
BUSINESS, PRESENTATION, AND RECENT ACCOUNTING PRONOUNCEMENTS | 6 Months Ended |
Jun. 30, 2022 | |
BUSINESS, PRESENTATION, AND RECENT ACCOUNTING PRONOUNCEMENTS | |
BUSINESS, PRESENTATION, AND RECENT ACCOUNTING PRONOUNCEMENTS | 1. BUSINESS, PRESENTATION, AND RECENT ACCOUNTING PRONOUNCEMENTS Overview ANI Pharmaceuticals, Inc. and its consolidated subsidiaries (together, “ANI,” the “Company,” “we,” “us,” or “our”) is a diversified bio-pharmaceutical company serving patients in need by developing, manufacturing, and marketing high quality branded and generic prescription pharmaceuticals, including for diseases with high unmet medical need. Our team is focused on delivering sustainable growth by building a successful Purified Cortrophin Gel franchise, strengthening our generics business with enhanced development capability, innovation in established brands and leveraging our manufacturing capabilities. Our four pharmaceutical manufacturing facilities, of which two are located in Baudette, Minnesota, one is located in East Windsor, New Jersey, and one is located in Oakville, Ontario, are together capable of producing oral solid dose products, as well as semi-solids, liquids and topicals, controlled substances, and potent products that must be manufactured in a fully-contained environment. On June 2, 2022, we announced that we intend to cease operations at our Oakville, Ontario, Canada manufacturing plant by first quarter 2023. This action is part of ongoing initiatives to capture operational synergies following our acquisition of Novitium Pharma LLC (“Novitium”) in November 2021. We will transition the majority of products manufactured or packaged in Oakville to one of our three U.S.-based manufacturing sites, and we are seeking to find potential buyers for the Oakville site. Our operations are subject to certain risks and uncertainties including, among others, current and potential competitors with greater resources, dependence on significant customers, and possible fluctuations in financial results. The accompanying unaudited interim condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the ordinary course of business. The propriety of using the going-concern basis is dependent upon, among other things, the achievement of future profitable operations, the ability to generate sufficient cash from operations, and potential other funding sources, including cash on hand, to meet our obligations as they become due. We believe the going-concern basis is appropriate for the accompanying unaudited interim condensed consolidated financial statements based on our current operating plan and business strategy for the 12 months following the issuance of this report. Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain prior period information has been reclassified to conform to the current period presentation. In our opinion, the accompanying unaudited interim condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly our financial position, results of operations, comprehensive income, and cash flows. The consolidated balance sheet at December 31, 2021 has been derived from audited financial statements as of that date. The unaudited interim condensed consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the U.S. Securities and Exchange Commission (the “SEC”). We believe that the disclosures provided herein are adequate to make the information presented not misleading when these unaudited interim condensed consolidated financial statements are read in conjunction with the audited financial statements and notes previously distributed in our Annual Report on Form 10-K for the year ended December 31, 2021. Principles of Consolidation The unaudited interim condensed consolidated financial statements include the accounts of ANI Pharmaceuticals, Inc. and its subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. Foreign Currency We have subsidiaries located in Canada and India. The Canada-based subsidiary conducts its transactions in U.S. dollars and Canadian dollars, but its functional currency is the U.S. dollar. The Indian-based subsidiary generally conducts its transactions in Indian rupees, which is also its functional currency. The results of any non-U.S. dollar transactions and balances are remeasured in U.S. dollars at the applicable exchange rates during the period and resulting foreign currency transaction gains and losses are included in the determination of net income. Our gain or loss on transactions denominated in foreign currencies and the translation impact of local currencies to U.S. dollars was immaterial for the three and six months ended June 30, 2022 and 2021. Unless otherwise noted, all references to “$” or “dollar” refer to the U.S. dollar. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. In the condensed consolidated financial statements, estimates are used for, but not limited to, variable consideration determined based on accruals for chargebacks, administrative fees and rebates, government rebates, returns and other allowances, income tax provision or benefit, deferred taxes and valuation allowance, stock-based compensation, revenue recognition, allowance for inventory obsolescence, valuation of financial instruments and intangible assets, accruals for contingent liabilities, including contingent consideration in acquisitions, fair value of long-lived assets, determination of right-of-use assets and lease liabilities, allowance for credit losses purchase price allocations, and the depreciable lives of long-lived assets. Because of the uncertainties inherent in such estimates, actual results may differ from those estimates. Management periodically evaluates estimates used in the preparation of the financial statements for reasonableness. Restructuring Activities We define restructuring activities to include costs directly associated with exit or disposal activities. Such costs include cash employee contractual severance and other termination benefits, one-time employee termination severance and benefits, contract termination charges, impairment and acceleration of depreciation associated with long-lived assets, and other exit or disposal costs. In general, we record involuntary employee- related exit and disposal costs when there is a substantive plan for employee severance and related payments are probable and estimable. For one-time termination benefits, including those with a service requirement, expense is recorded when the employees are entitled to receive such benefits and the amount can be reasonably estimated. Expense related to one-time termination benefits with a service requirement is recorded over time, as the service is completed. Contract termination fees and penalties, and other exit and disposal costs are generally recorded as incurred. Restructuring activities are recognized as an operating expense in our statement of operations. Recent Accounting Pronouncements Recent Accounting Pronouncements Not Yet Adopted We have evaluated all issued and unadopted Accounting Standards Updates and believe the adoption of these standards will not have a material impact on our condensed consolidated statements of operations, comprehensive income, balance sheets, or cash flows. |
REVENUE RECOGNITION AND RELATED
REVENUE RECOGNITION AND RELATED ALLOWANCES | 6 Months Ended |
Jun. 30, 2022 | |
REVENUE RECOGNITION AND RELATED ALLOWANCES | |
REVENUE RECOGNITION AND RELATED ALLOWANCES | 2. REVENUE RECOGNITION AND RELATED ALLOWANCES Revenue Recognition We recognize revenue using the following steps: ● Identification of the contract, or contracts, with a customer; ● Identification of the performance obligations in the contract; ● Determination of the transaction price, including the identification and estimation of variable consideration; ● Allocation of the transaction price to the performance obligations in the contract; and ● Recognition of revenue when we satisfy a performance obligation. We derive our revenues primarily from sales of generic and branded pharmaceutical products. Revenue is recognized when our obligations under the terms of our contracts with customers are satisfied, which generally occurs when control of the products we sell is transferred to the customer. We estimate variable consideration after considering applicable information that is reasonably available. We generally do not have incremental costs to obtain contracts that would otherwise not have been incurred. We do not adjust revenue for the promised amount of consideration for the effects of a significant financing component because our customers generally pay us within 100 days. All revenue recognized in the accompanying unaudited interim condensed consolidated statements of operations is considered to be revenue from contracts with customers. The following table depicts the disaggregation of revenue: Three Months Ended Six Months Ended Products and Services June 30, June 30, June 30, June 30, (in thousands) 2022 2021 2022 2021 Sales of generic pharmaceutical products $ 49,863 $ 34,199 $ 98,970 $ 66,812 Sales of established brand pharmaceutical products 8,463 11,038 16,915 18,555 Sales of rare disease pharmaceutical products 10,202 — 11,494 — Sales of contract manufactured products 4,389 2,322 7,293 4,895 Royalties from licensing agreements 194 — 2,097 11,210 Product development services 531 97 1,097 255 Other 213 969 466 1,419 Total net revenues $ 73,855 $ 48,625 $ 138,332 $ 103,146 Three Months Ended Six Months Ended Timing of Revenue Recognition June 30, June 30, June 30, June 30, (in thousands) 2022 2021 2022 2021 Performance obligations transferred at a point in time $ 73,324 $ 48,528 $ 137,235 $ 102,891 Performance obligations transferred over time 531 97 1,097 255 Total $ 73,855 $ 48,625 $ 138,332 $ 103,146 In the three and six months ended June 30, 2022 and 2021, we did not incur, and therefore did not defer, any material incremental costs to obtain or fulfill contracts. We recognized a decrease of $3.7 million to net revenue from performance obligations satisfied in prior periods during the six months ended June 30, 2022, consisting primarily of revised estimates for variable consideration, including chargebacks, rebates, returns, and other allowances, related to prior period sales. the Kite license agreement pursuant to the Tripartite Agreement as described herein in Royalties from Licensing Agreements. For the three and six months ended June 30, 2021, we recognized less than $0.1 million of revenue that was included in deferred revenue as of December 31, 2020. Revenue from Sales of Generic and Branded Pharmaceutical Products Product sales consists of sales of our generic and branded pharmaceutical products, including rare disease pharmaceutical products. Our sole performance obligation in our contracts is to provide pharmaceutical products to customers. Our products are sold at pre-determined standalone selling prices and our performance obligation is considered to be satisfied when control of the product is transferred to the customer. Control is generally transferred to the customer upon delivery of the product to the customer, as our pharmaceutical products are generally sold on an FOB destination basis and because inventory risk and risk of ownership passes to the customer upon delivery. Payment terms for these sales are generally less than 100 days. Sales of our pharmaceutical products are subject to variable consideration due to chargebacks, government rebates, returns, administrative and other rebates, and cash discounts. Estimates for these elements of variable consideration require significant judgment. The following table summarizes activity in the consolidated balance sheets for accruals and allowances for the six months ended June 30, 2022 and 2021, respectively: Accruals for Chargebacks, Returns, and Other Allowances Administrative Prompt Government Fees and Other Payment (in thousands) Chargebacks Rebates Returns Rebates Discounts Balance at December 31, 2020 (1) $ 88,746 $ 7,826 $ 27,155 $ 8,906 $ 3,839 Accruals/Adjustments 214,125 12,980 21,058 32,207 13,315 Credits Taken Against Reserve (220,776) (12,066) (16,309) (33,071) (13,682) Balance at June 30, 2021 (1) $ 82,095 $ 8,740 $ 31,904 $ 8,042 $ 3,472 Balance at December 31, 2021 (1) $ 94,066 $ 5,492 $ 35,831 $ 13,100 $ 4,642 Accruals/Adjustments 320,191 9,356 15,057 20,701 10,494 Credits Taken Against Reserve (274,714) (5,408) (15,989) (19,283) (8,938) Balance at June 30, 2022 (1) $ 139,543 $ 9,440 $ 34,899 $ 14,518 $ 6,198 (1) Chargebacks are included as an offset to accounts receivable in the unaudited interim condensed consolidated balance sheets. Administrative Fees and Other Rebates and Prompt Payment Discounts are included as an offset to accounts receivable or as accrued expenses and other in the unaudited interim condensed consolidated balance sheets. Returns are included in returned goods reserve in the unaudited interim condensed consolidated balance sheets. Government Rebates are included in accrued government rebates in the unaudited interim condensed consolidated balance sheets. Contract Manufacturing Product Sales Revenue Contract manufacturing arrangements consist of agreements in which we manufacture a pharmaceutical product on behalf of a third party. Our performance obligation is to manufacture and provide pharmaceutical products to customers, typically pharmaceutical companies. The contract manufactured products are sold at pre-determined standalone selling prices and our performance obligations are considered to be satisfied when control of the product is transferred to the customer. Control is transferred to the customer when the product leaves our dock to be shipped to the customer, as our contract manufactured pharmaceutical products are sold on an FOB shipping point basis and the inventory risk and risk of ownership passes to the customer at that time. Payment terms for these sales are generally fewer than two months. We estimate returns based on historical experience. Historically, we have not had material returns for contract manufactured products. As of June 30, 2022, the aggregate amount of the transaction price allocated to the remaining performance obligations for all open contract manufacturing customer contracts was $7.2 million, which consists of firm orders for contract manufactured products. We will recognize revenue for these performance obligations as they are satisfied, which is anticipated within six months. Royalties from Licensing Agreements From time to time, we enter into transition agreements with the sellers of products we acquire, under which we license to the seller the right to sell the acquired products. Therefore, we recognize the revenue associated with sales of the underlying products as royalties. Because these royalties are sales-based, we recognize the revenue when the underlying sales occur, based on sales and gross profit information received from the sellers. Upon full transition of the products and upon launching the products under our own labels, we recognize revenue for the products as sales of generic or branded pharmaceutical products, as described above. From time to time, we enter into supply and distribution agreements with contract manufacturing customers, under which we license to the contract manufacturing customer the right to sell our products, and we are entitled to a royalty on sales made by the contract manufacturing customer under these arrangements. Therefore, we recognize the revenue associated with sales of the underlying products as royalties. Because these royalties are sales-based, we recognize the revenue when the underlying sales occur, based on sales and gross profit information received from the contract manufacturing customers. Pursuant to a 2012 Tripartite Agreement (the “Tripartite Agreement”) between the Company, The Regents of the University of California (“The Regents”), and Cabaret Biotech Ltd., an Israeli corporation (“Cabaret”) (as assignee of Dr. Zelig Eshhar’s rights under the Tripartite Agreement), and subsequent amendments thereto and assignments thereof, we were entitled to receive a percentage of the milestone and sales royalty payments paid to Cabaret by Kite Pharma, Inc. (“Kite”), a subsidiary of Gilead Sciences, Inc., under a license agreement. Under such license agreement, Kite licensed from Dr. Eshhar and Cabaret the patent rights covered by the Tripartite Agreement and agreed to make certain payments to Cabaret based on, among other things, Kite’s sales of Yescarta®. Under the Tripartite Agreement, portions of these payments were to be distributed to The Regents and to us. Historically, we recorded royalty income related to Yescarta® on an accrual basis utilizing our best estimate of royalties earned based upon information available in the public domain, our understanding of the various agreements governing the royalty, and other information received from time to time from the relevant parties. Generally, cash was received directly from Cabaret once a year. The agreements governing this royalty were subject to multiple actions in multiple jurisdictions, including litigation between Cabaret and Kite, and separately, ANI and Cabaret. In the first quarter of 2021, we became aware that the litigation between Cabaret and Kite was dismissed. In April 2021, Cabaret and the Company settled all amounts due for amounts actually received by Cabaret or Eshhar for the licensing or use of the patent rights governed by the Kite license agreement. As a result, we recognized million, which has been recorded as other expense, net in the accompanying unaudited interim condensed consolidated statement of operations, related to certain legal expenditures incurred. We received final payment from Cabaret in May 2021. Based upon the events that led to the dismissal of the litigation between Cabaret and Kite, we do not expect to receive any future royalty income related to the Kite license agreement. In conjunction with payment of amounts due to us, all outstanding litigation between the Company and Cabaret was dismissed. Product Development Services Revenue We provide product development services to customers, which are performed over time. These are services primarily performed at our facilities in East Windsor, New Jersey and Oakville, Ontario. As we intend to cease operations at the Oakville, Ontario facility by the first quarter of 2023, we expect to transition the product development services at the facility to one of our three U.S.-based manufacturing sites. The duration of these development projects can be up to three years. Deposits received from these customers are recorded as deferred revenue until revenue is recognized. For contracts with no deposits and for the remainder of contracts with deposits, we invoice customers as our performance obligations are satisfied. We recognize revenue on a percentage of completion basis, which results in contract assets on our balance sheet. As of June 30, 2022, the aggregate amount of the transaction price allocated to the remaining performance obligations for all open product development services contracts was $0.3 million. We expect to satisfy these performance obligations within the next nine months. Credit Concentration Our customers are primarily wholesale distributors, chain drug stores, group purchasing organizations, and pharmaceutical companies. During the three and six months ended June 30, 2022 and 2021 we had three customers that accounted for 10% or more of net revenues. As of June 30, 2022, accounts receivable from these customers totaled 83% of accounts receivable, net. The three customers represent the total percentage of net revenues as follows: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2022 2021 2022 2021 Customer 1 23 % 34 % 27 % 29 % Customer 2 19 % 26 % 19 % 22 % Customer 3 15 % 14 % 14 % 14 % |
BUSINESS COMBINATION
BUSINESS COMBINATION | 6 Months Ended |
Jun. 30, 2022 | |
BUSINESS COMBINATION | |
BUSINESS COMBINATION | 3. BUSINESS COMBINATION Summary On November 19, 2021, we completed our previously announced acquisition of all of the interests of Novitium pursuant to the terms of the Agreement and Plan of Merger (the “Merger Agreement”), dated as of March 8, 2021, for cash consideration, 2,466,654 restricted shares of our common stock valued at $91.2 million based on our closing stock price of $43.54 on the date of closing and discounted for lack of marketability due to restrictions on shares, and up to $46.5 million in additional contingent consideration. Additionally, we agreed to pay certain debts of Novitium in the amount of $8.5 million, which we deemed to be paid in consummation of the transaction closing, and not assumed liabilities, and thus were included as additional cash consideration. This acquisition was accounted for as a business combination. The contingent consideration is based on the achievement of certain milestones, including milestones on gross profit of Novitium portfolio products over a 24-month 24-month Refer to Note 14 for changes in contingent consideration and changes in fair value. Purchase consideration consisted of the following: (in thousands) Cash consideration $ 88,109 Repayment of Novitium debts 8,493 Fair value of restricted shares 91,199 Fair value of contingent consideration 30,800 Gross consideration $ 218,601 Cash acquired 12,076 Net consideration $ 206,525 The cash consideration was funded in part by borrowings under our new credit facility (Note 5) and through issuance of shares of Series A convertible preferred stock (Note 10). We acquired Novitium due to its proven track record of being a research and development growth engine capable of fueling sustainable growth, to expand our research and development pipeline via niche opportunities, to enhance our contract development and manufacturing organization (“CDMO”) business and U.S.-based manufacturing capacity, and to diversify our revenue base. The preliminary allocation of the fair value of the Novitium acquisition, reflective of certain immaterial measurement period adjustments during the six months ended June 30, 2022, is shown in the table below. The allocation of the fair value will be finalized when all measurement period adjustments, if applicable, are complete. (in thousands) Total Purchase Consideration $ 218,601 Cash and cash equivalents 12,076 Accounts receivable 27,185 Inventories 14,460 Prepaid expenses and other current assets 1,891 Property and equipment 14,331 Intangible assets 139,200 Goodwill 24,641 Other non-current assets 1,413 Total assets acquired 235,197 Accounts payable 1,560 Accrued expense and other current liabilities 6,035 Accrued compensation and other related expenses 4,909 Accrued government rebates 744 Returned goods reserve 2,202 Other non-current liabilities 1,146 Total liabilities assumed 16,596 Net assets acquired $ 218,601 The net assets were recorded at their estimated fair value. In valuing acquired assets and liabilities, fair value estimates were based primarily on future expected cash flows, market rate assumptions for contractual obligations, and appropriate discount rates. In connection with the acquisition, we recognized $46.9 million of indefinite-lived in-process research and development intangible assets, $67.4 million of acquired ANDA intangible assets, and $24.9 million of customer relationship intangible assets. Goodwill is considered an indefinite-lived asset and relates primarily to intangible assets that do not qualify for separate recognition, such as the assembled workforce and synergies between the entities. Goodwill established as a result of the acquisition is tax deductible in the U.S. Novitium operations generated $19.9 million and $39.1 million of revenue during the three and six months ended June 30, 2022, respectively. Novitium recorded a net income of $2.5 million and $2.3 million during the three and six months ended June 30, 2022, respectively. Restricted Shares The Novitium acquisition consideration included 2,466,654 restricted shares, which were valued at $91.2 million. These shares contain restrictions on their transfer for periods from three |
RESTRUCTURING
RESTRUCTURING | 6 Months Ended |
Jun. 30, 2022 | |
RESTRUCTURING | |
RESTRUCTURING | 4. RESTRUCTURING On June 2, 2022, we announced that we intend to cease operations at our Oakville, Ontario, Canada manufacturing plant by the first quarter of 2023. This action is part of ongoing initiatives to capture operational synergies following our acquisition of Novitium in November 2021. We will transition the majority of products manufactured or packaged in Oakville to one of our three U.S.-based manufacturing sites. We are seeking to find potential buyers for the Oakville site, though there can be no assurance as to when or if that will occur or the amount of any net proceeds that may be received. For the three and six months ended June 30, 2022, restructuring activities resulted in expenses of $2.6 million and included $1.4 million of severance and other employee benefit costs, $0.9 million of asset-related impairment and accelerated depreciation costs, and $0.3 million of other costs. As of June 30, 2022, $1.3 million of the severance and other employee benefits are unpaid and accrued. These costs are recorded as restructuring activities, an operating item, in the accompanying unaudited interim condensed consolidated statement of operations. Certain of the severance and other employee benefit costs contain a service requirement, and as such, are being accrued over time as they are earned. We expect to incur additional charges of approximately $1.4 million in these costs over the next nine months, and approximately $3.1 to $3.6 million future asset-related accelerated depreciation charges over this period. These costs are part of the Generics, Established Brands, and Other segment. In conjunction with the planned exit of our Canadian facility, we have determined that the land and building at our Oakville, Ontario, Canada plant will be sold together over the transition period and meet the criteria to be classified as held for sale as of June 30, 2022. The land and building have a net carrying value of $8.0 million, which is presented as assets held for sale |
INDEBTEDNESS
INDEBTEDNESS | 6 Months Ended |
Jun. 30, 2022 | |
INDEBTEDNESS | |
INDEBTEDNESS | 5. INDEBTEDNESS Credit Facility On November 19, 2021, the Company, as borrower, entered into a credit agreement (the “Credit Agreement”) with Truist Bank and other lenders, which provides for credit facilities consisting of (i) a senior secured term loan facility in an aggregate principal amount of $300.0 million (the “Term Facility”) and (ii) a senior secured revolving credit facility in an aggregate commitment amount of $40.0 million, which may be used for revolving credit loans, swingline loans and letters of credit (the “Revolving Facility,” and together with the Term Facility, the “Credit Facility”). The Term Facility proceeds were used to finance the cash portion of the consideration under the Merger Agreement, repay our existing credit facility, and pay fees, costs and expenses incurred in connection with the merger. Proceeds from the Revolving Facility are expected to be used, subject to certain limitations, for working capital and other general corporate purposes. The Term Facility matures in November 2027 and the Revolving Facility in November 2026. Each permits both base rate borrowings (“ABR Loans”) and Eurodollar rate borrowings (“Eurodollar Loans”), plus a spread of (a) 5.00% above the base rate in the case of ABR Loans under the Term Facility and 6.00% above the LIBOR Rate (as defined in the Credit Agreement) in the case of LIBOR loans under the Term Facility and (b) 3.75% above the base rate in the case of ABR Loans under the Revolving Facility and 4.75% above the LIBOR Rate (as defined in the Credit Agreement) in the case of loans under the Revolving Facility. The interest rate under the Term Facility was 7.06% at June 30, 2022. The Credit Facility has a subjective acceleration clause in case of a material adverse effect. The Term Facility includes a repayment schedule, pursuant to which $750 thousand of the loan will be paid in quarterly installments during the twelve months ended June 30, 2023. As of June 30, 2022, $3.0 million of the loan is recorded as current borrowings in the unaudited interim condensed consolidated balance sheets. As of June 30, 2022, we had not drawn on the Revolving Facility and $40.0 million remained available for borrowing. We incurred $14.0 million in deferred debt issuance costs associated with the Credit Facility. Costs allocated to the Term Facility are classified as a direct reduction to the current and non-current portion of the borrowings, depending on their nature. Costs allocated to the Revolving Facility are classified as other current and other non-current assets, depending on their nature. We incur a commitment fee of 0.5% per annum on any unused portion of the Revolving Facility. In connection with entry into the Credit Facility, on November 19, 2021, we terminated our existing Amended and Restated Credit Agreement, dated as of December 27, 2018 (the “Prior Credit Agreement”), among the Company, as borrower, and Citizens Bank with other lenders. The Credit Facility is secured by a lien on substantially all of ANI Pharmaceuticals, Inc.’s and its principal domestic subsidiary’s assets and any future domestic subsidiary guarantors’ assets. The Credit Facility is subject to customary financial and nonfinancial covenants. The carrying value of the current and non-current components of the Term Facility as of June 30, 2022 and December 31, 2021 are: Current June 30, December 31, (in thousands) 2022 2021 Current borrowing on debt $ 3,000 $ 3,000 Deferred financing costs (2,150) (2,150) Current debt, net of deferred financing costs $ 850 $ 850 Non-Current June 30, December 31, (in thousands) 2022 2021 Non-current borrowing on debt $ 295,500 $ 297,000 Deferred financing costs (9,405) (10,480) Non-current debt, net of deferred financing costs and current component $ 286,095 $ 286,520 As of June 30, 2022, we had a $298.5 million balance on the Term Facility. Of the $0.9 million of deferred debt issuance costs allocated to the Revolving Facility, $0.7 million is included in other non-current assets in the unaudited interim condensed consolidated balance sheets, and $0.2 million is included in prepaid expenses and other current assets in the unaudited interim condensed consolidated balance sheets. The contractual maturity of our Term Facility is as follows for the years ending December 31: (in thousands) Term Facility 2022 $ 1,500 2023 3,000 2024 3,000 2025 3,000 2026 3,000 2027 and thereafter 285,000 Total $ 298,500 The following table sets forth the components of total interest expense related to the Term Facility during the three and six months ended June 30, 2022 and interest expense under the Prior Credit Agreement during the three and six months ended June 30, 2021, as recognized in the accompanying unaudited interim condensed consolidated statements of operations for the three and six months ended June 30, 2022 and 2021: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands) 2022 2021 2022 2021 Contractual coupon $ 6,122 $ 2,386 $ 12,180 $ 4,690 Amortization of finance fees 590 176 1,181 352 Capitalized interest (19) (31) (49) (57) $ 6,693 $ 2,531 $ 13,312 $ 4,985 |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENT AND HEDGING ACTIVITY | 6 Months Ended |
Jun. 30, 2022 | |
DERIVATIVE FINANCIAL INSTRUMENT AND HEDGING ACTIVITY | |
DERIVATIVE FINANCIAL INSTRUMENT AND HEDGING ACTIVITY | 6. DERIVATIVE FINANCIAL INSTRUMENT AND HEDGING ACTIVITY At times we use derivative financial instruments to hedge our exposure to interest rate risks. All derivative financial instruments are recognized as either assets or liabilities at fair value on the consolidated balance sheet and are classified as current or non-current based on the scheduled maturity of the instrument. When we enter into a hedge arrangement and intend to apply hedge accounting, we formally document the hedge relationship and designate the instrument for financial reporting purposes as a fair value hedge, a cash flow hedge, or a net investment hedge. When we determine that a derivative financial instrument qualifies as a cash flow hedge and is effective, the changes in fair value of the instrument are recorded in accumulated other comprehensive loss, net of tax in our consolidated balance sheets and will be reclassified to earnings when the hedged item affects earnings. In April 2020, we entered into an interest rate swap with Citizens Bank, N.A. to manage our exposure to changes in LIBOR-based interest rates underlying total borrowings under term facilities related to our Prior Credit Agreement. The interest rate swap matures in December 2026. Concurrent with the termination of the Prior Credit Agreement and entry into the Credit Agreement with Truist Bank, the interest rate swap with a notional value of $168.6 million was novated and Truist Bank is the new counterparty. The swap is used to manage changes in LIBOR-based interest rates underlying a portion of the borrowing under the Term Facility. The interest rate swap provides an effective fixed interest rate of 2.26% and has been designated as an effective cash flow hedge and therefore qualifies for hedge accounting. As of June 30, 2022, the notional amount of the interest rate swap was $158.6 million and decreases quarterly by approximately $4.0 million until December 2023, after which it remains static until maturity in December 2026. As of June 30, 2022, the fair value of the interest rate swap asset recorded in derivatives and other non-current assets in the unaudited interim condensed consolidated balance sheets was $3.6 million. As of June 30, 2022, $5.4 million was recorded in accumulated other comprehensive loss, net of tax in the unaudited interim condensed consolidated balance sheets. During the three and six months ended June 30, 2022, the change in fair value of the interest rate swaps was a gain of $2.9 million and $9.8 million, respectively. During the three and six months ended June 30, 2022, gains on the interest rate swap of $2.7 million and $8.5 million were recorded in accumulated other comprehensive loss, net of tax in our unaudited interim condensed consolidated statements of comprehensive (loss)/income, respectively. Differences between the hedged LIBOR rate and the fixed rate are recorded as interest expense in the same period that the related interest is recorded for the Term Facility based on the LIBOR rate. In the three and six months ended June 30, 2022, $1.0 million and $2.0 million of interest expense was recognized in relation to the interest rate swaps, respectively. Included in this amount for the three months ended June 30, 2022 and 2021 are reclassifications out of accumulated other comprehensive income/loss of $0.7 million and $0.9 million and during the six months ended June 30, 2022 and 2021 are $1.4 million and $1.8 million in expense, respectively, related to terminated and de-designated cash flow hedges. |
EARNINGS (LOSS) PER SHARE
EARNINGS (LOSS) PER SHARE | 6 Months Ended |
Jun. 30, 2022 | |
EARNINGS (LOSS) PER SHARE | |
EARNINGS (LOSS) PER SHARE | 7. EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted-average number of shares of common stock outstanding during the period. For periods of net income, and when the effects are not anti-dilutive, we calculate diluted earnings (loss) per share by dividing net income available to common stockholders by the weighted-average number of shares outstanding plus the impact of all potential dilutive common shares, consisting primarily of common stock options, shares to be purchased under our Employee Stock Purchase Plan (“ESPP”), unvested restricted stock awards, and stock purchase warrants, using the treasury stock method. For periods of net loss, diluted loss per share is calculated similarly to basic loss per share. Our unvested restricted shares and Series A convertible preferred stock shares contain non-forfeitable rights to dividends, and therefore are considered to be participating securities; in periods of net income, the calculation of basic and diluted earnings (loss) per share excludes from the numerator net income (but not net loss) attributable to the unvested restricted shares and the common shares assumed converted from the preferred shares and excludes the impact of those shares from the denominator. Earnings (loss) per share for the three and six months ended June 30, 2022 and 2021 are calculated for basic and diluted earnings (loss) per share as follows: Basic Diluted Basic Diluted (in thousands, except per share amounts) Three Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 2022 2021 2022 2021 Net loss $ (14,923) $ (14,106) $ (14,923) $ (14,106) $ (35,053) $ (14,020) $ (35,053) $ (14,020) Net income allocated to participating securities — — — — — — — — Dividends on Series A convertible preferred stock (407) — (407) — (812) — (812) — Net loss available to common shareholders $ (15,330) $ (14,106) $ (15,330) $ (14,106) $ (35,865) $ (14,020) $ (35,865) $ (14,020) Basic Weighted-Average Shares Outstanding 16,272 12,085 16,272 12,085 16,205 12,045 16,205 12,045 Dilutive effect of stock options and ESPP — — — — Diluted Weighted-Average Shares Outstanding 16,272 12,085 16,205 12,045 Loss per share $ (0.94) $ (1.17) $ (0.94) $ (1.17) $ (2.21) $ (1.16) $ (2.21) $ (1.16) The number of anti-dilutive shares, which have been excluded from the computation of diluted earnings (loss) per share, was 2.7 million and 1.7 million for the three months ended June 30, 2022 and 2021 and was 2.6 million and 1.7 million for the six months ended June 30, 2022 and 2021, respectively. For the three and six months ended June 30, 2022 and 2021, all potentially dilutive shares were anti-dilutive and excluded from the calculation of diluted loss per share because we recognized a net loss. |
INVENTORIES
INVENTORIES | 6 Months Ended |
Jun. 30, 2022 | |
INVENTORIES | |
INVENTORIES | 8. INVENTORIES Inventories consist of the following as of: June 30, December 31, (in thousands) 2022 2021 Raw materials $ 59,176 $ 51,350 Packaging materials 6,414 5,475 Work-in-progress 879 652 Finished goods 33,936 31,969 100,405 89,446 Reserve for excess/obsolete inventories (7,860) (7,753) Inventories, net $ 92,545 $ 81,693 Vendor Concentration We source the raw materials for our products, including active pharmaceutical ingredients (“API”), from both domestic and international suppliers. Generally, only a single source of API is qualified for use in each product due to the cost and time required to validate a second source of supply. As a result, we are dependent upon our current vendors to reliably supply the API required for on-going product manufacturing. During the three and six months ended June 30, 2022, we purchased approximately 18% and 17% of our inventory from one supplier, respectively. As of June 30, 2022, our amount payable to this supplier was $6.3 million. During the three and six months ended June 30, 2021, no single vendor represented more than 10% of inventory purchases. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2022 | |
GOODWILL AND INTANGIBLE ASSETS | |
GOODWILL AND INTANGIBLE ASSETS | 9. GOODWILL AND INTANGIBLE ASSETS Goodwill As a result of our 2013 merger with BioSante Pharmaceuticals, Inc. (“BioSante”), we recorded goodwill of $1.8 million. As a result of our acquisition of WellSpring Pharma Services Inc., we recorded additional goodwill of $1.7 million in 2018. From our acquisition of Novitium in 2021, we recorded goodwill of $24.6 million. We assess the recoverability of the carrying value of goodwill as of October 31 st Intangible Assets The components of net definite-lived intangible assets and net indefinite-lived intangible assets other than goodwill are as follows: June 30, 2022 December 31, 2021 Weighted Average Gross Carrying Accumulated Gross Carrying Accumulated Amortization (in thousands) Amount Amortization Amount Amortization Period Definite-Lived Intangible Assets: Acquired ANDA intangible assets $ 168,377 $ (64,128) $ 168,536 $ (54,079) 8.5 years NDAs and product rights 242,372 (150,853) 242,372 (138,835) 9.9 years Marketing and distribution rights 17,157 (12,828) 17,157 (12,347) 5.5 years Non-compete agreement 624 (557) 624 (513) 7.0 years Customer relationships 24,900 (2,371) 24,900 (593) 7.0 years Indefinite-Lived Intangible Assets: In process research and development 46,900 — 46,900 — Indefinite Total Intangible Assets, net $ 500,330 $ (230,737) $ 500,489 $ (206,367) 9.0 years The definite-lived Abbreviated New Drug Applications (“ANDAs”), New Drug Applications (“NDAs”) and product rights, marketing and distribution rights, customer relationships, and non-compete agreement are stated at cost, net of amortization, and generally amortized over their remaining estimated useful lives, ranging from seven Amortization expense was $11.9 million and $10.1 million for the three months ended June 30, 2022 and 2021, respectively. Amortization expense was $24.4 million and $19.7 million for the six months ended June 30, 2022 and 2021, respectively. We test for impairment of definite-lived intangible assets and indefinite-lived intangible assets when events or circumstances indicate that the carrying value of the assets may not be recoverable. In the three and six months ended June 30, 2022, we recognized a full impairment of a definite-lived ANDA asset with a remaining carrying value of $0.1 million. No such triggering events were identified during the three and six months ended June 30, 2021 and therefore no impairment loss was recognized in the three and six months ended June 30, 2021. Expected future amortization expense is as follows: (in thousands) 2022 (remainder of the year) $ 24,693 2023 50,770 2024 49,974 2025 47,870 2026 34,551 2027 and thereafter 61,735 Total $ 269,593 Expected amortization expense is an estimate. Actual amounts of amortization expense may differ due to timing of regulatory approvals related to IPR&D assets, additional intangible assets acquired, impairment of intangible assets, and other events. |
MEZZANINE AND STOCKHOLDERS' EQU
MEZZANINE AND STOCKHOLDERS' EQUITY | 6 Months Ended |
Jun. 30, 2022 | |
MEZZANINE AND STOCKHOLDERS' EQUITY | |
MEZZANINE AND STOCKHOLDERS' EQUITY | 10. MEZZANINE AND STOCKHOLDERS’ EQUITY Stockholders’ Equity Authorized shares We are authorized to issue up to 33.3 million shares of common stock with a par value of $0.0001 per share, 0.8 million shares of class C special stock with a par value of $0.0001 per share, and 1.7 million shares of undesignated preferred stock with a par value of $0.0001 per share at June 30, 2022. There were 17.6 million and 17.4 million shares of common stock issued and outstanding as of June 30, 2022 and 16.9 million shares of common stock issued and outstanding There were 11 thousand shares of class C special stock issued and outstanding Mezzanine Equity PIPE Shares Concurrently with the execution of the Merger Agreement, and as financing for a portion of the acquisition, on March 8, 2021, we entered into an Equity Commitment and Investment Agreement with Ampersand 2020 Limited Partnership (the “PIPE Investor”), pursuant to which we agreed to issue and sell to the PIPE Investor, and the PIPE Investor agreed to purchase, 25,000 shares of our Series A Convertible Preferred Stock (the “PIPE Shares”), for a purchase price of $1,000 per share and an aggregate purchase price of $25.0 million. This agreement closed and the 25,000 PIPE Shares were sold and issued for $25.0 million on November 19, 2021. The PIPE Shares are classified as mezzanine equity because the shares are mandatorily redeemable for cash upon a change in control, an event that is not solely in our control. We incurred $0.2 million in issuance costs associated with the transaction. The PIPE Shares accrue dividends at 6.50% per year on a cumulative basis, payable in cash or in-kind, and will also participate, on a pro-rata basis, in any dividends that may be declared with respect to our common stock. The PIPE Shares are convertible into our common shares at the conversion price of $41.47 (i) beginning two years after their issuance date, at the election of ANI (in which case the PIPE Investor must convert all of the PIPE Shares), if the volume-weighted average price of our common stock for any 20 trading days out of 30 consecutive trading days exceeds 170% of the conversion price, and (ii) at any time after issuance, at the election of the PIPE Investor. As of June 30, 2022, the PIPE shares are currently convertible into a maximum of 602,901 shares of our common stock. In case of a liquidation event, the holder of the PIPE Shares will be entitled to receive, in preference to holders of our common stock, the greater of (i) the PIPE Shares’ purchase price plus any accrued and unpaid dividends thereon and (ii) the amount the holder of the PIPE Shares would have received in the liquidation event if it had converted its PIPE Shares into our common stock. The PIPE Shares will have voting rights, voting as one series with our common stock, on as-converted basis, and will have separate voting rights on any (i) amendment to the Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock (the “Certificate”) that adversely amends and relates solely to the terms of the PIPE Shares and (ii) issuance of additional Series A convertible preferred stock. In case of a change of control of ANI, the PIPE Shares will be redeemed at the greater of (i) the PIPE Shares’ purchase price plus any accrued and unpaid dividends thereon and (ii) the change of control transaction consideration that the holder of the PIPE Shares would have received if it had converted into our common stock. There were 25,000 shares of Series A convertible preferred stock outstanding as of June 30, 2022. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2022 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | 11. STOCK-BASED COMPENSATION Employee Stock Purchase Plan In July 2016, we commenced administration of the ANI Pharmaceuticals, Inc. 2016 Employee Stock Purchase Plan. As of June 30, 2022, we had 0.2 million shares of common stock available under the ESPP. Under the ESPP, participants can purchase shares of our stock at a 15% discount. The following table summarizes ESPP expense incurred under the 2016 Employee Stock Purchase Plan and included in our accompanying unaudited interim condensed consolidated statements of operations: (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Cost of sales $ 19 $ 4 $ 29 $ 8 Research and development 15 6 22 11 Selling, general, and administrative 39 23 60 46 $ 73 $ 33 $ 111 $ 65 Stock Incentive Plan Equity-based service awards are granted under the ANI Pharmaceuticals, Inc. Amended and Restated 2022 Stock Incentive Plan (the “2022 Plan”), which was approved by our stockholders at the 2022 Annual Meeting of Stockholders (the “Annual Meeting”) held on April 27, 2022. Prior to this approval, we had been granting equity-based incentive awards under our Sixth Amended and Restated 2008 Stock Incentive Plan (the “Existing Plan”). The 2022 Plan was amended to, among other things, increase the number of shares reserved for issuance thereunder by 1,150,000 shares. As of June 30, 2022, 1.1 million shares of our common stock were available for issuance under the Existing Plan. From time to time, we may grant stock options to employees through an inducement grant outside of our 2022 Plan to induce prospective employees to accept employment with us (the “Inducement Grants”). The options are granted at an exercise price equal to the fair market value of a share of our common stock on the respective grant date and are generally exercisable in four equal annual installments beginning on the first anniversary of the respective grant date. The grants are made pursuant to inducement grants outside of our stockholder approved equity plan as permitted under the Nasdaq Stock Market listing rules. The following table summarizes stock-based compensation expense incurred under the 2022 Plan and Inducement Grants included in our accompanying unaudited interim condensed consolidated statements of operations: (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Cost of sales $ 124 $ 2 $ 259 $ 2 Research and development 180 149 345 263 Selling, general, and administrative 3,379 2,660 6,278 4,383 $ 3,683 $ 2,811 $ 6,882 $ 4,648 A summary of stock option and restricted stock activity under the 2022 Plan and Inducement Grants during the six months ended June 30, 2022 and 2021 is presented below: (in thousands) Options Inducement Grants RSAs Outstanding at December 31, 2020 756 180 352 Granted 84 61 457 Options Exercised/RSAs Vested (5) — (111) (1) Forfeited (58) — (73) Expired — — — Outstanding at June 30, 2021 777 241 625 Outstanding at December 31, 2021 747 241 707 Granted 36 — 669 Options Exercised/RSAs Vested (1) — (209) (2) Forfeited (37) — (24) Expired — — — Outstanding at June 30, 2022 745 241 1,143 (1) Includes 25 thousand shares purchased from employees to cover employee income taxes related to income earned upon vesting of restricted stock. The shares purchased are held in treasury and the $0.8 million total purchase price for the shares is included in Treasury stock in our accompanying unaudited interim condensed consolidated balance sheets. (2) Includes 56 thousand shares purchased from employees to cover employee income taxes related to income earned upon vesting of restricted stock. The shares purchased are held in treasury and the $1.6 million total purchase price for the shares is included in Treasury stock in our accompanying unaudited interim condensed consolidated balance sheets . |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2022 | |
INCOME TAXES | |
INCOME TAXES | 12. INCOME TAXES We use the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. The measurement of a deferred tax asset is reduced, if necessary, by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. As of June 30, 2022, we had provided a valuation allowance against consolidated net deferred tax assets of $0.4 million, related solely to deferred tax assets for net operating loss carryforwards in certain U.S. state jurisdictions. We use a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. We have not identified any uncertain income tax positions that could have a material impact on the consolidated financial statements. We recognize interest and penalties accrued on any unrecognized tax exposures as a component of income tax expense; we did not have any such amounts accrued as of June 30, 2022 and December 31, 2021. We are subject to taxation in various U.S. jurisdictions, Canada, and India and all of our income tax returns remain subject to examination by tax authorities due to the availability of NOL carryforwards. For interim periods, we recognize an income tax provision/(benefit) based on our estimated annual effective tax rate, calculated on a worldwide consolidated basis, expected for the entire year. The interim annual estimated effective tax rate is based on the statutory tax rates then in effect, as adjusted for estimated changes in temporary and estimated permanent differences, and excludes certain discrete items whose tax effect, when material, is recognized in the interim period in which they occur. These changes in temporary differences, permanent differences, and discrete items result in variances to the effective tax rate from period to period. We also have elected to exclude the impacts from significant pre-tax non-recognized subsequent events from our interim estimated annual effective rate until the period in which they occur. Our estimated annual effective tax rate changes throughout the year as our on-going estimates of pre-tax income, changes in temporary differences, and permanent differences are revised, and as discrete items occur. Global Intangible Low-Taxed Income (“GILTI”), as defined in the Tax Cuts and Jobs Act of 2017, generated from our Canadian and Indian operations is subject to U.S. taxes, with certain defined exemptions, thresholds and credits. For financial reporting purposes we have elected to treat GILTI inclusions as a period cost. For the three months ended June 30, 2022, we recognized an income tax benefit of $3.9 million. The income tax benefit resulted from applying an estimated annual worldwide effective tax benefit rate of 20.7% to pre-tax consolidated loss of $18.8 million reported during the period, as well as the net effects of certain discrete items occurring which impact our income tax provision in the period in which they occur. There were no material discrete items occurring during the three months ended June 30, 2022. For the three months ended June 30, 2021, we recognized an income tax benefit of $4.0 million. The income tax benefit resulted from applying an estimated annual worldwide effective tax benefit rate of 22.3% to pre-tax consolidated loss of $18.2 million reported during the period, reduced by the net effects of certain discrete items occurring which impact our income tax provision in the period in which they occur. There were no material discrete items occurring during the three months ended June 30, 2021. For the six months ended June 30, 2022, we recognized an income tax benefit of $9.7 million. The income tax benefit resulted from applying an estimated annual worldwide effective tax benefit rate of 21.6% to pre-tax consolidated loss of $44.7 million reported during the period, as well as the net effects of certain discrete items occurring which impact our income tax provision in the period in which they occur. There were no material discrete items occurring during the six months ended June 30, 2022. For the six months ended June 30, 2021, we recognized an income tax benefit of $4.1 million. The income tax benefit resulted from applying an estimated annual worldwide effective tax benefit rate of 22.4% to pre-tax consolidated loss of $18.1 million reported during the period, reduced by the net effects of certain discrete items occurring which impact our income tax provision in the period in which they occur. There were no material discrete items occurring during the six months ended June 30, 2021. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 13. COMMITMENTS AND CONTINGENCIES Operating Leases All our existing leases as of June 30, 2022 are classified as operating leases. As of June 30, 2022, we had 13 material operating leases for facilities and office equipment with remaining terms expiring from 2022 through 2027 and a weighted average remaining lease term of 2.9 years. Many of our existing leases have fair value renewal options, none of which are considered certain of being exercised or included in the minimum lease term. Discount rates used in the calculation of our lease liability ranged between 3.99% and 8.95%. Current lease liability is included in accrued expenses and other in the accompanying unaudited interim condensed consolidated balance sheets. Non-current lease liability is included in derivatives and other non-current liabilities in the accompanying unaudited interim condensed consolidated balance sheets. Rent expense for the three and six months ended June 30, 2022 and 2021 consisted of the following: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Operating lease costs $ 143 $ 43 $ 269 $ 92 Variable lease costs 54 13 120 21 Total lease costs $ 197 $ 56 $ 389 $ 113 A maturity analysis of our operating leases follows: (in thousands) Future payments: 2022 $ 251 2023 482 2024 468 2025 248 2026 and thereafter 126 Total $ 1,575 Discount (163) Lease liability 1,412 Current lease liability (413) Non-current lease liability $ 999 Government Regulation Our products and facilities are subject to regulation by a number of federal and state governmental agencies, such as the Drug Enforcement Administration (“DEA”), the Food and Drug Administration (“FDA”), the Centers for Medicare and Medicaid Services (“CMS”), Health Canada, the Central Drugs Standard Control Organization (“CDSCO”), The Narcotics Control Bureau (“NCB”), and India’s Ministry of Health and Family Welfare (“MoHFW”). The FDA, in particular, maintains oversight of the formulation, manufacture, distribution, packaging, and labeling of all of our products. The DEA, Health Canada, and NCB maintain oversight over our products that are considered controlled substances. Unapproved Products Two of our products, Esterified Estrogen with Methyltestosterone (“EEMT”) and Opium Tincture, are marketed without approved NDAs or ANDAs. During the three months ended June 30, 2022 and 2021, net revenues for these products totaled $2.9 million and $4.2 million, respectively. During the six months ended June 30, 2022 and 2021, net revenues for these products totaled $6.9 million and $8.0 million, respectively. In addition, one group of products that we manufacture on behalf of a contract customer is marketed by that customer without an approved NDA. If the FDA took enforcement action against such customer, the customer may be required to seek FDA approval for the group of products or withdraw them from the market. Our contract manufacturing revenues for the group of unapproved products for the three months ended June 30, 2022 and 2021 were $0.4 million and $0.6 million, respectively. Our contract manufacturing revenues for the group of unapproved products for the six months ended June 30, 2022 and 2021 were $1.1 million and $1.4 million, respectively. Legal proceedings We are involved, and from time to time may become involved, in various disputes, governmental and/or regulatory inquiries, investigations, government reimbursement related actions and litigation. These matters are complex and subject to significant uncertainties. As such, we cannot accurately predict the outcome, or the effects of the legal proceedings described below. While we believe that we have valid claims and/or defenses in the litigation and other matters described below, litigation is inherently unpredictable, and the outcome of the proceedings could result in losses, including substantial damages, fines, civil or criminal penalties and injunctive or administrative remedies. We intend to vigorously prosecute and/or defend these matters, as appropriate; however, from time to time, we may settle or otherwise resolve these matters on terms and conditions that we believe are in our best interests. Resolution of any or all claims, investigations, and legal proceedings, individually or in the aggregate, could have a material adverse effect on our results of operations and/or cash flows in any given accounting period or on our overall financial condition. Some of these matters with which we are involved are described below, and unless otherwise disclosed, we are unable to predict the outcome of the matter or to provide an estimate of the range of reasonably possible material losses. We record accruals for loss contingencies to the extent we conclude it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. From time to time, we are also involved in other pending proceedings for which, in our opinion based upon facts and circumstances known at the time, either the likelihood of loss is remote or any reasonably possible loss associated with the resolution of such proceedings is not expected to be material to our results, and therefore remain undisclosed. If and when any reasonably possible losses associated with the resolution of such other pending proceedings, in our opinion, become material, we will disclose such matters. Furthermore, like many pharmaceutical manufacturers, we are periodically exposed to product liability claims. The prevalence of these claims could limit our coverage under future insurance policies or cause those policies to become more expensive, which could harm our business, financial condition, and operating results. Recent trends in the product liability and director and officer insurance markets is to exclude matters related to certain classes of drugs. Our policies have been subject to such exclusions which place further potential risk of financial loss on us. Legal fees for litigation-related matters are expensed as incurred and included in the consolidated statements of operations under the selling, general, and administrative expense line item. Commercial Litigation In November of 2017, we were served with a complaint filed by Arbor Pharmaceuticals, LLC, in the United States District Court for the District of Minnesota. The complaint alleged false advertising and unfair competition in violation of Section 43(a) of the Lanham Act, Section 1125(a) of Title 15 of the United States Code, and Minnesota State law, under the premise that we sold an unapproved Erythromycin Ethylsuccinate (“EES”) product during the period between September 27, 2016 and November 2, 2018. The complaint sought a trial by jury and monetary damages (inclusive of actual and consequential damages, treble damages, disgorgement of ANI profits, and legal fees) of an unspecified amount. Discovery in this action closed on March 31, 2019 and trial was scheduled to commence on August 25, 2021. On August 3, 2021, the Company entered into a Settlement Agreement with Arbor Pharmaceuticals, LLC to resolve all claims related to Civil Action 17-4910, Arbor Pharmaceuticals, LLC (“Arbor”) v. ANI Pharmaceuticals, Inc., which was pending trial in the United States District Court for the District of Minnesota. Under the terms of the agreement, ANI paid Arbor $8.4 million and Arbor dismissed the action with prejudice. Neither party admitted wrongdoing in reaching this settlement. The Company paid the settlement from cash on the balance sheet. On December 3, 2020, class action complaints were filed against the Company on behalf of putative classes of direct and indirect purchasers of the drug Bystolic. On December 23, 2020, six individual purchasers of Bystolic, CVS, Rite Aid, Walgreen, Kroger, Albertsons, and H-E-B, filed complaints against the Company. On March 15, 2021, the plaintiffs in these actions filed amended complaints. All amended complaints are substantively identical. The plaintiffs in these actions allege that, beginning in 2012, Forest Laboratories, the manufacturer of Bystolic, entered into anticompetitive agreements when settling patent litigation related to Bystolic with seven potential manufacturers of a generic version of Bystolic: Hetero, Torrent, Alkem/Indchemie, Glenmark, Amerigen, Watson, and various of their corporate parents, successors, subsidiaries, and affiliates. ANI itself was not a party to patent litigation with Forest concerning Bystolic and did not settle patent litigation with Forest. The plaintiffs named the Company as a defendant based on the Company’s January 8, 2020 Asset Purchase Agreement with Amerigen. The complaints alleged that the 2013 patent litigation settlement agreement between Forest and Amerigen violated federal and state antitrust laws and state consumer protection laws by delaying the market entry of generic versions of Bystolic. Plaintiffs alleged they paid higher prices as a result of delayed generic competition. Plaintiffs sought damages, trebled or otherwise multiplied under applicable law, injunctive relief, litigation costs and attorneys’ fees. The complaints did not specify the amount of damages sought from the Company or other defendants and the Company at this early stage of the litigation cannot reasonably estimate the potential damages that the plaintiffs will seek. The cases have been consolidated in the United States District Court for the Southern District of New York On March 24, 2021, Azurity Pharmaceuticals, Inc. (“Azurity”) filed a complaint in the United States District Court for the District of Minnesota against ANI Pharmaceuticals, Inc., asserting that ANI’s vancomycin hydrochloride oral solution drug product infringes U.S. Patent No. 10,688,046. The complaint sought injunctive relief, damages, including lost profits and/or royalty, treble damages, and attorneys’ fee and costs. On February 15, 2022, the Company entered into a settlement agreement with Azurity to resolve all claims related to this action. Under the terms of the agreement, Azurity granted ANI a non-exclusive, non-transferable, non-sublicensable, royalty-bearing license under its Patents to sell ANI product in the United States and dismissed the action with prejudice. In exchange, we paid Azurity On April 1, 2021, United Therapeutics Corp. and Supernus Pharmaceuticals, Inc. (“UTC/Supernus”) filed a complaint in the United States District Court for the District of Delaware against ANI Pharmaceuticals, Inc., asserting that ANI’s proposed Treprostinil extended release drug product, which is subject to ANI’s Abbreviated New Drug Application No. 215667, infringes U.S. Patent Nos. 7,417,070, 7,544,713, 8,252,839, 8,349,892, 8,410,169, 8,747,897, 9,050,311, 9,278,901, 9,393,203, 9,422,223, 9,593,066 and 9,604,901 (“the Asserted Patents”). The complaint seeks injunctive relief , attorneys' fee and costs. ANI filed its answer and counterclaims on May 28, 2021, denying UTC/Supernus’ allegations and seeking declaratory judgment that ANI has not infringed any valid and enforceable claim of the Asserted Patents, that the Asserted Patents are invalid, and an award of attorneys’ fees and costs. On May 26, 2022, the parties’ respective claims and counterclaims were dismissed pursuant to a confidential settlement agreement. Industry Related Litigation In July 2020, ANI and Novitium were served with a complaint brought in the First Judicial Court, County of Santa Fe, State of New Mexico by the Office of the Attorney General of the State of New Mexico against manufacturers and sellers of ranitidine products. The complaint asserts a public nuisance claim and a negligence claim against the generic ranitidine manufacturer defendants, including ANI and Novitium. The public nuisance claim asserts that the widespread sale of ranitidine products in the state created a public nuisance that requires a state-wide medical monitoring program of New Mexico residents for the development of colorectal cancer, stomach cancer, gastrointestinal disorders and liver disease. As damages, New Mexico asks that the defendants fund this medical monitoring program. The negligence claims assert that the defendants were negligent in selling the product, essentially alleging that it was unreasonable to have the product on the market. With respect to that claim, New Mexico asserts that it paid for ranitidine products through state-funded insurance and health-care programs. On December 15, 2020, the case was removed to federal court and transferred to the In re Zantac multidistrict litigation (“MDL”) pending in the United States District Court for the Southern District of Florida. New Mexico moved for remand to state court. The MDL court granted the remand motion on February 25, 2021. On April 16, 2021, New Mexico filed an amended complaint in the New Mexico First Judicial District Court in Santa Fe County. It did not name ANI in the amended complaint, effectively voluntarily dismissing ANI from the action. Novitium is named as a Defendant in the amended complaint. According to Novitium’s records, Novitium sold approximately 42 bottles of ranitidine indirectly into New Mexico, and received no funds from any state funded health care plan or Medicaid. The Defendants filed a motion to dismiss the claims asserted in the New Mexico litigation based primarily on preemption. The motion was denied in August 2021. In December 2020, the City of Baltimore served ANI and Novitium with a complaint against manufacturers and sellers of ranitidine products. The City of Baltimore complaint, which was filed in the Circuit Court for Baltimore City, tracks the allegations of the New Mexico complaint. The Baltimore action was removed to federal court and transferred to the In re Zantac MDL on February 1, 2021. The City of Baltimore moved for remand, which was granted on April 1, 2021. The parties stipulated to allow the City of Baltimore to file an amended complaint in the Circuit Court of Maryland for Baltimore City in “due course,” without a specific filing deadline. On June 23, 2021, the City of Baltimore filed an amended complaint. The City of Baltimore did not name ANI in its amended complaint, effectively voluntarily dismissing ANI from the action. Novitium was named as a defendant in the amended complaint. Defendants in the Baltimore action filed a motion to dismiss on based primarily on preemption to which Novitium joined. The motion was granted as to all generic manufacturer defendants on January 28, 2022, and all claims against Novitium were dismissed with prejudice. The deadline for the City of Baltimore to file an appeal was February 28, 2022. ANI and Novitium dispute any liability in these matters. Product Liability Related Litigation All manufacturers of the drug Reglan and its generic equivalent metoclopramide, including ANI, have faced allegations from plaintiffs in various states claiming bodily injuries as a result of ingestion of metoclopramide or its brand name, Reglan, prior to the FDA’s February 2009 Black Box warning requirement (“legacy claims”). All these original legacy claims were settled or closed out, including a series of claims in California that were resolved by coordinated proceeding and settlement. Our insurance company assumed the defense of the legacy claims and paid all losses in settlement of the California legacy claims. In March 2019, we were served with a lawsuit in the Superior Court of California, County of Riverside, adding us as a defendant in a complaint filed in July 2017 that is alleged not to have been part of the original settled legacy claims. This new claim was dismissed with prejudice in July 2021 and the matter is now closed. In June 2020, ANI was served with a personal injury complaint in the case of Koepsel v. Boehringer Ingelheim Pharmaceuticals, et al. Koepsel In re Zantac MDL Koepsel case on August 21, 2020 and was dismissed from the MPIC on September 8, 2020. On December 31, 2020, after ANI was dismissed, the district court dismissed the MPIC claims against generic manufacturer defendants partially with prejudice and partially with leave to replead. The failure to warn and design defect claims were dismissed with prejudice on preemption grounds. An Amended Master Personal Injury Complaint was filed on February 8, 2021, which did not name ANI but did name Novitium. By opinion dated July 8, 2021, the district court dismissed all claims against the generic manufacturer defendants with prejudice on preemption grounds. That decision is on appeal to the Eleventh Circuit Court of Appeals. ANI and Novitium were named in other individual personal injury complaints filed in MDL 20 MD 2924 in which plaintiffs allege that they developed cancer after taking prescription and over the counter medication containing ranitidine. ANI was served with complaints in five of those additional cases: Cooper v. Boehringer Ingelheim Pharmaceuticals, et al. Lineberry v. Amneal Pharmaceuticals, LLC, et al. Lovette v. Amneal Pharmaceuticals, LLC, et al. Hightower v. Pfizer, et al, Bird v. Boehringer Ingelheim Pharmaceuticals, et al. Cooper Lovette Bird Hightower Novitium has been named in 155 short form complaints filed by claimants in the MDL. Those complaints were effectively dismissed with prejudice with the MPIC on July 8, 2021. Counsel for the plaintiffs have been notified that Novitium did not sell an over the counter ranitidine product and sold a generic prescription ranitidine product for a limited period of time, from December 2018 until September 2019. Novitium’s product was voluntarily recalled in October 2019. Out of the 155 short form complaints, approximately 111 plaintiffs either were diagnosed with cancer before Novitium began manufacturing the product, only took over the counter ranitidine, or took ranitidine before Novitium began manufacturing it. Two of those 111 plaintiffs dismissed Novitium from their short form complaints. In light of the Court’s dismissal of all claims with prejudice, Novitium has not pursued dismissal of the short form complaints against it at this time. On February 3, 2022, a complaint was filed in Cook County, Illinois, naming Novitium as a defendant. The complaint incorrectly identifies Novitium as a “repackager.” The case is styled Ross v. Boehringer Ingelheim Pharmaceuticals, Inc., et. al ANI and Novitium dispute any liability in these MDL matters. Other Industry Related Matters On or about September 20, 2017, the Company and certain of its employees were served with search warrants and/or grand jury subpoenas to produce documents and possibly testify relating to a federal investigation of the generic pharmaceutical industry. We have been cooperating and intend to continue cooperating with the investigation. However, no assurance can be given as to the timing or outcome of the investigation. |
FAIR VALUE DISCLOSURES
FAIR VALUE DISCLOSURES | 6 Months Ended |
Jun. 30, 2022 | |
FAIR VALUE DISCLOSURES | |
FAIR VALUE DISCLOSURES | 14. FAIR VALUE DISCLOSURES Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework that prioritizes and ranks the level of observability of inputs used in measuring fair value. The inputs used in measuring the fair value of cash and cash equivalents are considered to be Level 1 in accordance with the three-tier fair value hierarchy. The fair market values are based on period-end statements supplied by the various banks and brokers that held the majority of our funds. The fair value of short-term financial instruments (primarily accounts receivable, prepaid expenses, accounts payable, accrued expenses, and other current liabilities) approximate their carrying values because of their short-term nature. The Term Facility bears an interest rate that fluctuates with the changes in LIBOR and, because the variable interest rates approximate market borrowing rates available to us, we believe the carrying values of these borrowings approximated their fair values at June 30, 2022. Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis Contingent Value Rights Our contingent value rights (“CVRs”), which were granted coincident with our merger with BioSante and expire in June 2023, are considered contingent consideration and are classified as liabilities. As such, the CVRs were recorded as purchase consideration at their estimated fair value, using level 3 inputs, and are marked to market each reporting period until settlement. The fair value of CVRs is estimated using the present value of our projection of the expected payments pursuant to the terms of the CVR agreement, which is the primary unobservable input. If our projection or expected payments were to increase substantially, the value of the CVRs could increase as a result. The present value of the liability was calculated using a discount rate of 15%. We determined that the fair value of the CVRs was immaterial as of June 30, 2022 and December 31, 2021. We also determined that the changes in such fair value were immaterial in the three and six months ended June 30, 2022 and 2021. Interest Rate Swap The fair value of our interest rate swap is estimated based on the present value of projected future cash flows using the LIBOR forward rate curve. The model used to value the interest rate swap includes inputs of readily observable market data, a Level 2 input. As described in detail in Note 6, the fair value of the interest rate swap was a $3.6 million asset as of June 30, 2022. Contingent Consideration In connection with the acquisition of Novitium, we may pay up to $46.5 million in additional consideration related to the achievement of certain milestones, including milestones on gross profit of Novitium portfolio products over a 24-month period, regulatory filings completed during this 24-month period, and a percentage of net profits on certain products that are launched in the future. The discounted cash flow method used to value this contingent consideration includes inputs of not readily observable market data, which are Level 3 inputs. The recurring Level 3 fair value measurements of contingent consideration for which a liability is recorded include the following significant unobservable inputs: Payment Type Valuation Technique Unobservable Input Assumptions Profit-based milestone payments Probability-weighted discounted cash flow Discount rate 14.0% Projected fiscal year of payment 2023-2029 Product development-based milestone payments Probability-weighted discounted cash flow Discount rate 17.9% Probability of payment 90.0% Projected fiscal year of payment 2023-2024 The following table presents the changes in contingent consideration balances classified as Level 3 balances for the three and six months ended June 30, 2022 and 2021: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Beginning balance $ 32,053 $ — $ 31,000 $ — Measurement period adjustment — — 300 — Change in fair value (1,095) — (342) — Ending balance $ 30,958 $ — $ 30,958 $ — The following table presents our financial assets and liabilities accounted for at fair value on a recurring basis as of June 30, 2022 and December 31, 2021, by level within the fair value hierarchy: (in thousands) Fair Value at Description June 30, 2022 Level 1 Level 2 Level 3 Assets Interest rate swap $ 3,636 $ — $ 3,636 $ — Liabilities Contingent consideration $ 30,958 $ — $ — $ 30,958 CVRs $ — $ — $ — $ — Fair Value at Description December 31, 2021 Level 1 Level 2 Level 3 Liabilities Contingent consideration $ 31,000 $ — $ — $ 31,000 Interest rate swaps $ 6,790 $ — $ 6,790 $ — CVRs $ — $ — $ — $ — Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis We do not have any financial assets and liabilities that are measured at fair value on a non-recurring basis. Non-Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis We do not have any non-financial assets and liabilities that are measured at fair value on a recurring basis. Non-Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis We measure our long-lived assets, including property, plant, and equipment, ROU assets, intangible assets, and goodwill, at fair value on a non-recurring basis. These assets are recognized at fair value when they are deemed to be other-than-temporarily impaired. No such fair value impairment was recognized in the three and six months ended June 30, 2022 and 2021. Acquired Non-Financial Assets Measured at Fair Value In April 2021, we acquired three NDAs and an ANDA and certain related inventories from Sandoz, Inc. for total consideration of $20.7 million. We also incurred and paid $0.4 million in transaction costs directly related to the acquisition. The acquisition was funded via borrowings under the revolving facility portion of our prior credit facility. We accounted for this transaction as an asset acquisition and capitalized the transaction costs directly related to the acquisition. We recognized $11.4 million as acquired intangible assets and $9.7 million of inventory at fair value, including $0.6 million of API, $1.0 million of sample inventory, and $8.1 million in finished goods inventory. In order to determine the fair value of the intangible assets, we used the present value of the estimated cash flows related to the product rights using a discount rate of 10% , which are level 3 unobservable inputs. |
PURIFIED CORTROPHIN GEL PRE-LAU
PURIFIED CORTROPHIN GEL PRE-LAUNCH CHARGES | 6 Months Ended |
Jun. 30, 2022 | |
PURIFIED CORTROPHIN GEL PRE-LAUNCH CHARGES | |
PURIFIED CORTROPHIN GEL PRE-LAUNCH CHARGES | 15. PURIFIED CORTROPHIN GEL PRE-LAUNCH CHARGES In January 2016, we acquired the right, title and interest in the NDAs for Cortrophin Gel and Cortrophin-Zinc. Subsequently, we assembled a Cortrophin Gel re-commercialization team of scientists, executed a long-term supply agreement with a supplier of pig pituitary glands, our primary raw material for corticotrophin API, executed a long-term supply agreement with an API manufacturer, with whom we have advanced the manufacture of corticotropin API via manufacture of commercial-scale batches, and executed a long-term commercial supply agreement with a current good manufacturing practice (“cGMP”) aseptic fill contract manufacturer. Prior to the third quarter 2019, all purchases of material, including pig pituitary glands and API, related to the re-commercialization efforts were consumed in research and development activities and recognized as research and development expense in the period in which they were incurred. In the third quarter of 2019, we began purchasing materials that are intended to be used commercially in anticipation of FDA approval of Cortrophin Gel and the resultant product launch. The FDA granted approval of the sNDA of this product on October 29, 2021. Prior to FDA approval, under U.S. GAAP, we were prohibited from capitalizing these pre-launch purchases of materials as inventory, and accordingly, they were charged to expense in the period in which they were incurred. Subsequent to approval, these purchases are recorded as inventory at net realizable value. During the three and six months ended June 30, 2021, we recognized |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2022 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 16. RELATED PARTY TRANSACTIONS On March 8, 2021, we entered into an Equity Commitment and Investment Agreement with the PIPE Investor, pursuant to which we agreed to issue and sell 25,000 shares of our PIPE Shares for a purchase price of $1,000 per share and an aggregate purchase price of $25.0 million. This agreement closed and the shares were sold and issued for $25.0 million on November 19, 2021. The Chairman of our board of directors is an operating partner of Ampersand Capital Partners, an affiliate of the PIPE Investor. In connection with our acquisition of Novitium, we entered into employment agreements with the two executives and founders of Novitium, Muthusamy Shanmugam and Chad Gassert. Both serve as executive officers of the Company and Mr. Shanmugam also serves on the Company’s board of directors. Mr. Shanmugam holds a minority interest in Scitus Pharma Services (“Scitus”), which provides clinical research services to Novitium, majority interest in SS Pharma LLC (“SS Pharma”), which acquires and supplies API to Novitium, majority interest in Esjay Pharma LLC (“Esjay”), which provides research and development and facilities consulting services, and a minority interest in Nuray Chemical Private Limited (“Nuray”), which manufactures and supplies API to Novitium. Mr. Gassert holds a minority interest in Scitus. During the three months ended June 30, 2022, we paid Esjay an immaterial amount, paid SS Pharma $0.7 million, and paid Scitus $0.7 million. During the three months ended June 30, 2022, there were no payments to Nuray. During the six months ended June 30, 2022, we paid Esjay $0.1 million, paid SS Pharma $1.6 million, paid Nuray $0.9 million, and paid Scitus $1.3 million. As of June 30, 2022, the outstanding balance due to Scitus was $50 thousand and the outstanding balance due to SS Pharma was $0.6 million. As of June 30, 2022, there were no outstanding |
SEGMENT REPORTING
SEGMENT REPORTING | 6 Months Ended |
Jun. 30, 2022 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | 17. SEGMENT REPORTING An operating segment is defined as a component of an entity that engages in business activities from which it may recognize revenues and incur expense, its operating results are regularly reviewed by the entity’s chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance, and its discrete financial information is available. Prior to 2022, based on this definition, we had concluded that we had one operating segment. Prior period segment disclosures have been recast for the new segment presentation. Effective in the first quarter of 2022 and prospectively, in conjunction with the principal completion of our buildout of infrastructure in the areas of commercialization of rare disease therapies and the launch of Cortrophin Gel, we determined that we have two operating segments as follows: ● Generics, Established Brands, and Other – Consists of operations related to the development, manufacturing, and marketing of generic and established brand pharmaceuticals, including those sold through traditional channels, contract manufactured products, product development services, royalties, and other. ● Rare Disease – Consists of operations related to the development, manufacturing and marketing of pharmaceuticals used in the treatment of patients with rare conditions. The rare disease segment currently consists of operations related to Cortrophin Gel. Our CODM evaluates our two operating segments based on revenues and earnings before interest, income taxes, depreciation, and amortization (“EBITDA”), exclusive of corporate expenses and other expenses not directly allocated or attributable to an operating segment. These expenses include, but are not limited to, certain management, legal, accounting, human resources, insurance, and information technology expenses. We do not manage assets of the Company by operating segment and our CODM does not review asset information by operating segment. Accordingly, we do not present total assets by operating segment. Financial information by reportable segment, including historical information that has been retroactively re-cast to reflect our two operating segments, is as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Net Revenues Generics, Established Brands, and Other $ 63,653 $ 48,625 $ 126,838 $ 103,146 Rare Disease 10,202 — 11,494 — Total net revenues $ 73,855 $ 48,625 $ 138,332 $ 103,146 Segment earnings/(loss) before interest, taxes, depreciation and amortization (“EBITDA”) and reconciliation to (loss)/income before income taxes Generics, Established Brands, and Other 15,473 14,660 30,004 36,499 Rare Disease (6,663) (4,473) (17,111) (5,751) Depreciation and amortization (13,764) (11,324) (28,321) (22,222) Corporate and other unallocated expenses (1) (7,959) (14,416) (16,680) (21,034) Total operating loss $ (12,913) $ (15,553) $ (32,108) $ (12,508) Interest expense, net (6,669) (2,531) (13,282) (4,985) Other income/(expense), net 764 (67) 675 (582) Loss before benefit for income taxes $ (18,818) $ (18,151) $ (44,715) $ (18,075) (1) Includes expenses not directly allocated or attributable to a reporting segment, including certain management, legal, accounting, human resources, insurance, and information technology expenses, and are included in selling, general, and administrative expenses in our unaudited interim consolidated statement of operations. Geographic Information Our operations are located in the United States, Canada, and India. The majority of the assets of the Company are located in the United States. The following table depicts the Company’s revenue by geographic operations during the following periods: (in thousands) Three Months Ended June 30, Six Months Ended June 30, Location of Operations 2022 2021 2022 2021 United States $ 72,811 $ 47,580 $ 136,571 $ 100,907 Canada 1,044 1,045 1,761 2,239 Total Revenue $ 73,855 $ 48,625 $ 138,332 $ 103,146 The following table depicts the Company’s property and equipment, net according to geographic location as of: (in thousands) June 30, 2022 December 31, 2021 United States $ 38,964 $ 38,564 Canada (1) 4,552 13,831 India 255 276 Total property and equipment, net $ 43,771 $ 52,671 (1) Amounts as of June 30, 2022 exclude the land and building at our Canada facility, which are classified as held for sale as of June 30, 2022. These assets have a carrying value of $8.0 million . |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 6 Months Ended |
Jun. 30, 2022 | |
SUBSEQUENT EVENT | |
SUBSEQUENT EVENT | 18. SUBSEQUENT EVENT On July 21, 2022, we acquired four ANDAs from Oakrum Pharma, LLC for a purchase price of $8.0 million plus an immaterial amount for the purchase of API and finished goods inventory. The transaction was funded from cash on hand. |
BUSINESS, PRESENTATION, AND R_2
BUSINESS, PRESENTATION, AND RECENT ACCOUNTING PRONOUNCEMENTS (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
BUSINESS, PRESENTATION, AND RECENT ACCOUNTING PRONOUNCEMENTS | |
Organization and Business | Overview ANI Pharmaceuticals, Inc. and its consolidated subsidiaries (together, “ANI,” the “Company,” “we,” “us,” or “our”) is a diversified bio-pharmaceutical company serving patients in need by developing, manufacturing, and marketing high quality branded and generic prescription pharmaceuticals, including for diseases with high unmet medical need. Our team is focused on delivering sustainable growth by building a successful Purified Cortrophin Gel franchise, strengthening our generics business with enhanced development capability, innovation in established brands and leveraging our manufacturing capabilities. Our four pharmaceutical manufacturing facilities, of which two are located in Baudette, Minnesota, one is located in East Windsor, New Jersey, and one is located in Oakville, Ontario, are together capable of producing oral solid dose products, as well as semi-solids, liquids and topicals, controlled substances, and potent products that must be manufactured in a fully-contained environment. On June 2, 2022, we announced that we intend to cease operations at our Oakville, Ontario, Canada manufacturing plant by first quarter 2023. This action is part of ongoing initiatives to capture operational synergies following our acquisition of Novitium Pharma LLC (“Novitium”) in November 2021. We will transition the majority of products manufactured or packaged in Oakville to one of our three U.S.-based manufacturing sites, and we are seeking to find potential buyers for the Oakville site. Our operations are subject to certain risks and uncertainties including, among others, current and potential competitors with greater resources, dependence on significant customers, and possible fluctuations in financial results. The accompanying unaudited interim condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the ordinary course of business. The propriety of using the going-concern basis is dependent upon, among other things, the achievement of future profitable operations, the ability to generate sufficient cash from operations, and potential other funding sources, including cash on hand, to meet our obligations as they become due. We believe the going-concern basis is appropriate for the accompanying unaudited interim condensed consolidated financial statements based on our current operating plan and business strategy for the 12 months following the issuance of this report. |
Basis of Presentation | Our operations are subject to certain risks and uncertainties including, among others, current and potential competitors with greater resources, dependence on significant customers, and possible fluctuations in financial results. The accompanying unaudited interim condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the ordinary course of business. The propriety of using the going-concern basis is dependent upon, among other things, the achievement of future profitable operations, the ability to generate sufficient cash from operations, and potential other funding sources, including cash on hand, to meet our obligations as they become due. We believe the going-concern basis is appropriate for the accompanying unaudited interim condensed consolidated financial statements based on our current operating plan and business strategy for the 12 months following the issuance of this report. |
Principles of Consolidation | Principles of Consolidation The unaudited interim condensed consolidated financial statements include the accounts of ANI Pharmaceuticals, Inc. and its subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. |
Foreign Currency | Foreign Currency We have subsidiaries located in Canada and India. The Canada-based subsidiary conducts its transactions in U.S. dollars and Canadian dollars, but its functional currency is the U.S. dollar. The Indian-based subsidiary generally conducts its transactions in Indian rupees, which is also its functional currency. The results of any non-U.S. dollar transactions and balances are remeasured in U.S. dollars at the applicable exchange rates during the period and resulting foreign currency transaction gains and losses are included in the determination of net income. Our gain or loss on transactions denominated in foreign currencies and the translation impact of local currencies to U.S. dollars was immaterial for the three and six months ended June 30, 2022 and 2021. Unless otherwise noted, all references to “$” or “dollar” refer to the U.S. dollar. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. In the condensed consolidated financial statements, estimates are used for, but not limited to, variable consideration determined based on accruals for chargebacks, administrative fees and rebates, government rebates, returns and other allowances, income tax provision or benefit, deferred taxes and valuation allowance, stock-based compensation, revenue recognition, allowance for inventory obsolescence, valuation of financial instruments and intangible assets, accruals for contingent liabilities, including contingent consideration in acquisitions, fair value of long-lived assets, determination of right-of-use assets and lease liabilities, allowance for credit losses purchase price allocations, and the depreciable lives of long-lived assets. Because of the uncertainties inherent in such estimates, actual results may differ from those estimates. Management periodically evaluates estimates used in the preparation of the financial statements for reasonableness. |
Restructuring Activities | Restructuring Activities We define restructuring activities to include costs directly associated with exit or disposal activities. Such costs include cash employee contractual severance and other termination benefits, one-time employee termination severance and benefits, contract termination charges, impairment and acceleration of depreciation associated with long-lived assets, and other exit or disposal costs. In general, we record involuntary employee- related exit and disposal costs when there is a substantive plan for employee severance and related payments are probable and estimable. For one-time termination benefits, including those with a service requirement, expense is recorded when the employees are entitled to receive such benefits and the amount can be reasonably estimated. Expense related to one-time termination benefits with a service requirement is recorded over time, as the service is completed. Contract termination fees and penalties, and other exit and disposal costs are generally recorded as incurred. Restructuring activities are recognized as an operating expense in our statement of operations. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recent Accounting Pronouncements Not Yet Adopted We have evaluated all issued and unadopted Accounting Standards Updates and believe the adoption of these standards will not have a material impact on our condensed consolidated statements of operations, comprehensive income, balance sheets, or cash flows. |
REVENUE RECOGNITION AND RELAT_2
REVENUE RECOGNITION AND RELATED ALLOWANCES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
REVENUE RECOGNITION AND RELATED ALLOWANCES | |
Schedule of disaggregation of revenue and revenue recognized | Three Months Ended Six Months Ended Products and Services June 30, June 30, June 30, June 30, (in thousands) 2022 2021 2022 2021 Sales of generic pharmaceutical products $ 49,863 $ 34,199 $ 98,970 $ 66,812 Sales of established brand pharmaceutical products 8,463 11,038 16,915 18,555 Sales of rare disease pharmaceutical products 10,202 — 11,494 — Sales of contract manufactured products 4,389 2,322 7,293 4,895 Royalties from licensing agreements 194 — 2,097 11,210 Product development services 531 97 1,097 255 Other 213 969 466 1,419 Total net revenues $ 73,855 $ 48,625 $ 138,332 $ 103,146 Three Months Ended Six Months Ended Timing of Revenue Recognition June 30, June 30, June 30, June 30, (in thousands) 2022 2021 2022 2021 Performance obligations transferred at a point in time $ 73,324 $ 48,528 $ 137,235 $ 102,891 Performance obligations transferred over time 531 97 1,097 255 Total $ 73,855 $ 48,625 $ 138,332 $ 103,146 |
Schedule of accruals and allowances | The following table summarizes activity in the consolidated balance sheets for accruals and allowances for the six months ended June 30, 2022 and 2021, respectively: Accruals for Chargebacks, Returns, and Other Allowances Administrative Prompt Government Fees and Other Payment (in thousands) Chargebacks Rebates Returns Rebates Discounts Balance at December 31, 2020 (1) $ 88,746 $ 7,826 $ 27,155 $ 8,906 $ 3,839 Accruals/Adjustments 214,125 12,980 21,058 32,207 13,315 Credits Taken Against Reserve (220,776) (12,066) (16,309) (33,071) (13,682) Balance at June 30, 2021 (1) $ 82,095 $ 8,740 $ 31,904 $ 8,042 $ 3,472 Balance at December 31, 2021 (1) $ 94,066 $ 5,492 $ 35,831 $ 13,100 $ 4,642 Accruals/Adjustments 320,191 9,356 15,057 20,701 10,494 Credits Taken Against Reserve (274,714) (5,408) (15,989) (19,283) (8,938) Balance at June 30, 2022 (1) $ 139,543 $ 9,440 $ 34,899 $ 14,518 $ 6,198 (1) Chargebacks are included as an offset to accounts receivable in the unaudited interim condensed consolidated balance sheets. Administrative Fees and Other Rebates and Prompt Payment Discounts are included as an offset to accounts receivable or as accrued expenses and other in the unaudited interim condensed consolidated balance sheets. Returns are included in returned goods reserve in the unaudited interim condensed consolidated balance sheets. Government Rebates are included in accrued government rebates in the unaudited interim condensed consolidated balance sheets. |
Schedule of customer concentration | Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2022 2021 2022 2021 Customer 1 23 % 34 % 27 % 29 % Customer 2 19 % 26 % 19 % 22 % Customer 3 15 % 14 % 14 % 14 % |
BUSINESS COMBINATION (Tables)
BUSINESS COMBINATION (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
BUSINESS COMBINATION | |
Schedule of purchase consideration | (in thousands) Cash consideration $ 88,109 Repayment of Novitium debts 8,493 Fair value of restricted shares 91,199 Fair value of contingent consideration 30,800 Gross consideration $ 218,601 Cash acquired 12,076 Net consideration $ 206,525 |
Schedule of purchase price allocation | (in thousands) Total Purchase Consideration $ 218,601 Cash and cash equivalents 12,076 Accounts receivable 27,185 Inventories 14,460 Prepaid expenses and other current assets 1,891 Property and equipment 14,331 Intangible assets 139,200 Goodwill 24,641 Other non-current assets 1,413 Total assets acquired 235,197 Accounts payable 1,560 Accrued expense and other current liabilities 6,035 Accrued compensation and other related expenses 4,909 Accrued government rebates 744 Returned goods reserve 2,202 Other non-current liabilities 1,146 Total liabilities assumed 16,596 Net assets acquired $ 218,601 |
INDEBTEDNESS (Tables)
INDEBTEDNESS (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
INDEBTEDNESS | |
Schedule of carrying value of the current and non-current components of the term loan | Current June 30, December 31, (in thousands) 2022 2021 Current borrowing on debt $ 3,000 $ 3,000 Deferred financing costs (2,150) (2,150) Current debt, net of deferred financing costs $ 850 $ 850 Non-Current June 30, December 31, (in thousands) 2022 2021 Non-current borrowing on debt $ 295,500 $ 297,000 Deferred financing costs (9,405) (10,480) Non-current debt, net of deferred financing costs and current component $ 286,095 $ 286,520 |
Schedule of contractual maturity of term loan and DDTL | The contractual maturity of our Term Facility is as follows for the years ending December 31: (in thousands) Term Facility 2022 $ 1,500 2023 3,000 2024 3,000 2025 3,000 2026 3,000 2027 and thereafter 285,000 Total $ 298,500 |
Schedule of components of total interest expense related to the notes and term loan | The following table sets forth the components of total interest expense related to the Term Facility during the three and six months ended June 30, 2022 and interest expense under the Prior Credit Agreement during the three and six months ended June 30, 2021, as recognized in the accompanying unaudited interim condensed consolidated statements of operations for the three and six months ended June 30, 2022 and 2021: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands) 2022 2021 2022 2021 Contractual coupon $ 6,122 $ 2,386 $ 12,180 $ 4,690 Amortization of finance fees 590 176 1,181 352 Capitalized interest (19) (31) (49) (57) $ 6,693 $ 2,531 $ 13,312 $ 4,985 |
EARNINGS (LOSS) PER SHARE (Tabl
EARNINGS (LOSS) PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
EARNINGS (LOSS) PER SHARE | |
Schedule of earnings per share, basic and diluted | Earnings (loss) per share for the three and six months ended June 30, 2022 and 2021 are calculated for basic and diluted earnings (loss) per share as follows: Basic Diluted Basic Diluted (in thousands, except per share amounts) Three Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 2022 2021 2022 2021 Net loss $ (14,923) $ (14,106) $ (14,923) $ (14,106) $ (35,053) $ (14,020) $ (35,053) $ (14,020) Net income allocated to participating securities — — — — — — — — Dividends on Series A convertible preferred stock (407) — (407) — (812) — (812) — Net loss available to common shareholders $ (15,330) $ (14,106) $ (15,330) $ (14,106) $ (35,865) $ (14,020) $ (35,865) $ (14,020) Basic Weighted-Average Shares Outstanding 16,272 12,085 16,272 12,085 16,205 12,045 16,205 12,045 Dilutive effect of stock options and ESPP — — — — Diluted Weighted-Average Shares Outstanding 16,272 12,085 16,205 12,045 Loss per share $ (0.94) $ (1.17) $ (0.94) $ (1.17) $ (2.21) $ (1.16) $ (2.21) $ (1.16) |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
INVENTORIES | |
Schedule of Inventories | June 30, December 31, (in thousands) 2022 2021 Raw materials $ 59,176 $ 51,350 Packaging materials 6,414 5,475 Work-in-progress 879 652 Finished goods 33,936 31,969 100,405 89,446 Reserve for excess/obsolete inventories (7,860) (7,753) Inventories, net $ 92,545 $ 81,693 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
GOODWILL AND INTANGIBLE ASSETS | |
Schedule of components of intangible assets | June 30, 2022 December 31, 2021 Weighted Average Gross Carrying Accumulated Gross Carrying Accumulated Amortization (in thousands) Amount Amortization Amount Amortization Period Definite-Lived Intangible Assets: Acquired ANDA intangible assets $ 168,377 $ (64,128) $ 168,536 $ (54,079) 8.5 years NDAs and product rights 242,372 (150,853) 242,372 (138,835) 9.9 years Marketing and distribution rights 17,157 (12,828) 17,157 (12,347) 5.5 years Non-compete agreement 624 (557) 624 (513) 7.0 years Customer relationships 24,900 (2,371) 24,900 (593) 7.0 years Indefinite-Lived Intangible Assets: In process research and development 46,900 — 46,900 — Indefinite Total Intangible Assets, net $ 500,330 $ (230,737) $ 500,489 $ (206,367) 9.0 years |
Schedule of expected future amortization expense | Expected future amortization expense is as follows: (in thousands) 2022 (remainder of the year) $ 24,693 2023 50,770 2024 49,974 2025 47,870 2026 34,551 2027 and thereafter 61,735 Total $ 269,593 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Summary of Stock option and restricted stock activity | A summary of stock option and restricted stock activity under the 2022 Plan and Inducement Grants during the six months ended June 30, 2022 and 2021 is presented below: (in thousands) Options Inducement Grants RSAs Outstanding at December 31, 2020 756 180 352 Granted 84 61 457 Options Exercised/RSAs Vested (5) — (111) (1) Forfeited (58) — (73) Expired — — — Outstanding at June 30, 2021 777 241 625 Outstanding at December 31, 2021 747 241 707 Granted 36 — 669 Options Exercised/RSAs Vested (1) — (209) (2) Forfeited (37) — (24) Expired — — — Outstanding at June 30, 2022 745 241 1,143 (1) Includes 25 thousand shares purchased from employees to cover employee income taxes related to income earned upon vesting of restricted stock. The shares purchased are held in treasury and the $0.8 million total purchase price for the shares is included in Treasury stock in our accompanying unaudited interim condensed consolidated balance sheets. (2) Includes 56 thousand shares purchased from employees to cover employee income taxes related to income earned upon vesting of restricted stock. The shares purchased are held in treasury and the $1.6 million total purchase price for the shares is included in Treasury stock in our accompanying unaudited interim condensed consolidated balance sheets . |
2016 Employee Stock Purchase Plan | |
Summary of allocated expense | (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Cost of sales $ 19 $ 4 $ 29 $ 8 Research and development 15 6 22 11 Selling, general, and administrative 39 23 60 46 $ 73 $ 33 $ 111 $ 65 |
2022 Plan | |
Summary of allocated expense | (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Cost of sales $ 124 $ 2 $ 259 $ 2 Research and development 180 149 345 263 Selling, general, and administrative 3,379 2,660 6,278 4,383 $ 3,683 $ 2,811 $ 6,882 $ 4,648 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of rent expense | Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Operating lease costs $ 143 $ 43 $ 269 $ 92 Variable lease costs 54 13 120 21 Total lease costs $ 197 $ 56 $ 389 $ 113 |
Schedule of maturity analysis of operating leases | (in thousands) Future payments: 2022 $ 251 2023 482 2024 468 2025 248 2026 and thereafter 126 Total $ 1,575 Discount (163) Lease liability 1,412 Current lease liability (413) Non-current lease liability $ 999 |
FAIR VALUE DISCLOSURES (Tables)
FAIR VALUE DISCLOSURES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
FAIR VALUE DISCLOSURES | |
Schedule of recurring Level 3 fair value measurements of contingent consideration | Payment Type Valuation Technique Unobservable Input Assumptions Profit-based milestone payments Probability-weighted discounted cash flow Discount rate 14.0% Projected fiscal year of payment 2023-2029 Product development-based milestone payments Probability-weighted discounted cash flow Discount rate 17.9% Probability of payment 90.0% Projected fiscal year of payment 2023-2024 |
Schedule of changes in contingent consideration | Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Beginning balance $ 32,053 $ — $ 31,000 $ — Measurement period adjustment — — 300 — Change in fair value (1,095) — (342) — Ending balance $ 30,958 $ — $ 30,958 $ — |
Schedule of financial assets and liabilities accounted for at fair value on a recurring basis | (in thousands) Fair Value at Description June 30, 2022 Level 1 Level 2 Level 3 Assets Interest rate swap $ 3,636 $ — $ 3,636 $ — Liabilities Contingent consideration $ 30,958 $ — $ — $ 30,958 CVRs $ — $ — $ — $ — Fair Value at Description December 31, 2021 Level 1 Level 2 Level 3 Liabilities Contingent consideration $ 31,000 $ — $ — $ 31,000 Interest rate swaps $ 6,790 $ — $ 6,790 $ — CVRs $ — $ — $ — $ — |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
SEGMENT REPORTING | |
Schedule of revenue by reportable segments | Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Net Revenues Generics, Established Brands, and Other $ 63,653 $ 48,625 $ 126,838 $ 103,146 Rare Disease 10,202 — 11,494 — Total net revenues $ 73,855 $ 48,625 $ 138,332 $ 103,146 Segment earnings/(loss) before interest, taxes, depreciation and amortization (“EBITDA”) and reconciliation to (loss)/income before income taxes Generics, Established Brands, and Other 15,473 14,660 30,004 36,499 Rare Disease (6,663) (4,473) (17,111) (5,751) Depreciation and amortization (13,764) (11,324) (28,321) (22,222) Corporate and other unallocated expenses (1) (7,959) (14,416) (16,680) (21,034) Total operating loss $ (12,913) $ (15,553) $ (32,108) $ (12,508) Interest expense, net (6,669) (2,531) (13,282) (4,985) Other income/(expense), net 764 (67) 675 (582) Loss before benefit for income taxes $ (18,818) $ (18,151) $ (44,715) $ (18,075) (1) Includes expenses not directly allocated or attributable to a reporting segment, including certain management, legal, accounting, human resources, insurance, and information technology expenses, and are included in selling, general, and administrative expenses in our unaudited interim consolidated statement of operations. |
Schedule of revenue by geographic operations | (in thousands) Three Months Ended June 30, Six Months Ended June 30, Location of Operations 2022 2021 2022 2021 United States $ 72,811 $ 47,580 $ 136,571 $ 100,907 Canada 1,044 1,045 1,761 2,239 Total Revenue $ 73,855 $ 48,625 $ 138,332 $ 103,146 |
Schedule of property and equipment by geographic location | (in thousands) June 30, 2022 December 31, 2021 United States $ 38,964 $ 38,564 Canada (1) 4,552 13,831 India 255 276 Total property and equipment, net $ 43,771 $ 52,671 (1) Amounts as of June 30, 2022 exclude the land and building at our Canada facility, which are classified as held for sale as of June 30, 2022. These assets have a carrying value of $8.0 million . |
REVENUE RECOGNITION AND RELAT_3
REVENUE RECOGNITION AND RELATED ALLOWANCES - Disaggregation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Revenue recognition | $ 73,855 | $ 48,625 | $ 138,332 | $ 103,146 |
Sales of generic pharmaceutical products | ||||
Revenue recognition | 49,863 | 34,199 | 98,970 | 66,812 |
Sales of established brand pharmaceutical products | ||||
Revenue recognition | 8,463 | 11,038 | 16,915 | 18,555 |
Sales of rare disease pharmaceutical products | ||||
Revenue recognition | 10,202 | 11,494 | ||
Sales of contract manufactured products | ||||
Revenue recognition | 4,389 | 2,322 | 7,293 | 4,895 |
Royalties from licensing agreements | ||||
Revenue recognition | 194 | 2,097 | 11,210 | |
Product development services | ||||
Revenue recognition | 531 | 97 | 1,097 | 255 |
Other | ||||
Revenue recognition | $ 213 | $ 969 | $ 466 | $ 1,419 |
REVENUE RECOGNITION AND RELAT_4
REVENUE RECOGNITION AND RELATED ALLOWANCES - Timing (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2004 | |
Revenue recognition | $ 73,855 | $ 48,625 | $ 138,332 | $ 103,146 | ||
Performance obligations satisfied in prior periods | 3,700 | 10,300 | ||||
Revenue recognized | 100 | 100 | ||||
Performance obligations transferred at a point in time | ||||||
Revenue recognition | 73,324 | 48,528 | 137,235 | 102,891 | ||
Performance obligations transferred over time | ||||||
Revenue recognition | $ 531 | $ 97 | $ 1,097 | $ 255 | ||
Maximum | ||||||
Revenue recognized | $ 100 | |||||
Tripartite Agreement-Yescart | ||||||
Revenue recognition | $ 11,200 |
REVENUE RECOGNITION AND RELAT_5
REVENUE RECOGNITION AND RELATED ALLOWANCES - Allowances (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Accruals and allowances | ||
Beginning balance | $ 105,260 | |
Ending balance | 150,428 | |
Chargebacks | ||
Accruals and allowances | ||
Beginning balance | 94,066 | $ 88,746 |
Accruals/Adjustments | 320,191 | 214,125 |
Credits Taken Against Reserve | (274,714) | (220,776) |
Ending balance | 139,543 | 82,095 |
Government Rebates | ||
Accruals and allowances | ||
Beginning balance | 5,492 | 7,826 |
Accruals/Adjustments | 9,356 | 12,980 |
Credits Taken Against Reserve | (5,408) | (12,066) |
Ending balance | 9,440 | 8,740 |
Returns | ||
Accruals and allowances | ||
Beginning balance | 35,831 | 27,155 |
Accruals/Adjustments | 15,057 | 21,058 |
Credits Taken Against Reserve | (15,989) | (16,309) |
Ending balance | 34,899 | 31,904 |
Administrative Fees and Other Rebates | ||
Accruals and allowances | ||
Beginning balance | 13,100 | 8,906 |
Accruals/Adjustments | 20,701 | 32,207 |
Credits Taken Against Reserve | (19,283) | (33,071) |
Ending balance | 14,518 | 8,042 |
Prompt Payment Discounts | ||
Accruals and allowances | ||
Beginning balance | 4,642 | 3,839 |
Accruals/Adjustments | 10,494 | 13,315 |
Credits Taken Against Reserve | (8,938) | (13,682) |
Ending balance | $ 6,198 | $ 3,472 |
REVENUE RECOGNITION AND RELAT_6
REVENUE RECOGNITION AND RELATED ALLOWANCES - Concentration (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2004 | |
Revenue recognition | $ 73,855 | $ 48,625 | $ 138,332 | $ 103,146 | |
Tripartite Agreement-Yescart | |||||
Revenue recognition | $ 11,200 | ||||
Payment for legal expenditures | $ 400 | ||||
Sales of contract manufactured products | |||||
Revenue, Remaining Performance Obligation, Amount | $ 7,200 | $ 7,200 | |||
Revenue, Remaining Performance Obligation, Remaining Period | 6 months | 6 months | |||
Revenue recognition | $ 4,389 | $ 2,322 | $ 7,293 | $ 4,895 | |
Product Development Services | |||||
Revenue, Remaining Performance Obligation, Amount | $ 300 | $ 300 | |||
Revenue, Remaining Performance Obligation, Remaining Period | 9 months | 9 months | |||
Customer concentration | Revenue | Customer one | |||||
Concentration Risk, Percentage | 0.23% | 0.34% | 0.27% | 0.29% | |
Customer concentration | Revenue | Customer two | |||||
Concentration Risk, Percentage | 0.19% | 0.26% | 0.19% | 0.22% | |
Customer concentration | Revenue | Customer three | |||||
Concentration Risk, Percentage | 0.15% | 0.14% | 0.14% | 0.14% | |
Customer concentration | Accounts receivable | Three Customers | |||||
Concentration Risk, Percentage | 83% |
BUSINESS COMBINATION (Details)
BUSINESS COMBINATION (Details) - Novitium $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Nov. 19, 2021 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) shares | Jun. 30, 2022 USD ($) | |
Business acquisition | |||
Shares issued in acquisition (in shares) | shares | 2,466,654 | 2,500,000 | |
Closing stock price | $ / shares | $ 43.54 | ||
Additional contingent consideration | $ 46,500 | $ 46,500 | |
Restriction period for shares issued | 24 months | ||
Business acquisition purchase consideration | |||
Cash consideration | $ 88,109 | ||
Repayment of Novitium debts | 8,493 | ||
Fair value of restricted shares | 91,199 | ||
Fair value of contingent consideration in a business combination | 30,800 | $ 31,000 | $ 30,958 |
Gross consideration | 218,601 | ||
Cash acquired | 12,076 | ||
Net consideration | $ 206,525 | ||
Minimum | |||
Business acquisition | |||
Restriction period for shares issued | 3 months | ||
Maximum | |||
Business acquisition | |||
Restriction period for shares issued | 24 months | ||
Measurement Input, Stock Volatility | Minimum | |||
Business acquisition purchase consideration | |||
Unobservable inputs | 65 | ||
Measurement Input, Stock Volatility | Maximum | |||
Business acquisition purchase consideration | |||
Unobservable inputs | 71 | ||
Measurement Input, Discounted Lack of Marketability | Minimum | |||
Business acquisition purchase consideration | |||
Unobservable inputs | 7.5 | ||
Measurement Input, Discounted Lack of Marketability | Maximum | |||
Business acquisition purchase consideration | |||
Unobservable inputs | 21.5 |
BUSINESS COMBINATION - Acquired
BUSINESS COMBINATION - Acquired (Details) - USD ($) $ in Thousands | Nov. 19, 2021 | Jun. 30, 2022 | Dec. 31, 2021 |
Goodwill | $ 28,221 | $ 27,888 | |
Novitium | |||
Total Purchase Consideration | $ 218,601 | ||
Total purchase consideration | 206,525 | ||
Cash and cash equivalents | 12,076 | ||
Accounts receivable | 27,185 | ||
Inventories | 14,460 | ||
Prepaid expenses and other current assets | 1,891 | ||
Property and equipment | 14,331 | ||
Intangible assets | 139,200 | ||
Goodwill | 24,641 | ||
Other non-current assets | 1,413 | ||
Total assets acquired | 235,197 | ||
Accounts payable | 1,560 | ||
Accrued expense and other current liabilities | 6,035 | ||
Accrued compensation and other related expenses | 4,909 | ||
Accrued government rebates | 744 | ||
Returned goods reserve | 2,202 | ||
Other non-current liabilities | 1,146 | ||
Total liabilities assumed | 16,596 | ||
Net assets acquired | 218,601 | ||
Novitium | Acquired ANDA intangible assets | |||
Intangible assets | 67,400 | ||
Novitium | Customer relationships | |||
Intangible assets | 24,900 | ||
Novitium | In process research and development | |||
Intangible assets | $ 46,900 |
BUSINESS COMBINATION - Pro Form
BUSINESS COMBINATION - Pro Forma (Details) - Novitium - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2022 | Jun. 30, 2022 | |
Revenue since acquisition date | $ 19.9 | $ 39.1 |
Earnings (loss) since acquisition date | $ 2.5 | $ 2.3 |
RESTRUCTURING (Details)
RESTRUCTURING (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2022 | Jun. 30, 2021 | |
Restructuring | |||
Restructuring activity expense | $ 2,570 | $ 2,570 | $ 0 |
Assets held-for-sale | 8,020 | 8,020 | |
Oakville, Ontario, Canada | |||
Restructuring | |||
Restructuring activity expense | 2,600 | 2,600 | |
Restructuring accrual | 1,300 | 1,300 | |
Assets held-for-sale | 8,000 | 8,000 | |
Oakville, Ontario, Canada | Employee severance and other benefit costs | |||
Restructuring | |||
Restructuring activity expense | 1,400 | 1,400 | |
Oakville, Ontario, Canada | Employee severance and other benefit costs | Minimum | |||
Restructuring | |||
Restructuring expected cost remaining | 1,400 | 1,400 | |
Oakville, Ontario, Canada | Asset-related impairment | |||
Restructuring | |||
Restructuring activity expense | 900 | 900 | |
Oakville, Ontario, Canada | Asset-related impairment | Minimum | |||
Restructuring | |||
Restructuring expected cost remaining | 3,100 | 3,100 | |
Oakville, Ontario, Canada | Asset-related impairment | Maximum | |||
Restructuring | |||
Restructuring expected cost remaining | 3,600 | 3,600 | |
Oakville, Ontario, Canada | Other implementation costs | |||
Restructuring | |||
Restructuring activity expense | $ 300 | $ 300 |
INDEBTEDNESS - Credit facility
INDEBTEDNESS - Credit facility (Details) - USD ($) $ in Thousands | 6 Months Ended | |||
Nov. 19, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Debt | ||||
Current debt | $ 850 | $ 850 | ||
Payments of debt issuance costs | 0 | $ 141 | ||
Term Facility | ||||
Debt | ||||
Debt, net of issuance costs | 298,500 | |||
Credit Facility - 2021 | ||||
Debt | ||||
Current debt | $ 3,000 | |||
Payments of debt issuance costs | $ 14,000 | |||
Credit Facility - 2021 | Term Facility | ||||
Debt | ||||
Maximum borrowing capacity | 300,000 | |||
Debt effective interest rate (as a percent) | 7.06% | |||
Quarterly payment | $ 750 | |||
Principal amount | $ 298,500 | |||
Credit Facility - 2021 | Term Facility | Alternative Base Rate | ||||
Debt | ||||
Basis spread (as a percent) | 5% | |||
Credit Facility - 2021 | Term Facility | LIBOR | ||||
Debt | ||||
Basis spread (as a percent) | 6% | |||
Credit Facility - 2021 | Revolving Facility | ||||
Debt | ||||
Maximum borrowing capacity | $ 40,000 | |||
Remaining borrowing capacity | 40,000 | |||
Commitment fee (as a percent) | 0.50% | |||
Deferred debt issuance costs | $ 900 | |||
Credit Facility - 2021 | Revolving Facility | Alternative Base Rate | ||||
Debt | ||||
Basis spread (as a percent) | 3.75% | |||
Credit Facility - 2021 | Revolving Facility | LIBOR | ||||
Debt | ||||
Basis spread (as a percent) | 4.75% |
INDEBTEDNESS - Facility compone
INDEBTEDNESS - Facility components (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Current debt, net of deferred financing costs | $ 850 | $ 850 |
Non-current debt, net of deferred financing costs and current component | 286,095 | 286,520 |
Term Loan and DDTL | ||
Current borrowing on debt | 3,000 | 3,000 |
Deferred financing costs | (2,150) | (2,150) |
Current debt, net of deferred financing costs | 850 | 850 |
Non-current borrowing on debt | 295,500 | 297,000 |
Deferred financing costs | (9,405) | (10,480) |
Non-current debt, net of deferred financing costs and current component | 286,095 | $ 286,520 |
Credit Facility - 2021 | ||
Current debt, net of deferred financing costs | $ 3,000 |
INDEBTEDNESS - Outstanding (Det
INDEBTEDNESS - Outstanding (Details) - Credit Facility - 2021 $ in Millions | Jun. 30, 2022 USD ($) |
Term Facility | |
Borrowing on debt | $ 298.5 |
Revolving Facility | |
Total debt issuance costs, net | 0.9 |
Debt issuance costs, noncurrent | 0.7 |
Debt issuance costs, current | $ 0.2 |
INDEBTEDNESS - Credit facilit_2
INDEBTEDNESS - Credit facility - Maturity (Details) - Term Facility $ in Thousands | Jun. 30, 2022 USD ($) |
2022 | $ 1,500 |
2023 | 3,000 |
2024 | 3,000 |
2025 | 3,000 |
2026 | 3,000 |
2027 and thereafter | 285,000 |
Total | $ 298,500 |
INDEBTEDNESS - Interest (Detail
INDEBTEDNESS - Interest (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
INDEBTEDNESS | ||||
Contractual coupon | $ 6,122 | $ 2,386 | $ 12,180 | $ 4,690 |
Amortization of finance fees | 590 | 176 | 1,181 | 352 |
Capitalized interest | (19) | (31) | (49) | (57) |
Interest Expense, Debt | $ 6,693 | $ 2,531 | $ 13,312 | $ 4,985 |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENT AND HEDGING ACTIVITY (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Apr. 30, 2020 | |
Fair value interest rate derivative assets | $ 3,636 | $ 3,636 | ||||
Fair value interest rate derivative liabilities | $ 6,790 | |||||
Accumulated other comprehensive loss, net of tax | (5,430) | (5,430) | $ 3,055 | |||
Derivative unrealized gain (loss) recorded in OCI | $ 2,718 | $ (401) | $ 8,485 | $ 6,004 | ||
Credit Facility - 2021 | Term Facility | ||||||
Debt effective interest rate (as a percent) | 7.06% | 7.06% | ||||
Interest rate swap | ||||||
Derivative liability, notional amount | $ 158,600 | $ 158,600 | $ 168,600 | |||
Debt effective interest rate (as a percent) | 2.26% | |||||
Decrease in notional amount | 4,000 | |||||
Fair value interest rate derivative assets | 3,600 | 3,600 | ||||
Accumulated other comprehensive loss, net of tax | 5,400 | 5,400 | ||||
Derivative unrealized gain (loss) | 2,900 | 9,800 | ||||
Derivative unrealized gain (loss) recorded in OCI | 2,700 | 8,500 | ||||
Interest expense | 1,000 | 2,000 | ||||
Reclassifications out of accumulated other comprehensive income/loss | 700 | $ 900 | 1,400 | $ 1,800 | ||
Interest rate swap | Credit Facility - 2021 | ||||||
Derivative liability, notional amount | $ 158,600 | $ 158,600 |
EARNINGS (LOSS) PER SHARE (Deta
EARNINGS (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
EARNINGS (LOSS) PER SHARE | ||||
Net Loss | $ (14,923) | $ (14,106) | $ (35,053) | $ (14,020) |
Dividends on Series A convertible preferred stock | (407) | (812) | 0 | |
Net (loss)/income available to common shareholders, Basic | (15,330) | (14,106) | (35,865) | (14,020) |
Net (loss)/income available to common shareholders, Diluted | $ (15,330) | $ (14,106) | $ (35,865) | $ (14,020) |
Basic Weighted-Average Shares Outstanding | 16,272 | 12,085 | 16,205 | 12,045 |
Diluted Weighted-Average Shares Outstanding | 16,272 | 12,085 | 16,205 | 12,045 |
(Loss)/Income per share, Basic | $ (0.94) | $ (1.17) | $ (2.21) | $ (1.16) |
(Loss)/Income per share, Diluted | $ (0.94) | $ (1.17) | $ (2.21) | $ (1.16) |
EARNINGS (LOSS) PER SHARE - Add
EARNINGS (LOSS) PER SHARE - Additional information (Details) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
EARNINGS (LOSS) PER SHARE | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 2.7 | 1.7 | 2.6 | 1.7 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
INVENTORIES | ||
Raw materials | $ 59,176 | $ 51,350 |
Packaging materials | 6,414 | 5,475 |
Work-in-progress | 879 | 652 |
Finished goods | 33,936 | 31,969 |
Inventory, Gross, Total | 100,405 | 89,446 |
Reserve for excess/obsolete inventories | (7,860) | (7,753) |
Inventories, net | $ 92,545 | $ 81,693 |
INVENTORIES - Concentration (De
INVENTORIES - Concentration (Details) - Supplier concentration - One supplier $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2022 USD ($) | Jun. 30, 2022 USD ($) | |
Cost of goods sold | ||
Concentration Risk, Percentage | 18% | 17% |
Accounts payable | ||
Amount payable to supplier | $ 6.3 | $ 6.3 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS - Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2018 | Dec. 31, 2013 | |
Goodwill, impairment loss | $ 0 | $ 0 | $ 0 | $ 0 | |||
BioSante Pharmaceuticals | |||||||
Acquisition of goodwill | $ 1,800 | ||||||
WellSpring | |||||||
Acquisition of goodwill | $ 1,700 | ||||||
Novitium | |||||||
Acquisition of goodwill | $ 24,600 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS - Components (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Definite-Lived Intangible Assets: | |||||
Accumulated Amortization | $ (230,737) | $ (230,737) | $ (206,367) | ||
Weighted Average Amortization Period | 9 years | ||||
Indefinite-Lived Intangible Assets: | |||||
Gross Carrying Amount, total | 500,330 | $ 500,330 | 500,489 | ||
Amortization of intangible assets | 11,900 | $ 10,100 | 24,400 | $ 19,700 | |
Intangible asset impairment charge | 112 | $ 0 | $ 112 | $ 0 | |
Minimum | |||||
Definite-Lived Intangible Assets: | |||||
Weighted Average Amortization Period | 7 years | ||||
Maximum | |||||
Definite-Lived Intangible Assets: | |||||
Weighted Average Amortization Period | 10 years | ||||
In process research and development | |||||
Indefinite-Lived Intangible Assets: | |||||
Gross Carrying Amount | 46,900 | $ 46,900 | 46,900 | ||
Acquired ANDA intangible assets | |||||
Definite-Lived Intangible Assets: | |||||
Gross Carrying Amount | 168,377 | 168,377 | 168,536 | ||
Accumulated Amortization | (64,128) | $ (64,128) | (54,079) | ||
Weighted Average Amortization Period | 8 years 6 months | ||||
NDAs and product rights | |||||
Definite-Lived Intangible Assets: | |||||
Gross Carrying Amount | 242,372 | $ 242,372 | 242,372 | ||
Accumulated Amortization | (150,853) | $ (150,853) | (138,835) | ||
Weighted Average Amortization Period | 9 years 10 months 24 days | ||||
Marketing and distribution rights | |||||
Definite-Lived Intangible Assets: | |||||
Gross Carrying Amount | 17,157 | $ 17,157 | 17,157 | ||
Accumulated Amortization | (12,828) | $ (12,828) | (12,347) | ||
Weighted Average Amortization Period | 5 years 6 months | ||||
Non-compete agreement | |||||
Definite-Lived Intangible Assets: | |||||
Gross Carrying Amount | 624 | $ 624 | 624 | ||
Accumulated Amortization | (557) | $ (557) | (513) | ||
Weighted Average Amortization Period | 7 years | ||||
Customer relationships | |||||
Definite-Lived Intangible Assets: | |||||
Gross Carrying Amount | 24,900 | $ 24,900 | 24,900 | ||
Accumulated Amortization | $ (2,371) | $ (2,371) | $ (593) | ||
Weighted Average Amortization Period | 7 years |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS - Amortization (Details) $ in Thousands | Jun. 30, 2022 USD ($) |
GOODWILL AND INTANGIBLE ASSETS | |
2022 (remainder of the year) | $ 24,693 |
2023 | 50,770 |
2024 | 49,974 |
2025 | 47,870 |
2026 | 34,551 |
2027 and thereafter | 61,735 |
Total | $ 269,593 |
MEZZANINE AND STOCKHOLDERS' E_2
MEZZANINE AND STOCKHOLDERS' EQUITY (Details) $ / shares in Units, $ in Millions | 12 Months Ended | ||||
Nov. 19, 2021 USD ($) D $ / shares shares | Mar. 08, 2021 USD ($) $ / shares shares | Dec. 31, 2021 $ / shares shares | Jun. 30, 2022 $ / shares shares | Mar. 31, 2022 shares | |
Preferred Stock, Shares Authorized | 1,666,667 | 1,666,667 | |||
Preferred Stock, Par or Stated Value Per Share (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | |||
Convertible Preferred Stock | |||||
Convertible preferred stock outstanding (shares) | 25,000 | 25,000 | 25,000 | ||
PIPE Shares | Convertible Preferred Stock | |||||
Temporary stock issued (in shares) | 25,000 | 25,000 | |||
Temporary stock issued (in dollars per share) | $ / shares | $ 1,000 | $ 1,000 | |||
Temporary stock issued, value | $ | $ 25 | $ 25 | |||
Cash paid for costs of share issuances | $ | $ 0.2 | ||||
Shares accrue dividends rate | 6.50% | ||||
Shares conversion price | $ / shares | $ 41.47 | ||||
Threshold number of trading days | D | 20 | ||||
Number of consecutive trading days | D | 30 | ||||
Maximum percentage of conversion price | 1.70% | ||||
Convertible, shares issuable | 602,901 | ||||
Common Stock | |||||
Common Stock, Authorized Shares | 33,300,000 | ||||
Common Stock, Par Value (in dollars per share) | $ / shares | $ 0.0001 | ||||
Common Stock, Shares, Issued | 16,900,000 | 17,600,000 | |||
Common Stock, Shares, Outstanding | 16,900,000 | 17,400,000 | |||
Issuance of Common Stock in Public Offering (in shares) | 1,500,000 | ||||
Class C Special Stock | |||||
Common Stock, Authorized Shares | 800,000 | ||||
Common Stock, Par Value (in dollars per share) | $ / shares | $ 0.0001 | ||||
Common Stock, Shares, Issued | 11,000 | ||||
Common Stock, Shares, Outstanding | 11,000 | ||||
Common Stock Conversion Price | $ / shares | $ 90 | ||||
Novitium | |||||
Shares issued in acquisition (in shares) | 2,466,654 | 2,500,000 |
STOCK-BASED COMPENSATION - Expe
STOCK-BASED COMPENSATION - Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
2016 Employee Stock Purchase Plan | ||||
Stock-based compensation shares available | 200,000 | 200,000 | ||
Discount from market price (as a percent) | 15% | |||
Allocated share-based compensation expense | $ 73 | $ 33 | $ 111 | $ 65 |
2022 Plan | ||||
Stock-based compensation shares available | 1,100,000 | 1,100,000 | ||
Stock-based compensation additional shares authorized | 1,150,000 | |||
Allocated share-based compensation expense | $ 3,683 | 2,811 | $ 6,882 | 4,648 |
Cost of sales | 2016 Employee Stock Purchase Plan | ||||
Allocated share-based compensation expense | 19 | 4 | 29 | 8 |
Cost of sales | 2022 Plan | ||||
Allocated share-based compensation expense | 124 | 2 | 259 | 2 |
Research and development | 2016 Employee Stock Purchase Plan | ||||
Allocated share-based compensation expense | 15 | 6 | 22 | 11 |
Research and development | 2022 Plan | ||||
Allocated share-based compensation expense | 180 | 149 | 345 | 263 |
Selling, general and administrative | 2016 Employee Stock Purchase Plan | ||||
Allocated share-based compensation expense | 39 | 23 | 60 | 46 |
Selling, general and administrative | 2022 Plan | ||||
Allocated share-based compensation expense | $ 3,379 | $ 2,660 | $ 6,278 | $ 4,383 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock option activity (Details) - USD ($) shares in Thousands, $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Option Shares | ||
Proceeds from stock option exercises and ESPP purchases | $ 206 | $ 336 |
Options | ||
Option Shares | ||
Outstanding at the beginning of the period (in shares) | 747 | 756 |
Granted (in shares) | 36 | 84 |
Exercised (in shares) | (1) | (5) |
Forfeited (in shares) | (37) | (58) |
Outstanding at the end of the period (in shares) | 745 | 777 |
Inducement Grants | ||
Option Shares | ||
Outstanding at the beginning of the period (in shares) | 241 | 180 |
Granted (in shares) | 61 | |
Outstanding at the end of the period (in shares) | 241 | 241 |
STOCK-BASED COMPENSATION - RSA
STOCK-BASED COMPENSATION - RSA activity (Details) - RSAs - shares shares in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Unvested, Shares, Outstanding, Beginning of period | 707 | 352 |
Unvested Shares, Granted | 669 | 457 |
Unvested Shares, Vested | (209) | (111) |
Unvested Shares, Forfeited | (24) | (73) |
Unvested Shares, Outstanding, End of period | 1,143 | 625 |
STOCK-BASED COMPENSATION - Addi
STOCK-BASED COMPENSATION - Additional information (Details) - USD ($) shares in Thousands, $ in Thousands | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Treasury stock value | $ 4,736 | $ 3,135 | |
RSAs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares purchased from employees | 56 | 25 | |
Treasury stock value | $ 1,600 | $ 800 |
INCOME TAXES - Quarter (Details
INCOME TAXES - Quarter (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
INCOME TAXES | ||||
Valuation allowance | $ 400 | $ 400 | ||
Provision (benefit) for income taxes | $ (3,895) | $ (4,045) | $ (9,662) | $ (4,055) |
Effective income tax rate (as a percent) | 20.70% | 22.30% | (21.60%) | 22.40% |
Pre-tax consolidated loss | $ (18,818) | $ (18,151) | $ (44,715) | $ (18,075) |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Leases expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Operating lease, weighted average remaining lease term | 2 years 10 months 24 days | 2 years 10 months 24 days | ||
Operating lease costs | $ 143 | $ 43 | $ 269 | $ 92 |
Variable lease costs | 54 | 13 | 120 | 21 |
Total lease costs | $ 197 | $ 56 | $ 389 | $ 113 |
Minimum | ||||
Operating lease liability discount rates (in percent) | 3.99% | 3.99% | ||
Maximum | ||||
Operating lease liability discount rates (in percent) | 8.95% | 8.95% |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Lease maturity (Details) $ in Thousands | Jun. 30, 2022 USD ($) |
COMMITMENTS AND CONTINGENCIES | |
2022 | $ 251 |
2023 | 482 |
2024 | 468 |
2025 | 248 |
2026 and thereafter | 126 |
Total | 1,575 |
Discount | (163) |
Lease liability | 1,412 |
Current lease liability | $ (413) |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued Liabilities, Current |
Non-current lease liability | $ 999 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Feb. 15, 2022 | Aug. 03, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
COMMITMENTS AND CONTINGENCIES | ||||||
Revenue recognition | $ 73,855 | $ 48,625 | $ 138,332 | $ 103,146 | ||
Arbor Pharmaceuticals [Member] | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Settlement amount awarded to other party | $ 8,400 | |||||
Azurity Pharmaceuticals [Member] | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Settlement amount awarded to other party | $ 1,900 | |||||
Unapproved Products [Member] | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Revenue recognition | 2,900 | 4,200 | 6,900 | 8,000 | ||
Unapproved Products [Member] | Contract Customer [Member] | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Revenue recognition | $ 400 | $ 600 | $ 1,100 | $ 1,400 |
FAIR VALUE DISCLOSURES - Level
FAIR VALUE DISCLOSURES - Level 3 (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2022 USD ($) | Jun. 30, 2022 USD ($) | Nov. 19, 2021 USD ($) | |
Changes in contingent consideration | |||
Level 3 liability, beginning balance | $ 32,053 | $ 31,000 | |
Measurement period adjustment | 300 | ||
Change in fair value | (1,095) | (342) | |
Level 3 liability, ending balance | $ 30,958 | $ 30,958 | |
Discount rate | Profit-based milestone payments | |||
Unobservable inputs | 14 | 14 | |
Discount rate | Product development-based milestone payments | |||
Unobservable inputs | 17.9 | 17.9 | |
Probability of payment | Product development-based milestone payments | |||
Unobservable inputs | 90 | 90 | |
Contingent Value Rights | Discount rate | |||
Unobservable inputs | 15 | 15 | |
Novitium | |||
Additional contingent consideration | $ 46,500 | $ 46,500 | $ 46,500 |
FAIR VALUE DISCLOSURES - Hierar
FAIR VALUE DISCLOSURES - Hierarchy (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 | Nov. 19, 2021 |
Interest rate swaps, asset | $ 3,636 | ||
Interest rate swaps, liability | $ 6,790 | ||
Fair Value, Inputs, Level 2 [Member] | |||
Interest rate swaps, asset | 3,636 | ||
Interest rate swaps, liability | 6,790 | ||
Novitium | |||
Contingent consideration | 30,958 | 31,000 | $ 30,800 |
Novitium | Fair Value, Inputs, Level 3 [Member] | |||
Contingent consideration | $ 30,958 | $ 31,000 |
FAIR VALUE DISCLOSURES - Acquir
FAIR VALUE DISCLOSURES - Acquired (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Apr. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Intangible asset impairment charge | $ 112 | $ 0 | $ 112 | $ 0 | ||
Payments to acquire intangible assets | $ 229 | 21,057 | ||||
Useful life of intangible assets | 9 years | |||||
Research and development | 4,165 | 2,805 | $ 9,439 | 5,773 | ||
Amortization of intangible assets | 11,900 | $ 10,100 | 24,400 | $ 19,700 | ||
Inventories, net | 92,545 | 92,545 | $ 81,693 | |||
Raw materials | 59,176 | 59,176 | 51,350 | |||
Finished goods | 33,936 | $ 33,936 | 31,969 | |||
Minimum | ||||||
Useful life of intangible assets | 7 years | |||||
Maximum | ||||||
Useful life of intangible assets | 10 years | |||||
Acquired ANDA intangible assets | ||||||
Finite-lived intangible gross carrying amount | 168,377 | $ 168,377 | 168,536 | |||
Useful life of intangible assets | 8 years 6 months | |||||
Marketing and distribution rights | ||||||
Finite-lived intangible gross carrying amount | $ 17,157 | $ 17,157 | $ 17,157 | |||
Useful life of intangible assets | 5 years 6 months | |||||
Sandoz | ||||||
Intangible asset impairment charge | $ 0 | |||||
Total asset purchase | $ 20,700 | |||||
Transaction costs | 400 | |||||
Finite-lived intangible gross carrying amount | $ 11,400 | |||||
Useful life of intangible assets | 7 years | |||||
Inventories, net | $ 9,700 | |||||
Raw materials | 600 | |||||
Sample inventory | 1,000 | |||||
Finished goods | $ 8,100 | |||||
Sandoz | Discount rate | ||||||
Intangible asset measurement input | 10 |
PURIFIED CORTROPHIN GEL PRE-L_2
PURIFIED CORTROPHIN GEL PRE-LAUNCH CHARGES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
PURIFIED CORTROPHIN GEL PRE-LAUNCH CHARGES | |||
Purified Cortrophin Gel pre-launch charges | $ 515 | $ 0 | $ 553 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Nov. 19, 2021 | Mar. 08, 2021 | Jun. 30, 2022 | Jun. 30, 2022 | |
Convertible Preferred Stock | PIPE Shares | ||||
Related Party Transaction [Line Items] | ||||
Temporary stock issued (in shares) | 25,000 | 25,000 | ||
Temporary stock issued (in dollars per share) | $ 1,000 | $ 1,000 | ||
Temporary stock issued, value | $ 25,000 | $ 25,000 | ||
Esjay | ||||
Related Party Transaction [Line Items] | ||||
Payments to related party | $ 100 | |||
Due to related parties | $ 0 | 0 | ||
SS Pharma | ||||
Related Party Transaction [Line Items] | ||||
Payments to related party | 700 | 1,600 | ||
Due to related parties | 600 | 600 | ||
Nuray | ||||
Related Party Transaction [Line Items] | ||||
Payments to related party | 0 | 900 | ||
Due to related parties | 0 | 0 | ||
Scitus | ||||
Related Party Transaction [Line Items] | ||||
Payments to related party | 700 | 1,300 | ||
Due to related parties | $ 50 | $ 50 |
SEGMENT REPORTING - Revenue (De
SEGMENT REPORTING - Revenue (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) segment | Jun. 30, 2021 USD ($) | Dec. 31, 2021 segment | |
Segment reporting | |||||
Number of segments | segment | 2 | 1 | |||
Revenue recognition | $ 73,855 | $ 48,625 | $ 138,332 | $ 103,146 | |
Depreciation and amortization | 13,764 | 11,324 | 28,321 | 22,222 | |
Selling, general, and administrative | 31,958 | 18,820 | 60,775 | 36,407 | |
Operating Loss | (12,913) | (15,553) | (32,108) | (12,508) | |
Interest expense, net | (6,669) | (2,531) | (13,282) | (4,985) | |
Other expense, net | 764 | (67) | 675 | (582) | |
Loss Before Benefit for Income Taxes | (18,818) | (18,151) | (44,715) | (18,075) | |
Operating segments | Generics, Established Brands and Other | |||||
Segment reporting | |||||
Revenue recognition | 63,653 | 48,625 | 126,838 | 103,146 | |
EBITDA | 15,473 | 14,660 | 30,004 | 36,499 | |
Operating segments | Rare Disease | |||||
Segment reporting | |||||
Revenue recognition | 10,202 | 11,494 | |||
EBITDA | (6,663) | (4,473) | (17,111) | (5,751) | |
Unallocated expenses | |||||
Segment reporting | |||||
Depreciation and amortization | (13,764) | (11,324) | (28,321) | (22,222) | |
Selling, general, and administrative | (7,959) | (14,416) | (16,680) | (21,034) | |
Operating Loss | (12,913) | (15,553) | (32,108) | (12,508) | |
Interest expense, net | (6,669) | (2,531) | (13,282) | (4,985) | |
Other expense, net | $ 764 | $ (67) | $ 675 | $ (582) |
SEGMENT REPORTING - Geographic
SEGMENT REPORTING - Geographic (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Segment reporting | |||||
Revenue recognition | $ 73,855 | $ 48,625 | $ 138,332 | $ 103,146 | |
Property and equipment, net | 43,771 | 43,771 | $ 52,671 | ||
Assets held-for-sale | 8,020 | 8,020 | |||
United States | |||||
Segment reporting | |||||
Revenue recognition | 72,811 | 47,580 | 136,571 | 100,907 | |
Property and equipment, net | 38,964 | 38,964 | 38,564 | ||
Canada | |||||
Segment reporting | |||||
Revenue recognition | 1,044 | $ 1,045 | 1,761 | $ 2,239 | |
Property and equipment, net | 4,552 | 4,552 | 13,831 | ||
Assets held-for-sale | 8,000 | 8,000 | |||
India | |||||
Segment reporting | |||||
Property and equipment, net | $ 255 | $ 255 | $ 276 |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) $ in Thousands, $ in Millions | 6 Months Ended | ||
Jul. 21, 2022 CAD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | |
SUBSEQUENT EVENTS | |||
Payments to acquire intangible assets | $ 229 | $ 21,057 | |
Subsequent Event [Member] | Oakrum Pharma | |||
SUBSEQUENT EVENTS | |||
Payments to acquire intangible assets | $ 8 |