Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2015 | May. 11, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | AKORN INC | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 119,427,471 | |
Amendment Flag | false | |
Entity Central Index Key | 3,116 | |
Entity Current Reporting Status | No | |
Entity Filer Category | Large Accelerated Filer | |
Document Period End Date | Mar. 31, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2015 | Dec. 31, 2014 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 123,532 | $ 70,679 |
Trade accounts receivable, net | 190,710 | 187,545 |
Inventories, net | 149,403 | 135,197 |
Deferred taxes, current | 39,564 | 38,411 |
Available for sale security, current | 5,558 | 7,268 |
Prepaid expenses and other current assets | 35,118 | 37,061 |
TOTAL CURRENT ASSETS | 543,885 | 476,161 |
PROPERTY, PLANT AND EQUIPMENT, NET | 175,991 | 144,196 |
OTHER LONG-TERM ASSETS | ||
Goodwill | 285,674 | 285,283 |
Product licensing rights, net | 689,490 | 704,791 |
Other intangibles, net | 254,590 | 255,612 |
Deferred financing costs, net | 22,687 | 23,704 |
Deferred taxes, non-current | 2,643 | 2,084 |
Long-term investments | 129 | 211 |
Other non-current assets | 1,248 | 1,863 |
TOTAL OTHER LONG-TERM ASSETS | 1,256,462 | 1,273,548 |
TOTAL ASSETS | 1,976,338 | 1,893,905 |
CURRENT LIABILITIES | ||
Trade accounts payable | 57,971 | 47,317 |
Purchase consideration payable, current | 12,367 | 10,970 |
Accrued royalties | 13,948 | 13,204 |
Accrued compensation | 8,375 | 13,467 |
Current maturities of long-term debt | 10,450 | 10,450 |
Accrued administrative fees | 36,312 | 40,870 |
Accrued expenses and other liabilities | 14,428 | 14,576 |
TOTAL CURRENT LIABILITIES | 153,851 | 150,854 |
LONG-TERM LIABILITIES | ||
Long-term debt | 1,110,458 | 1,114,481 |
Deferred tax liability, non-current | 263,466 | 269,428 |
Lease incentive obligations and other long-term liabilities | 6,388 | 2,836 |
TOTAL LONG-TERM LIABILITIES | 1,380,312 | 1,386,745 |
TOTAL LIABILITIES | 1,534,163 | 1,537,599 |
SHAREHOLDERS' EQUITY | ||
Common stock, no par value - 150,000,000 shares authorized; 114,332,873 and 111,734,901 shares issued and outstanding at December 31, 2015 and 2014, respectively | 388,475 | 342,252 |
Retained earnings | 66,788 | 29,250 |
Accumulated other comprehensive loss | (13,088) | (15,195) |
TOTAL SHAREHOLDERS' EQUITY | 442,175 | 356,307 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 1,976,338 | $ 1,893,905 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Mar. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Common stock, no par value (in Dollars per share) | $ 0 | $ 0 |
Common stock, authorized | 150,000,000 | 150,000,000 |
Common stock, issued | 114,332,873 | 111,734,901 |
Common stock, outstanding | 114,332,873 | 111,734,901 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Income Statement [Abstract] | ||
REVENUES | $ 227,378 | $ 90,622 |
Cost of sales (exclusive of amortization of intangibles included below) | 97,215 | 40,966 |
GROSS PROFIT | 130,163 | 49,656 |
Selling, general and administrative expenses | 29,986 | 16,586 |
Acquisition-related costs | 1,257 | 454 |
Research and development expenses | 9,276 | 4,419 |
Amortization of intangibles | 16,377 | 4,757 |
TOTAL OPERATING EXPENSES | 56,896 | 26,216 |
OPERATING INCOME | 73,267 | 23,440 |
Amortization of deferred financing costs | (996) | (4,251) |
Interest expense, net | (13,480) | (2,161) |
Bargain purchase gain | 849 | |
Other non-operating income (expense), net | (1,312) | 567 |
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 58,328 | 17,595 |
Income tax provision (benefit) | 20,790 | 8,101 |
NET INCOME (LOSS) | $ 37,538 | $ 9,494 |
NET INCOME (LOSS) PER SHARE: | ||
NET INCOME (LOSS), BASIC (in Dollars per share) | $ 0.33 | |
NET INCOME (LOSS), DILUTED (in Dollars per share) | $ 0.31 | |
SHARES USED IN COMPUTING NET INCOME (LOSS) PER SHARE: | ||
BASIC (in Shares) | 113,352 | 96,633 |
DILUTED (in Shares) | 125,377 | 116,884 |
COMPREHENSIVE INCOME: | ||
Consolidated net income (loss) | $ 37,538 | $ 9,494 |
Unrealized holding gain on available-for-sale securities, net of tax of ($59) | 101 | |
Foreign currency translation (loss) income, net of tax of ($1,034) and ($878) for the quarters ended March 31, 2015 and 2014, respectively. | 2,008 | 1,705 |
COMPREHENSIVE INCOME (LOSS) | $ 39,647 | $ 11,199 |
Consolidated Statements of Com5
Consolidated Statements of Comprehensive Income (Parentheticals) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Income Statement [Abstract] | ||
Unrealized holding gain on available-for-sale securities, tax | $ (59) | |
Foreign currency translation (loss) income, tax | $ (1,034) | $ (878) |
Consolidated Statement of Share
Consolidated Statement of Shareholders' Equity - 3 months ended Mar. 31, 2015 - USD ($) $ in Thousands | Common Stock | Retained Earnings | Other Comprehensive (Loss) | Total |
BALANCES at Dec. 31, 2014 | $ 342,252 | $ 29,250 | $ (15,195) | $ 356,307 |
BALANCES (in Shares) at Dec. 31, 2014 | 111,735,000 | 111,734,901 | ||
Consolidated net income | 37,538 | $ 37,538 | ||
Exercise of stock options | $ 9,414 | 9,414 | ||
Exercise of stock options (in Shares) | 2,225,000 | |||
Employee stock purchase plan issuances | $ 1,544 | 1,544 | ||
Employee stock purchase plan issuances (in Shares) | 66,000 | |||
Compensation and share issuances related to restricted stock awards | $ 722 | 722 | ||
Stock-based compensation expense | 2,252 | 2,252 | ||
Foreign currency translation loss | 2,008 | 2,008 | ||
Excess tax benefit - stock compensation | 29,944 | 29,944 | ||
Unrealized holding loss on available-for-sale securities | 101 | 101 | ||
Convertible note conversions | $ 2,347 | 2,347 | ||
Convertible note conversions (in Shares) | 307,000 | |||
BALANCES at Mar. 31, 2015 | $ 388,475 | $ 66,788 | $ (13,088) | $ 442,175 |
BALANCES (in Shares) at Mar. 31, 2015 | 114,333,000 | 114,332,873 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
OPERATING ACTIVITIES: | ||
Consolidated net income | $ 37,538 | $ 9,494 |
Adjustments to reconcile consolidated net income to net cash provided by operating activities: | ||
Depreciation and amortization | 21,109 | 6,675 |
Amortization of deferred financing fees | 997 | 226 |
Amortization of favorable (unfavorable) contracts | 18 | 18 |
Amortization of inventory step-up | 4,682 | |
Non-cash stock compensation expense | 2,974 | 1,282 |
Non-cash interest expense | 1,186 | 1,249 |
Non-cash gain on bargain purchase | (849) | |
Deferred income taxes, net | (9,186) | (1,722) |
Excess tax benefit from stock compensation | (29,944) | (33) |
Loss on extinguishment of debt | 98 | |
Gain on sale of available for sale security | 146 | |
Changes in operating assets and liabilities: | ||
Trade accounts receivable, net | 384 | (450) |
Inventories, net | (14,559) | (5,987) |
Prepaid expenses and other current assets | 2,896 | 1,026 |
Trade accounts payable | 7,916 | 6,100 |
Accrued expenses and other liabilities | 19,860 | 5,498 |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 45,266 | 23,376 |
INVESTING ACTIVITIES: | ||
Payments for acquisitions and equity investments, net of cash acquired | (24,637) | (7,500) |
Proceeds from disposal of assets | 2,358 | |
Purchases of property, plant and equipment | (7,088) | (5,198) |
NET CASH USED IN INVESTING ACTIVITIES | (29,367) | (12,698) |
FINANCING ACTIVITIES: | ||
Proceeds under stock option and stock purchase plans | 10,958 | 1,022 |
Payments of contingent acquisition liabilities | (1,500) | |
Debt financing costs | (408) | |
Excess tax benefits from stock compensation | 29,944 | 33 |
Debt payments | (2,613) | |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 36,789 | 647 |
Effect of changes in exchange rates on cash and cash equivalents | 165 | 103 |
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 52,853 | 11,428 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 70,679 | 34,178 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 123,532 | 45,606 |
SUPPLEMENTAL DISCLOSURES | ||
Amount paid for interest | 11,836 | 129 |
Amount paid for income taxes, net of refunds received | $ 238 | $ 1,806 |
BUSINESS AND BASIS OF PRESENTAT
BUSINESS AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2015 | |
BUSINESS AND BASIS OF PRESENTATION | |
BUSINESS AND BASIS OF PRESENTATION | NOTE 1 — BUSINESS AND BASIS OF PRESENTATION Business: Akorn, Inc., together with its wholly-owned subsidiaries (collectively “Akorn”, the “Company”, “we”, “our” or “us”) is a specialty generic pharmaceutical company that develops, manufactures and markets generic and branded prescription pharmaceuticals and branded as well as private-label over-the-counter consumer health products and animal health pharmaceuticals. We are an industry leader in the development, manufacturing and marketing of specialized generic pharmaceutical products in alternative dosage forms. We specialize in difficult-to-manufacture sterile and non-sterile dosage forms including, but not limited to, ophthalmics, injectables, oral liquids, otics, topicals, inhalants and nasal sprays. Akorn is a Louisiana corporation founded in 1971 in Abita Springs, Louisiana. In 1997, we relocated our corporate headquarters to the Chicago, Illinois area and currently maintain our principal corporate offices in Lake Forest, Illinois. We operate pharmaceutical manufacturing facilities in Decatur, Illinois; Somerset, New Jersey; Amityville, New York; Hettlingen, Switzerland; and Paonta Sahib, Himachal Pradesh, India. We also operate a central distribution warehouse in Gurnee, Illinois and additional distribution facilities in Amityville, New York and Decatur, Illinois. Our research and development (“R&D”) centers are located in Vernon Hills, Illinois; Copiague, New York; and Warminster, Pennsylvania. We also have other corporate offices in Ann Arbor, Michigan and Gurgaon, Haryana, India. For further detail concerning our reportable segments please see Note 10 “ Segment Information.” Our common shares are traded on The NASDAQ Global Select Market under the ticker symbol AKRX. Basis of Presentation : The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and accordingly do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments of a normal and recurring nature considered necessary for a fair presentation have been included in these financial statements. Operating results for the three months ended March 31, 2015 are not necessarily indicative of the results for the full year. For further information, refer to the condensed consolidated financial statements and footnotes for the year ended December 31, 2015, included in the Company’s Annual Report on Form 10-K filed on May 10, 2016. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation: The accompanying condensed consolidated financial statements include the accounts of Akorn, Inc. and its wholly owned domestic and foreign subsidiaries. All inter-company transactions and balances have been eliminated in consolidation, and the financial statements of Akorn India Private Limited (“AIPL”) and Akorn AG (formerly “Excelvision AG” or “Hettlingen”) have been translated from Indian Rupees to U.S. Dollars and Swiss Francs to U.S. Dollars, respectively based on the currency translation rates in effect during the period or as of the date of consolidation, as applicable. The Company has no involvement with variable interest entities. Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. Significant estimates and assumptions for the Company relate to the allowances for chargebacks, rebates, product returns, coupons, promotions and doubtful accounts, as well as the reserve for slow-moving and obsolete inventories, the carrying value and lives of intangible assets, the useful lives of fixed assets, the carrying value of deferred income tax assets and liabilities, the assumptions underlying share-based compensation, accrued but unreported employee benefit costs and assumptions underlying the accounting for business combinations. Revenue Recognition: Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the sales price is fixed or determinable, and collectability is reasonably assured. Revenue from product sales are recognized when title and risk of loss have passed to the customer. Provision for estimated chargebacks, rebates, discounts, managed care rebates, product returns and doubtful accounts is made at the time of sale and is analyzed and adjusted, if necessary, at each balance sheet date. Freight: The Company records amounts billed to customers for shipping and handling as revenue, and records shipping and handling expense related to product sales as cost of sales. Cash and Cash Equivalents: The Company considers all unrestricted, highly liquid investments with maturity of three months or less when acquired, to be cash and cash equivalents. Accounts Receivable: Trade accounts receivables are stated at their net realizable value. The nature of the Company’s business involves, in the ordinary course, significant judgments and estimates relating to chargebacks, coupon redemption, product returns, rebates, discounts given to customers and allowances for doubtful accounts. Depending on the products, the customers, the specific terms of national supply contracts and the particular arrangements with the Company’s wholesaler customers, certain rebates, chargebacks and other credits are recorded as deductions to the Company’s trade accounts receivable. Unless otherwise noted, the provisions and allowances for the following customer deductions are reflected in the accompanying condensed consolidated financial statements as reductions of revenues and trade accounts receivable, respectively. Chargebacks, Rebates, Discounts and Other Adjustments: The Company enters into contractual agreements with certain third parties such as retailers, hospitals, group-purchasing organizations (“GPOs”) and managed care organizations to sell certain products at predetermined prices. Similarly, we maintain an allowance for rebates and discounts related to billbacks, wholesaler service fee for service contracts, GPO administrative fees, government programs, prompt payment and other adjustments with certain customers. Most of the parties have elected to have these contracts administered through wholesalers that buy the product from the Company and subsequently sell it to these third parties. When a wholesaler sells products to one of these third parties that are subject to a contractual price agreement, the difference between the price paid to the Company by the wholesaler and the price under the specific contract is charged back to the Company by the wholesaler. The Company tracks sales and submitted chargebacks by product number and contract for each wholesaler. Utilizing this information, the Company estimates a chargeback percentage for each product and records an allowance as a reduction to gross sales when the Company records its sale of the products. The Company reduces the chargeback allowance when a chargeback request from a wholesaler is processed. Actual chargebacks processed by the Company can vary materially from period to period based upon actual sales volume through the wholesalers. However, the Company’s provision for chargebacks is fully reserved for at the time when sales revenues are recognized. Management obtains certain wholesaler inventory reports to aid in analyzing the reasonableness of the chargeback allowance and which are additionally monitored to ensure that wholesaler inventory levels by product do not significantly exceed underlying customer demand. The Company assesses the reasonableness of its chargeback allowance by applying the product chargeback percentage based on a combination of historical activity and future price and mix expectations to the quantities of inventory on hand at the wholesaler per wholesaler inventory reports. In accordance with its accounting policy, the Company estimates the percentage amount of wholesaler inventory that will ultimately be sold to third parties that are subject to contractual price agreements based on a trend of such sales through wholesalers. The Company uses this percentage estimate until historical trends indicate that a revision should be made. On an ongoing basis, the Company evaluates its actual chargeback rate experience, and new trends are factored into its estimates each quarter as market conditions change. Similarly, the Company maintains an allowance for rebates related to contract and other programs with certain customers. Rebate percentages vary by product and by volume purchased by each eligible customer. The Company tracks sales by product number for each eligible customer and then applies the applicable rebate percentage, using both historical trends and actual experience to estimate its rebate allowance. The Company reduces gross sales and increases the rebate allowance by the estimated rebate amount when the Company sells its products to its rebate-eligible customers. The Company reduces the rebate allowance when it processes a customer request for a rebate. At each balance sheet date, the Company analyzes the allowance for rebates against actual rebates processed and makes necessary adjustments as appropriate. Actual rebates processed can vary materially from period to period. Other adjustments consist primarily of price adjustments, also known as “shelf-stock adjustments” and “price protections,” which are both credits issued to reflect increases or decreases in the invoice or contract prices of the Company’s products. In the case of a price decrease a credit is given for product remaining in customer’s inventories at the time of the price reduction. Contractual price protection results in a similar credit when the invoice or contract prices of the Company’s products increase, effectively allowing customers to purchase products at previous prices for a specified period of time. Amounts recorded for estimated shelf-stock adjustments and price protections are based upon specified terms with direct customers, estimated changes in market prices, and estimates of inventory held by customers. The Company regularly monitors these and other factors and evaluates the reserve as additional information becomes available. Other adjustments also include prompt payment discounts. Sales Returns: Certain of the Company’s products are sold with the customer having the right to return the product within specified periods and guidelines for a variety of reasons, including but not limited to, pending expiration dates. Provisions are made at the time of sale based upon tracked historical experience. Historical factors such as one-time events as well as pending new developments that would impact the expected level of returns are taken into account to determine the appropriate reserve estimate at each balance sheet date. As part of the evaluation of the balance required, the Company considers actual returns to date that are in process, the expected impact of any product recalls and the wholesaler’s inventory information to assess the magnitude of unconsumed product that may result in sales returns to the Company in the future. The sales returns level can be impacted by factors such as overall market demand and market competition and availability for substitute products which can increase or decrease the pull through for sales of the Company’s products and ultimately impact the level of sales returns. Actual returns experience and trends are factored into the Company’s estimates each quarter as market conditions change. Actual returns processed can vary materially from period to period. Allowance for Coupons, Promotions and Co-Pay discount cards: The Company issues coupons from time to time that are redeemable against certain of our Consumer Health products. Upon release of coupons into the market, the Company records an estimate of the dollar value of coupons expected to be redeemed. This estimate is based on historical experience and is adjusted as needed based on actual redemptions. In addition to couponing, from time to time the Company authorizes various retailers to run in-store promotional sales of its products. Upon receiving confirmation that a promotion was run, the Company accrues an estimate of the dollar amount expected to be owed back to the retailer. This estimate is trued up to actual upon receipt of the invoice from the retailer. Additionally, the Company provides consumer co-pay discount cards, administered through outside agents to provide discounted products when redeemed. Upon release of the cards into the market, the Company records an estimate of the dollar value of co-pay discounts expected to be utilized. This estimate is based on historical experience and is adjusted as needed based on actual usage. Doubtful Accounts: Provisions for doubtful accounts, which reflect trade receivable balances owed to the Company that are believed to be uncollectible, are recorded as a component of selling, general and administrative (“SG&A”) expenses. In estimating the allowance for doubtful accounts, the Company considers its historical experience with collections and write-offs, the credit quality of its customers and any recent or anticipated changes thereto, and the outstanding balances and past due amounts from its customers. Note that in the ordinary course of business, and consistent with our peers, we may from time to time offer extended payment terms to our customers as an incentive for new product launches and in other circumstances in accordance with industry practices. These extended payment terms do not represent a significant risk to the collectability of accounts receivable as of the period-end and are evaluated in accordance with Accounting Standards Codification (ASC) 605 - Revenue Recognition as applicable. Accounts are considered past due when they remain uncollected beyond the due date specified in the applicable contract or on the applicable invoice, whichever is deemed to take precedence. Advertising and Promotional Allowances to Customers: The Company routinely sells its consumer health products to major retail drug chains. From time to time, the Company may arrange for these retailers to run in-store promotional sales of the Company’s products. The Company reserves an estimate of the dollar amount owed back to the retailer, recording this amount as a reduction to revenue at the later of the date on which the revenue is recognized or the date the sales incentive is offered. When the actual invoice for the sales promotion is received from the retailer, the Company adjusts its estimate accordingly. Advertising and promotional expenses paid to customers are expensed as incurred in accordance with ASC 605-50 - Customer Payments and Incentives . Inventories: Inventories are stated at the lower of cost (average cost method) or market. The Company maintains an allowance for slow-moving and obsolete inventory as well as inventory where the cost is in excess of its net realizable value. For finished goods inventory, the Company estimates the amount of inventory that may not be sold prior to its expiration or is slow moving based upon review of recent sales activity and wholesaler inventory information. The Company also analyzes its raw material and component inventory for slow moving items. The Company capitalizes inventory costs associated with its products prior to regulatory approval when, based on management judgment, future commercialization is considered probable and future economic benefit is expected to be realized. The Company assesses the regulatory approval process and where the product stands in relation to that approval process including any known constraints or impediments to approval. The Company also considers the shelf life of the product in relation to the product timeline for approval. Intangible Assets: Intangible assets consist primarily of goodwill and in-process research and development, which are carried at initial value and subject to evaluation for impairment, and product licensing costs, trademarks and other such costs, which are capitalized and amortized on a straight-line basis over their useful lives, normally ranging from one year to thirty years. The Company regularly assesses its intangible assets for impairment based on several factors, including estimated fair value and anticipated cash flows. If the Company incurs additional costs to renew or extend the life of an intangible asset, such costs are added to the remaining unamortized cost of the asset, if any, and the sum is amortized over the extended remaining life of the asset. Goodwill is tested for impairment annually or more frequently if changes in circumstances or the occurrence of events suggest that impairment may exist. The Company uses widely accepted valuation techniques to determine the fair value of its reporting units used in its annual goodwill impairment analysis. The Company’s valuation is primarily based on qualitative and quantitative assessments regarding the fair value of goodwill relative to its carrying value. The Company models the fair value of the reporting unit based on projected earnings and cash flows of the reporting unit. Property, Plant and Equipment: Property, plant and equipment is stated at cost, less accumulated depreciation. Depreciation is provided using the straight-line method in amounts considered sufficient to amortize the cost of the assets to operations over their estimated useful lives or capital lease terms. The amortization of assets under capital leases is included within depreciation expense. Net Income Per Common Share: Basic net income per common share is based upon weighted average common shares outstanding. Diluted net income per common share is based upon the weighted average number of common shares outstanding, including the dilutive effect, if any, of stock options and convertible securities using the treasury stock and if converted methods. Anti-dilutive shares are excluded from the computation of diluted net income per share. Income Taxes: Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities, and net operating loss and other tax credit carry-forwards. These items are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce the recognized deferred tax assets to the amount that is more likely than not to be realized. Fair Value of Financial Instruments: The Company applies ASC 820 , which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability, and are to be developed based on the best information available in the circumstances. The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below: · Level 1 —Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. The carrying value of the Company’s cash and cash equivalents and the portion of the value of the Nicox S.A. (“Nicox”) shares which are available to trade on the exchange are considered Level 1 assets as of the periods ended March 31, 2015 and December 31, 2014. · Level 2 —Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as directly or indirectly observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. · Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. The portion of the fair valuation of the available for sale investment held in shares of Nicox subject to a lock-up provision is considered a Level 3 asset as of the periods ended March 31, 2015 and December 31, 2014, respectively. The additional consideration payable to Santen Pharmaceutical Co. Ltd. (“Santen”) in relation to the Company’s acquisition of the U.S. New Drug Application (“NDA”) rights to Betimol ® on January 2, 2014 and the additional consideration payable as a result of the ECR divestiture on June 20, 2014 and other insignificant contingent amounts are considered Level 3 liabilities as of periods ended March 31, 2015 and December 31, 2014, respectively. The following table summarizes the basis used to measure the fair values of the Company’s financial instruments (amounts in thousands): Fair Value Measurements at Reporting Date, Using: Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable March 31, Identical Items Inputs Inputs Description 2015 (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ $ $ — $ — Available-for-sale securities — Total assets $ $ $ — $ Purchase consideration payable $ $ — $ — $ Total liabilities $ $ — $ — $ Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable December 31, Identical Items Inputs Inputs Description 2014 (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ $ $ — $ — Available-for-sale securities — — Total assets $ $ $ — $ Purchase consideration payable $ $ — $ — $ Total liabilities $ $ — $ — $ Discontinued Operations: During the year ended December 31, 2014 and subsequent to the Hi-Tech Pharmacal Co. Inc. (“Hi-Tech”) acquisition the Company divested the ECR subsidiary. As a result of the sale the Company will have no continuing involvement or cash flows from the operations of this business. In accordance with FASB ASC 205 - Presentation of Financial Statements , and to allow for meaningful comparison of our continuing operations, the operating results of this business are reported as “discontinued operations.” All other operations are considered “continuing operations.” Unless noted otherwise, discussion in these notes to the financial statements pertain to our continuing operations. Business Combinations: Business combinations are accounted for in accordance with ASC 805 - Business Combinations , using the acquisition method of accounting. The acquisition method of accounting requires an acquirer to recognize the assets acquired and the liabilities assumed at the acquisition date measured at their fair values as of that date. Fair value determinations are based on discounted cash flow analyses or other valuation techniques. In determining the fair value of the assets acquired and liabilities assumed in a material acquisition, the Company may utilize appraisals from third party valuation firms to determine fair values of some or all of the assets acquired and liabilities assumed, or may complete some or all of the valuations internally. In either case, the Company takes full responsibility for the determination of the fair value of the assets acquired and liabilities assumed. The value of goodwill reflects the excess of the fair value of the consideration conveyed to the seller over the fair value of the net assets received. Under the acquisition method of accounting, the Company will identify the acquirer and the closing date and apply applicable recognition principles and conditions. Acquisition-related costs are costs the Company incurs to effect a business combination. The Company accounts for acquisition-related costs as expenses in the periods in which the costs are incurred. Stock-Based Compensation: Stock-based compensation cost is estimated at grant date based on the fair value of the award, and the cost is recognized as expense ratably over the vesting period. The Company uses the Black-Scholes model for estimating the grant date fair value of stock options. Determining the assumptions to be used in the model is highly subjective and requires judgment. The Company uses an expected volatility that is based on the historical volatility of its common stock. The expected life assumption is based on historical employee exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the average market rate on U.S. Treasury securities of similar term in effect during the quarter in which the options were granted. The dividend yield reflects the Company’s historical experience as well as future expectations over the expected term of the option. The Company estimates forfeitures at the time of grant and revises the estimate in subsequent periods, as necessary, if actual forfeitures differ from initial estimates. |
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2015 | |
STOCK BASED COMPENSATION | |
STOCK BASED COMPENSATION | NOTE 3 — STOCK BASED COMPENSATION At the Company’s 2014 Annual Meeting of Shareholders, which took place May 2, 2014, the Company’s shareholders approved the adoption of the Akorn, Inc. 2014 Stock Option Plan (the “2014 Plan”). The 2014 Plan reserves 7.5 million shares for issuance upon the grant of stock options, restricted stock units, or various other instruments to directors, employers and consultants. The 2014 Plan replaced the 2003 Stock Option Plan (the “2003 Plan”), which expired on November 6, 2013, although previously granted awards remain outstanding under the 2003 Plan. The Company uses the single-award method for allocating compensation cost related to stock options to each period. The following table sets forth the components of the Company’s stock-based compensation expense for the three month periods ended March 31, 2015 and 2014 (in thousands): Three months ended March 31, 2015 2014 Stock options and employee stock purchase plan $ $ Restricted stock units Total stock-based compensation expense $ The weighted-average assumptions used in estimating the grant date fair value of the stock options granted under the 2014 Plan and the 2003 Plan during the three month periods ended March 31, 2015, and 2014, respectively along with the weighted-average grant date fair values, are set forth in the table below. Three months ended March 31, 2015 2014 Expected volatility % — Expected life (in years) — Risk-free interest rate % — Dividend yield — — Fair value per stock option $ — Forfeiture rate % — The table below sets forth a summary of activity within the 2014 and 2003 Plans for the three months ended March 31, 2015: Number of Options (in thousands) Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) (1) Outstanding at December 31, 2014 $ $ Granted Exercised ) Forfeited ) Outstanding at March 31, 2015 $ $ Exercisable at March 31, 2015 $ $ (1) May include value from potentially anti-dilutive options whose exercise price exceeds the closing stock price. The aggregate intrinsic value for stock options outstanding and exercisable is defined as the difference between the market value of the Company’s common stock as of the date indicated and the exercise price of the stock options. During the three month period ended March 31, 2015, approximately 2.2 million stock options were exercised resulting in cash payments due to the Company of approximately $9.2 million. These stock option exercises generated tax-deductible expenses totaling approximately $84.9 million. During the three month period ended March 31, 2014, 56,000 stock options were exercised resulting in cash payments to the Company of approximately $0.2 million. These option exercises generated tax-deductible expenses of approximately $1.1 million. From time to time the Company grants restricted stock units to certain employees and members of its Board of Directors (“Directors”). Restricted stock units are valued at the closing market price of the Company’s common stock on the day of grant and the total value of the award is recognized as expense ratably over the vesting period of the grants. On May 2, 2014, the Company granted a total of 71,582 restricted stock units to senior management which vest at 25% per year on the anniversary date of the grant ending May 2, 2018. Also on May 2, 2014, the Company modified approximately 2.3 million options to extend the option term for grants to certain individuals in senior management. On September 5, 2014, the Company granted a total of 257,416 restricted stock units to senior management and 8,034 shares to a Director to make the individuals who received extended option terms on May 2, 2014 whole given increased tax liabilities. The shares each vest at 25% per year on the anniversary date of the grant ending September 5, 2018. No restricted stock units were issued during the quarter ended March 31, 2015. The following is a summary of non-vested restricted stock activity: Number of Units Weighted Average (in thousands) Grant Date Fair Value Non-vested at December 31, 2014 $ Granted — — Forfeited — — Vested — — Non-vested at March 31, 2015 $ |
ACCOUNTS RECEIVABLE ALLOWANCES
ACCOUNTS RECEIVABLE ALLOWANCES | 3 Months Ended |
Mar. 31, 2015 | |
ACCOUNTS RECEIVABLE ALLOWANCES | |
ACCOUNTS RECEIVABLE ALLOWANCES | NOTE 4 — ACCOUNTS RECEIVABLE ALLOWANCES The nature of the Company’s business inherently involves, in the ordinary course, significant amounts and substantial volumes of transactions and estimates relating to allowances for product returns, chargebacks, rebates, doubtful accounts and discounts given to customers. This is a natural circumstance of the pharmaceutical industry and is not specific to the Company. Depending on the product, the end-user customer, the specific terms of national supply contracts and the particular arrangements with the Company’s wholesaler customers, certain rebates, chargebacks and other credits are deducted from the Company’s accounts receivable. The process of claiming these deductions depends on wholesalers reporting to the Company the amount of deductions that were earned under the terms of the respective agreement with the end-user customer (which in turn depends on the specific end-user customer, each having its own pricing arrangement, which entitles it to a particular deduction). This process can lead to partial payments against outstanding invoices as the wholesalers take the claimed deductions at the time of payment. With the exception of the provision for doubtful accounts, which is reflected as part of selling, general and administrative expense, the provisions for the following customer reserves are reflected as a reduction of revenues in the accompanying condensed consolidated statements of comprehensive income. The ending reserve balances are included in trade accounts receivable, net in the Company’s condensed consolidated balance sheets. Net trade accounts receivable consists of the following (in thousands): DECEMBER 31, MARCH 31, 2014 2015 (as Restated) Gross accounts receivable $ $ Less reserves for: Chargebacks and rebates ) ) Product returns ) ) Discounts and allowances ) ) Advertising and promotions ) ) Doubtful accounts ) ) Trade accounts receivable, net $ $ For the three month periods ended March 31, 2015 and 2014, the Company recorded the following adjustments to gross sales (in thousands): Three Months Ended March 31, 2015 2014 (as Restated) Gross sales $ $ Less adjustments for: Chargebacks and rebates ) ) Product returns ) ) Discounts and allowances ) ) Administrative fees ) ) Advertising, promotions and others ) ) Revenues, net $ $ |
INVENTORIES, NET
INVENTORIES, NET | 3 Months Ended |
Mar. 31, 2015 | |
INVENTORIES, NET. | |
INVENTORIES, NET | NOTE 5 — INVENTORIES, NET The components of inventories are as follows (in thousands): MARCH 31, 2015 DECEMBER 31, 2014 (as Restated) Finished goods $ $ Work in process Raw materials and supplies Inventories, net $ $ The Company maintains reserves and records provisions for slow-moving and obsolete inventory as well as inventory with a cost in excess of its net realizable value. Inventory at March 31, 2015 and December 31, 2014 were reported net of these reserves of $24.1 million and $21.4 million, respectively. |
PROPERTY, PLANT AND EQUIPMENT,
PROPERTY, PLANT AND EQUIPMENT, NET | 3 Months Ended |
Mar. 31, 2015 | |
PROPERTY, PLANT AND EQUIPMENT, NET. | |
PROPERTY, PLANT AND EQUIPMENT, NET | NOTE 6 — PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment consist of the following (in thousands): MARCH 31, 2015 DECEMBER 31, 2014 (as Restated) Land and land improvements $ $ Buildings and leasehold improvements Furniture and equipment Sub-total Accumulated depreciation ) ) Property, plant and equipment placed in service, net Construction in progress Property, plant and equipment, net $ $ A portion of the Company’s property, plant and equipment is located outside the United States. At March 31, 2015, property, plant and equipment, net, with a net carrying value of $55.6 million, was located outside the United States at the Company’s manufacturing facility and regional corporate office in India and the Company’s manufacturing facility and regional corporate offices in Switzerland. While at December 31, 2014, property, plant and equipment, net, with a net carrying value of $25.6 million, respectively, was located outside the United States at the Company’s manufacturing facility and regional corporate office in India. The Company recorded depreciation expense of approximately $5.0 million and $1.9 million during the three month periods ended March 31, 2015 and 2014, respectively. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS, NET | 3 Months Ended |
Mar. 31, 2015 | |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET. | |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET | NOTE 7 — GOODWILL AND OTHER INTANGIBLE ASSETS, NET Goodwill: The following table provides a summary of the activity in goodwill by segment for the three months ended March 31, 2015 (in thousands): Consumer Health Prescription Pharmaceuticals Total Balances at December 31, 2014 (as Restated) $ $ $ Currency translation adjustments — Acquisitions — — — Dispositions — — — Balances at March 31, 2015 $ $ $ Product Licensing Rights, IPR&D, and Other Intangible Assets: The following table sets forth information about the net book value of the Company’s other intangible assets as of March 31, 2015 and December 31, 2014, and the weighted average remaining amortization period as of March 31, 2015 and December 31, 2014 (dollar amounts in thousands): Gross Amount Accumulated Amortization Impairment Net Balance Wgtd Avg Remaining Amortization Period MARCH 31, 2015 Product licensing rights $ $ ) $ — $ 13.9 IPR&D — — N/A - Indefinite lived Trademarks ) — 22.6 Customer relationships ) — 12.5 Other Intangibles ) — 8.7 Non-compete agreement ) — 0.8 $ $ ) $ — $ DECEMBER 31, 2014 (as Restated) Product licensing rights $ $ ) $ — $ 12.1 IPR&D — — N/A - Indefinite lived Trademarks ) — 18.6 Customer relationships ) — 11.0 Other Intangibles ) — 7.5 Non-compete agreement ) — 1.4 $ $ ) $ — $ The Company recorded amortization expense of approximately $16.4 million and $4.8 million during the three month periods ended March 31, 2015 and 2014, respectively. |
FINANCING ARRANGEMENTS
FINANCING ARRANGEMENTS | 3 Months Ended |
Mar. 31, 2015 | |
FINANCING ARRANGEMENTS | |
FINANCING ARRANGEMENTS | NOTE 8 — FINANCING ARRANGEMENTS Incremental Term Loan Concurrent with the closing of its acquisition of VersaPharm Incorporated (“VersaPharm”), Akorn, Inc. and its wholly owned domestic subsidiaries (the “Akorn Loan Parties”) entered into a $445.0 million Incremental Facility Joinder Agreement (the “Incremental Term Loan Facility”) pursuant to a Loan Agreement (the “Incremental Term Loan Agreement”) dated August 12, 2014 between the Akorn Loan Parties as borrowers, certain other lenders, with JPMorgan Chase Bank, N.A. (“JPMorgan”), acting as administrative agent. The proceeds received pursuant to the Incremental Term Loan Agreement were used to finance the acquisition of VersaPharm, a Georgia corporation (“VersaPharm Acquisition”). The Incremental Term Loan Facility is secured by all of the assets of the Akorn Loan Parties, including springing control of the Company’s primary deposit account pursuant to a deposit account control agreement. The Incremental Term Loan Facility requires quarterly principal repayment equal to 0.25% of the initial loan amount of $445.0 million beginning with the first full quarter following the closing date of the Incremental Term Loan Agreement, with a final payment of the remaining principal balance due at maturity seven years from the date of closing of the Existing Term Loan Agreement. The Company may prepay all or a portion of the remaining outstanding principal amount under the Incremental Term Loan Agreement at any time, or from time to time, subject to prior notice requirement to the lenders and payment of applicable fees. Prepayment of principal will be required should the Company incur any indebtedness not permitted under the Incremental Term Loan Agreement, or effect the sale, transfer or disposition of any property or asset, other than in the ordinary course of business. To the extent the Incremental Term Loan Facility is refinanced within the first six (6) months of closing, a 1.00% prepayment fee will be due. As of March 31, 2015 outstanding debt under the Incremental Term Loan Facility was $442.8 million and the Company was in full compliance with all applicable covenants which included customary limitations on indebtedness, distributions, liens, acquisitions, investments, and other activities. Interest accrues based, at the Company’s election, on an adjusted prime/federal funds rate (“ABR Loan”) or an adjusted LIBOR (“Eurodollar Loan”) rate, plus a margin of 2.50% for ABR Loans, and 3.50% for Eurodollar Loans. Each such margin will decrease by 0.25% in the event the Company’s senior debt to EBITDA ratio for any quarter falls to 2.25:1.00 or below. During an event of default, as defined in the Existing Term Loan Agreement, any interest rate will be increased by 2.00% per annum. Per the Existing Term Loan Agreement, the interest rate on LIBOR loans cannot fall below 4.50%. For the three month period ended March 31, 2015, the Company recorded interest expense of $5.0 million in relation to the Incremental Term Loan Agreement. As of and for the three month period ended March 31, 2015, and in connection with the $445.0 million Incremental Term Loan Agreement entered into in 2014, the Company amortized $0.3 million of deferred financing fees which resulted in unamortized deferred financing fees of $8.2 million remaining. The Company will amortize the remaining deferred financing fees using the effective interest method over the term of the Incremental Term Loan Agreement. Subsequent to March 31, 2015 the Company completed several loan modifications as further discussed in the Form 10-K filed on May 10, 2016. Existing Term Loan Concurrent with the closing of its acquisition of Hi-Tech (the “Hi-Tech Acquisition”) Akorn Loan Parties entered into a $600.0 million Term Facility (the “Existing Term Facility”) pursuant to a Loan Agreement dated April 17, 2014 (the “Existing Term Loan Agreement”) between the Akorn Loan Parties as borrowers, certain other lenders, with JPMorgan, acting as administrative agent. The Company may increase the loan amount up to an additional $150.0 million, or more, provided certain financial covenants and other conditions are satisfied. The proceeds received pursuant to the Existing Term Loan Agreement were used to finance the Hi-Tech Acquisition. The Existing Term Facility is secured by all of the assets of the Akorn Loan Parties, including springing control of the Company’s primary deposit account pursuant to a deposit account control agreement. The Existing Term Loan Agreement requires quarterly principal repayment equal to 0.25% of the initial loan amount of $600.0 million beginning with the second full quarter following the closing date of the Existing Term Loan Agreement, with a final payment of the remaining principal balance due at maturity seven years from the date of closing of the Existing Term Loan Agreement. The Company may prepay all or a portion of the remaining outstanding principal amount under the Existing Term Loan Agreement at any time, or from time to time, subject to prior notice requirement to the lenders and payment of applicable fees. Prepayment of principal will be required should the Company incur any indebtedness not permitted under the Existing Term Loan Agreement, or effect the sale, transfer or disposition of any property or asset, other than in the ordinary course of business. As of March 31, 2015 outstanding debt under the term loan facility was $597.0 million and the Company was in full compliance with all applicable covenants which included customary limitations on indebtedness, distributions, liens, acquisitions, investments, and other activities. Interest accrues based, at the Company’s election, on an adjusted prime/federal funds rate or an adjusted LIBOR rate, plus a margin of 2.50% for ABR Loans, and 3.50% for Eurodollar Loans. Each such margin will decrease by 0.25% in the event Akorn’s senior debt to EBITDA ratio for any quarter falls to 2.25:1.00 or below. During an event of default, as defined in the Existing Term Loan Agreement, any interest rate will be increased by 2.00% per annum. Per the Existing Term Loan Agreement, the interest rate on LIBOR loans cannot fall below 4.50%. For the three month period ended March 31, 2015, the Company recorded interest expense of $6.7 million in relation to the Existing Term Loan. As of and for the three month period ended March 31, 2015, and in connection with the $600.0 million Existing Term Loan Agreement entered into in 2014, the Company amortized $0.5 million of deferred financing fees which resulted in unamortized deferred financing fees of $13.2 million remaining. The Company will amortize the remaining deferred financing fees using the effective interest method over the term of the Existing Term Loan Agreement. During the three month period ended March 31, 2014, the Company amortized $4.0 million of ticking fees associated with the existing term loan agreement. Subsequent to March 31, 2015 the Company completed several loan modifications as further discussed in the Form 10-K filed on May 10, 2016. JPMorgan Credit Facility On April 17, 2014, the Akorn Loan Parties entered into a Credit Agreement (the “JPM Credit Agreement”) with JPMorgan as administrative agent, and Bank of America, N.A., as syndication agent for certain other lenders (at closing, Bank of America, N.A. and Wells Fargo Bank, N. A.) for a $150.0 million revolving credit facility (the “JPM Revolving Facility”). Upon entering into the JPM Credit Agreement, the Company terminated its prior $60.0 million revolving credit facility with Bank of America, N.A., as further described below. Subject to other conditions in the JPM Credit Agreement, advances under the JPM Revolving Facility will be made in accordance with a borrowing base consisting of the sum of the following: (a) 85% of eligible accounts receivable; (b) The lesser of: a. 65% of the lower of cost or market value of eligible raw materials and work in process inventory, valued on a first in first out basis, and b. 85% of the orderly liquidation value of eligible raw materials and work in process inventory, valued on a first in first out basis; (c) The lesser of: a. 75% of the lower of cost or market value of eligible finished goods inventory, valued on a first in first out basis, and b. 85% of the orderly liquidation value of eligible finished goods inventory, valued on a first in first out basis up to 85% of the liquidation value of eligible inventory (or 75% of market value finished goods inventory); and (d) Less any reserves deemed necessary by the administrative agent, and allowed in its permitted discretion. The total amount available under the JPM Revolving Facility includes a $10.0 million letter of credit facility. Under the terms of the JPM Credit Agreement, if availability under the JPM Revolving Facility falls below 12.5% of commitments or $15.0 million for more than 30 consecutive days, the Company may be subject to cash dominion, additional reporting requirements, and additional covenants and restrictions. The Company may seek additional commitments to increase the maximum amount of the JPM Revolving Facility to $200.0 million. Unless cash dominion is exercised by the lenders in connection with the JPM Revolving Facility, the Company will be required to repay the JPM Revolving Facility upon its expiration five (5) years from issuance, subject to permitted extension, and will pay interest on the outstanding balance monthly based, at the Company’s election, on an adjusted prime/federal funds rate (“ABR”) or an adjusted LIBOR (“Eurodollar”), plus a margin determined in accordance with the Company’s consolidated fixed charge coverage ratio (EBITDA to fixed charges) as follows: Fixed Charge Coverage Ratio Revolver ABR Spread Revolver Eurodollar Spread Category 1 > 1.50 to 1.0 % % Category 2 > 1.25 to 1.00 but ≤ 1.50 to 1.00 % % Category 3 ≤ 1.25 to 1.00 % % In addition to interest on borrowings, the Company will pay an unused line fee of 0.25% per annum on the unused portion of the JPM Revolving Facility. During an event of default, as defined in the JPM Credit Agreement, any interest rate will be increased by 2.00% per annum. The JPM Revolving Facility is secured by all of the assets of the Akorn Loan Parties, including springing control of the Company’s primary deposit account pursuant to a Deposit Account Control Agreement. The financial covenants require the Akorn Loan Parties to maintain the following on a consolidated basis: (a) Minimum Liquidity, as defined in the JPM Credit Agreement, of not less than (a) $120.0 million plus (b) 25% of the JPM Revolving Facility commitments during the three month period preceding the June 1, 2016 maturity date of the Company’s $120.0 million of senior convertible notes. (b) Ratio of EBITDA to fixed charges of no less than 1.00 to 1.00 (measured quarterly for the trailing 4 quarters). As of March 31, 2015 the Company was in full compliance with all covenants applicable to the JPM Revolving Facility. The Company intends to use any proceeds from borrowings under the JPM Revolving Facility for working capital needs and for the general corporate purposes of the Company and its subsidiaries, and to otherwise replace letters of credit that were outstanding upon the termination of the Company’s prior revolving credit facility with Bank of America, N.A. At March 31, 2015, there were no outstanding borrowings and one (1) outstanding letter of credit in the amount of approximately $1.2 million under the JPM Revolving Facility. Availability under the facility as of March 31, 2015 was approximately $148.8 million The JPM Credit Agreement contains representations, warranties and affirmative and negative covenants customary for financings of this type. The JPM Credit Agreement places customary limitations on indebtedness, distributions, liens, acquisitions, investments, and other activities of the Akorn Loan Parties in a manner designed to protect the collateral while providing flexibility for growth and the historic business activities of the Company and its subsidiaries. Convertible Notes On June 1, 2011, the Company closed on an offering of $120.0 million aggregate principal amount of 3.50% Convertible Senior Notes due 2016 (the “Notes”) which included $20.0 million in aggregate principal amount of the Notes issued in connection with the full exercise by the initial purchasers of their over-allotment option. The Notes are governed by the Company’s indenture with Wells Fargo Bank, N.A., as trustee (the “Indenture”). The Notes were offered and sold only to qualified institutional buyers. The net proceeds from the sale of the Notes were approximately $115.3 million, after deducting underwriting fees and other related expenses. The Notes have a maturity date of June 1, 2016 and pay interest at an annual rate of 3.50% semiannually in arrears on June 1 and December 1 of each year, beginning on December 1, 2011. The Notes are convertible into the Company’s common stock, cash or a combination thereof at an initial conversion price of $8.76 per share, which is equivalent to an initial conversion rate of approximately 114.1553 shares per $1,000 principal amount of Notes. The conversion price is subject to adjustment for certain events described in the Indenture, including certain corporate transactions which will increase the conversion rate and decrease the conversion price for a holder that elects to convert its Notes in connection with such corporate transaction. The Notes may be converted at any time prior to the close of business on the business day immediately preceding December 1, 2015 only under the following circumstances: (1) during any calendar quarter commencing after September 30, 2011, if the closing sale price of the Company’s common stock, for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the calendar quarter immediately preceding the calendar quarter in which the conversion occurs, is more than 130% of the conversion price in effect on each applicable trading day; (2) during the five consecutive trading-day period following any five consecutive trading-day period in which the trading price for the Notes per $1,000 principal amount of Notes for each such trading day was less than 98% of the closing sale price of the Company’s common stock on such date multiplied by the then-current conversion rate; or (3) upon the occurrence of specified corporate events. On or after December 1, 2015 until the close of business on the business day immediately preceding the stated maturity date, holders may surrender all or any portion of their Notes for conversion at any time, regardless of the foregoing circumstances. Upon conversion, the Company will pay or deliver, at the Company’s option, cash, shares of the Company’s common stock, or a combination thereof. If a fundamental change (as defined in the Indenture) occurs prior to the stated maturity date, holders may require the Company to purchase for cash all or a portion of their Notes. The Notes became convertible for the quarter ending on June 30, 2012 as a result of the Company’s stock trading at or above the required price of $11.39 per share for 20 of the last 30 trading days in the quarter ended March 31, 2012. The Notes have remained convertible for each successive quarter as a result of meeting the trading price requirement at the end of each prior quarter. During the year ended December 31, 2014, approximately $32.5 million of this convertible debt was converted at the holder’s request which resulted in an additional $1.0 million of expense recognized due to the conversions. During the three months ended March 31, 2015, approximately $2.4 million of the remaining convertible debt was converted at the holder’s request which resulted in an additional $0.1 million of expense recognized due to the conversions. The Notes are not listed on any securities exchange or on any automated dealer quotation system, but are traded on a secondary market made by the initial purchasers. The initial purchasers of the Notes advised the Company of their intent to make a market in the Notes following the offering, though they are not obligated to do so and may discontinue any market making at any time. As of March 31, 2015, the Notes were trading at approximately 541.5% of their face value, resulting in a total market value of $461.1 million compared to their face value of $85.2 million. The actual conversion value of the Notes is based on the product of the conversion rate and the market price of the Company’s common stock at conversion, as defined in the Indenture. As of March 31, 2015, the Company’s common stock closed at $47.51 per share, resulting in a pro forma conversion value for the Notes of approximately $461.9 million. Increases in the market value of the Company’s common stock increase the Company’s obligation accordingly. There is no upper limit placed on the possible conversion value of the Notes. The Notes are accounted for in accordance with ASC 470-20, Debt with Conversion and Other Options . Under ASC 470-20, issuers of convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement, are required to separately account for the liability (debt) and equity (conversion option) components. The application of ASC 470-20 resulted in the recognition of $21.3 million as the value for the equity component. This amount was offset by $0.8 million of equity issuance costs, as described below, and both were affected by the aggregate conversion of $34.8 million of notes as documented above. At the dates indicated, the net carrying amount of the liability component and the remaining unamortized debt discount were as follows (in thousands): March 31, 2015 December 31, 2014 Carrying amount of equity component $ $ Carrying amount of the liability component Unamortized discount of the liability component Unamortized debt financing costs The Company incurred debt issuance costs of $4.7 million related to its issuance of the Notes. In accordance with ASC 470-20, the Company allocated this debt issuance cost ratably between the liability and equity components of the Notes, resulting in $3.9 million of debt issuance costs allocated to the liability component and $0.8 million allocated to the equity component. The portion allocated to the liability component was classified as deferred financing costs and is being amortized by the effective interest method through the earlier of the maturity date of the Notes or the date of conversion, while the portion allocated to the equity component was recorded as an offset to additional paid-in capital upon issuance of the Notes. For the three month periods ended March 31, 2015 and 2014, the Company recorded the following expenses in relation to the Notes (in thousands): Three Months Ended March 31, 2015 2014 Interest expense at 3.50% coupon rate $ $ Debt discount amortization Deferred financing cost amortization Loss on conversion — $ $ Upon issuing the Notes, the Company established a deferred tax liability of $8.6 million related to the debt discount of $21.3 million, with an offsetting debit of $8.6 million to common stock. The deferred tax liability was established because the amortization of the debt discount generates non-cash interest expense that is not deductible for income tax purposes. Since the Company’s net deferred tax assets were fully reserved by valuation allowance at the time the Notes were issued, the Company reduced its valuation allowance by $8.6 million upon recording the deferred tax liability related to the debt discount with an offsetting credit of $8.6 million to common stock. As a result, the net impact of these entries was a debit of $8.6 million to the valuation reserve against the Company’s deferred tax assets and a credit of $8.6 million to deferred tax liability. The deferred tax liability is being amortized monthly as the Company records non-cash interest from its amortization of the debt discount on the Notes. Bank of America Credit Facility On October 7, 2011, the Company and its domestic subsidiaries (the “Borrowers”) entered into a Loan and Security Agreement (the “B of A Credit Agreement”) with Bank of America, N.A. (the “Agent”) and other financial institutions (collectively with the Agent, the “B of A Lenders”) through which it obtained a $20.0 million revolving line of credit, which included a $2.0 million letter of credit facility. On April 17, 2014, concurrent with the Company entering into the JPM Credit Agreement, the Company and Bank of America, N.A. agreed to early terminate the B of A Credit Agreement, without penalty. Aggregate cumulative maturities of long-term obligations (including the incremental and existing term loans, convertible debt and the JPM revolver) commencing after the quarter ended March 31, 2015 are: (In thousands) 2015 2016 2017 2018 Thereafter Maturities (1) $ $ $ $ $ (1) On February 16, 2016 the Company voluntarily prepaid $200.0 million of existing and incremental term loan principal which eliminated any further interim principal repayment obligations. The Company has not altered the schedule above for the subsequent event as of and for the quarter ended March 31, 2015. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2015 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE 9 — EARNINGS PER SHARE Basic net income per common share is based upon the weighted average number of common shares outstanding during the period. Diluted net income per common share is based upon the weighted average number of common shares outstanding, including the dilutive effect, if any, of potentially dilutive securities using the treasury stock method. Previously, diluted net income per share assumed the principal amount of the convertible Notes would be cash settled and any conversion spread would be settled using common shares, as the Company has the choice of settling either in cash or shares. The Company had demonstrated a past practice and intent of cash settlement for the principal and stock settlement of the conversion spread. As a result, earnings per share calculations for periods ended prior to and including September 30, 2014 only included the assumption of conversion to common shares for the convertible spread. During the quarter ended December 31, 2014, the Company changed its practice of cash settlement and settled redemptions using common shares for both the principal and conversion spread and accordingly, earnings per share amounts were calculated using the if-converted method. The Company’s potentially dilutive securities consist of: (i) vested and unvested stock options that are in-the-money, (ii) warrants that are in-the-money, (iii) unvested restricted stock units (“RSUs”), and (iv) shares issuable on conversion of convertible notes. Information about the computation of basic and diluted earnings per share is detailed below (in thousands, except per share data): Three Months Ended March 31, 2015 2014 Income from continuing operations used for basic earnings per share $ $ Convertible debt income adjustments, net of tax (1) — Income from continuing operations adjusted for convertible debt as used for diluted earnings per share $ $ Income from continuing operations per share: Basic $ $ Diluted $ $ Shares used in computing net income (loss) per share: Weighted average basic shares outstanding Dilutive securities: Stock option and unvested RSUs Stock warrants — Shares issuable upon conversion of convertible notes (1) Total dilutive securities Weighted average diluted shares outstanding Shares subject to stock options omitted from the calculation of income per share as their effect would have been anti-dilutive (1) As of the period ended March 31, 2014 the number of shares issuable upon conversion of the Notes is based on the assumption that the Company would repay the principal of the Notes in cash and pay any incremental value in shares of common stock. Due to a change in the expectation that management may settle all future note conversions solely through shares in the quarter ended December 31, 2014, the diluted income from continuing operations per share calculation includes the dilutive effect of convertible debt and is offset by the exclusion of interest expense and deferred financing fees related to the convertible debt of $1.1 million, after-tax for the quarter ended March 31, 2015. This also alters the dilutive share effect of the convertible notes as the Company is now using the if-converted method for debt conversion obligations. Stock Warrant Exercise On April 10, 2014, the Company’s chairman, John N. Kapoor, Ph.D., exercised all of his 7.2 million outstanding stock warrants for cash. These warrants were issued at various dates in 2009 and were scheduled to expire in 2014. The Company received cash proceeds of approximately $8.2 million from the warrant exercise during the year ended December 31, 2014. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Mar. 31, 2015 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | NOTE 10 — SEGMENT INFORMATION During the three month period ended March 31, 2015, the Company reported results for the following two reportable segments: · Prescription Pharmaceuticals · Consumer Health Prior to the three months ended June 30, 2014 the Company managed the business as three distinct reporting segments; Ophthalmics, Hospital Drugs and Injectables, and Contract Services, which were realigned as a result of the Hi-Tech acquisition to more closely align our reporting structure with the operations and management of the business. Financial information about the Company’s reportable segments is based upon internal financial reports that aggregate certain operating information. The Company’s CEO and Chief Operating Decision Maker (CODM), as defined in ASC 280 - Segment Reporting , oversees operational assessments and resource allocations based upon the results of the Company’s reportable segments, which have available and discrete financial information. Selected financial information by reportable segment is presented below (in thousands). The Company has recasted prior periods such as the three month periods ended March 31, 2014, to reflect the new segment reporting. Three Months Ended March 31, 2015 2014 Revenues: Prescription Pharmaceuticals $ $ Consumer Health Total revenues Gross Profit: Prescription Pharmaceuticals Consumer Health Total gross profit Operating expenses Operating income Other (expense) ) ) Income from continuing operations before income taxes $ $ The Company manages its reportable segments to the gross profit level and manages its operating and other costs on a company-wide basis. Inter-segment activity at the revenue and gross profit level has been minimal. The Company does not identify total assets by segment for internal purposes, as the Company’s CODM does not assess performance, make strategic decisions, or allocate resources based on assets. |
BUSINESS COMBINATIONS, DISPOSIT
BUSINESS COMBINATIONS, DISPOSITIONS AND OTHER STRATEGIC INVESTMENTS | 3 Months Ended |
Mar. 31, 2015 | |
BUSINESS COMBINATIONS, DISPOSITIONS AND OTHER STRATEGIC INVESTMENTS | |
BUSINESS COMBINATIONS, DISPOSITIONS AND OTHER STRATEGIC INVESTMENTS | NOTE 11 — BUSINESS COMBINATIONS, DISPOSITIONS AND OTHER STRATEGIC INVESTMENTS Akorn AG (formerly Excelvision AG) On July 22, 2014, Akorn International S.à r.l., a wholly owned subsidiary of Akorn, Inc. entered into a share purchase agreement with Fareva SA, a private company headquartered in France to acquire all of the issued and outstanding shares of capital stock of its wholly owned subsidiary, Excelvision AG for 21.7 million CHF (“Swiss Francs”), net of certain working capital and inventory amounts. Excelvision AG was a contract manufacturer located in Hettlingen, Switzerland specializing in ophthalmic products. On April 1, 2016 the name of Excelvision AG was changed to Akorn AG. On January 2, 2015, the Company acquired all of the outstanding shares of capital stock of Excelvision AG for $28.4 million U.S. dollars (“USD”) funded through available cash on hand including other net working capital and inventory amounts. The Company’s acquisition of Akorn AG is being accounted for as a business combination in accordance with ASC 805 - Business Combinations . The purpose of the acquisition was to expand the Company’s manufacturing capacity. During the quarter ended March 31, 2015, the Company recorded approximately $0.1 million in acquisition-related expenses in connection with the Akorn AG Acquisition. These expenses principally consisted of various legal fees and other acquisition costs which have been recorded within “acquisition related costs” as part of operating expenses in the Company’s condensed and consolidated statement of comprehensive income. The following table sets forth the consideration paid for the Akorn AG acquisition and the fair values of the acquired assets and assumed liabilities (in millions of USD) as of the acquisition date adjusted in accordance with GAAP. The figures below are preliminary and subject to review of the facts and assumptions used to determine the fair values of the acquired assets developed utilizing an income approach and may differ from historical financial results of Akorn AG. Consideration: Amount of cash paid $ Outstanding amount payable to Fareva Total consideration at closing $ Recognized amounts of identifiable assets acquired: Cash and cash equivalents $ Accounts receivable Inventory Other current assets Property and equipment Total assets acquired Assumed current liabilities ) Assumed non-current liabilities ) Deferred tax liabilities ) Total liabilities assumed ) Bargain purchase gain ) Fair value of assets acquired $ Through its acquisition of Akorn AG the Company recognized a bargain purchase gain of $0.9 million which was largely derived from the difference between the fair value and the book value of the property and equipment acquired through the acquisition. Bargain purchase gain has been recognized within net income for the quarter ended March 31, 2015. During the quarter ended March 31, 2015, the Company recorded net revenue of approximately $6.5 million related to sales from the Akorn AG location subsequent to acquisition. Lloyd Animal Health Products On October 2, 2014, Akorn Animal Health, Inc., a wholly owned subsidiary of the Company entered into a definitive Product acquisition agreement with Lloyd, Inc., to acquire certain rights and inventory related to a suite of animal health injectable products (the “Lloyd Products”) used in pain management and anesthesia. The Company acquired the products for $16.1 million, funded through available cash paid at closing, and a contingent payment of $2.0 million, discounted to $1.9 million using a 4.5% discount rate and other unobservable inputs, which was paid in 2015. The Company’s acquisition of the Lloyd Products is being accounted for as a business combination in accordance with ASC 805 - Business Combinations . The purpose of the acquisition is to expand the Company’s animal health product portfolio. The following table sets forth the consideration paid for the Lloyd Acquisition and the fair values of the acquired assets and assumed liabilities (in millions) as of the acquisition date adjusted in accordance with GAAP. The figures below may differ from historical financial results of the Lloyd Products. Consideration: Amount of cash paid $ Fair value of contingent payment Total consideration at closing $ Recognized amounts of identifiable assets acquired: Accounts receivable Inventory Product licensing rights IPR&D Accounts payable assumed ) Fair value of assets acquired $ IPR&D assets represent ongoing in-process research and development projects obtained through the acquisition. Weighted average remaining amortization period of intangible assets acquired through the Lloyd acquisition as of the closing date was 10.7 years. The rights to Lloyd Products are included within product licensing rights, net on the Company’s condensed consolidated balance sheet as of March 31, 2015 and December 31, 2014. The Company has not provided pro forma revenue and earnings of the Company as if the Lloyd Products Acquisition was completed as of January 1, 2014 because to do so would be impracticable. The acquired Lloyd Product rights were not managed as a discrete business by the previous owner. Accordingly, determining the pro forma revenue and earnings of the Company including the Lloyd Products acquisition would require significant estimates of amounts, and it is impossible to distinguish objectively information about such estimates that provides evidence of circumstances that existed on the dates at which those amounts would be recognized and measured, and would have been available when the financial statements for that prior period were issued. Xopenex Inhalation Solutions On October 1, 2014, the Company entered into a definitive product acquisition agreement with Sunovion Pharmaceuticals Inc., to acquire certain rights and inventory related to the branded product, Xopenex ® Inhalation Solution (levalbuterol hydrochloride) (the “Xopenex Product”) for $45 million, funded through available cash paid at closing, less certain liabilities for product return reserves, rebates, and chargeback reserves, which were assumed by Oak Pharmaceuticals, Inc. (“Oak”), a subsidiary of Akorn, subject to a cap. The total cash paid at closing was $41.5 million, which was net of certain liabilities for product return reserves, rebates, and chargeback reserves assumed by the Company. Xopenex ® is indicated for the treatment or prevention of bronchospasm in adults, adolescents, and children 6 years of age and older with reversible obstructive airway disease. The Company’s acquisition of Xopenex ® (the “Xopenex Acquisition”) is being accounted for as a business combination in accordance with ASC 805 - Business Combinations . The purpose of the Xopenex Acquisition is to expand the Company’s product portfolio of prescription pharmaceuticals. Pursuant to the purchase agreement, certain trademarks and patents related to the Xopenex Product will be licensed to Oak by Sunovion. Further, in connection with closing the Xopenex acquisition, the Company and Sunovion entered into a customary transition services agreement. Additionally, the Company assumed a distribution agreement for authorized generic of the product and assumed certain open purchase orders placed in ordinary course for active pharmaceutical ingredients. The following table sets forth the consideration paid for the Xopenex Acquisition and the fair values of the acquired assets and assumed liabilities (in millions) as of the acquisition date adjusted in accordance with GAAP. The figures below may differ from historical financial results of the Xopenex Product. Consideration: Amount of cash paid $ Product returns and reserves assumed Total consideration at closing $ Recognized amounts of identifiable assets acquired: Accounts Receivable, net (product returns and reserves assumed) ) Inventory Product licensing rights Fair value of net assets acquired $ Weighted average remaining amortization period of the intangible asset acquired as of the closing date was 10 years. The rights to Xopenex ® are included within product licensing rights, net on the Company’s condensed consolidated balance sheet as of March 31, 2015 and December 31, 2014. During the quarter ended March 31, 2015 the Company recorded approximately $0.1 million in acquisition related expenses in connection with the Xopenex acquisition. VPI Holdings Corp. Inc. On August 12, 2014, the Company completed its acquisition of VersaPharm, for a total purchase price of approximately $433.0 million, subject to net working capital adjustments. This purchase price was based on acquiring all outstanding equity interests of VPI Holdings Corp. (“VPI”), the parent company of VersaPharm and was equal to $440.0 million, net of various post-closing adjustments related to working capital, cash, and transaction expenses of approximately $7.0 million. On May 9, 2014, the Company entered into an Agreement and Plan of Merger (the “VP Merger Agreement”) to acquire VPI. Upon consummation of the merger, each share of VPI’s common stock and preferred stock issued and outstanding immediately prior to such time, other than those shares held in treasury by VersaPharm, owned by Akorn, Akorn Enterprises II, Inc., or VPI or any other subsidiary of VPI (each of which were cancelled) and to which dissenters’ rights have been properly exercised, were cancelled and converted into the right to receive its per share right to the aggregate merger consideration, subject to various post-closing adjustments related to working capital, cash, transaction expenses and funded indebtedness. In addition, all stock options of VPI held immediately prior to the consummation of the merger became fully vested and were cancelled upon consummation of the merger with the right to receive payment on the terms set forth in the VP Merger Agreement. The acquisition was approved by the Federal Trade Commission (“FTC”) on August 4, 2014 following review pursuant to provisions of Hart-Scott Rodino Act (“HSR”). In connection with the VersaPharm acquisition, the Company entered into an agreement (the “Rifampin Divestment Agreement”) with Watson, a wholly owned subsidiary of Allergan, Inc. (formerly Actavis plc), to divest certain rights and assets to the Company’s Rifampin injectable pending ANDA. Under the terms of the disposition the Company received $1.0 million for the pending product rights and recorded a gain of $0.8 million in Other non-operating income, net in the year ended December 31, 2014 related to the divestment. VersaPharm was a developer and marketer of multi-source prescription pharmaceuticals. We believe the acquisition complements and expands our product portfolio by diversifying our offering to niche dermatology markets. VersaPharm’s product portfolio, pipeline and development capabilities were complimentary to the Hi-Tech Pharmacal Co., Inc. (“Hi-Tech”) acquisition, described below, through which we acquired manufacturing capabilities needed for many of VersaPharm’s current and pipeline products. The VersaPharm Acquisition also enhanced our new product pipeline as VersaPharm had significant R&D experience and knowledge and numerous in-process research and development (“IPR&D”) products which were under active development. The VersaPharm Acquisition was principally funded through a $445.0 million Incremental Term Loan Facility entered into concurrent with completing the acquisition, and through available Akorn cash. For further details on the term loan financing, please refer to the description in Note 8 — Financing Arrangements . During the quarter ended March 31, 2015, the Company recorded approximately $0.4 million in acquisition-related expenses in connection with the VersaPharm Acquisition. These expenses principally consisted of various legal fees and other acquisition costs which have been recorded within “acquisition related costs” as part of operating expenses in the Company’s consolidated statement of comprehensive income in the applicable periods. The following table sets forth the consideration paid for the VersaPharm Acquisition and the fair values of the acquired assets and assumed liabilities (in millions) as of the acquisition date adjusted in accordance with GAAP. The figures below may differ from historical financial results of VersaPharm. Fair Valuation Consideration: Amount of cash paid to VersaPharm stockholders $ Amount of cash paid to vested VersaPharm option holders Amounts paid to escrow accounts Transaction expenses paid for previous owners of VersaPharm Total consideration paid at closing VersaPharm debt paid off through closing cash Total cash paid at closing $ Recognized amounts of identifiable assets acquired and liabilities assumed: Cash and cash equivalents $ Accounts receivable Inventory Other current assets Property and equipment Trademarks Product licensing rights Intangibles, other IPR&D Goodwill Total assets acquired $ Assumed current liabilities ) Assumed non-current liabilities ) Deferred tax liabilities ) Total liabilities assumed $ ) $ Goodwill represents expected synergies resulting from the combination of the entities and other intangible assets that do not qualify for separate recognition, while IPR&D assets represent ongoing projects obtained through the acquisition. The Company does not anticipate being able to deduct any of the associated incremental value of goodwill and other intangible assets for income tax purposes, but expects to be able to deduct approximately $43.2 million of value associated with pre-existing VersaPharm goodwill and other intangible assets for income tax purposes in future periods. During the quarter ended March 31, 2015 the Company recorded net revenue of approximately $13.1 million related to sales of the VersaPharm currently marketed products subsequent to acquisition. Weighted average remaining amortization period of intangible assets acquired other than goodwill and IPR&D through the VersaPharm acquisition as of the closing date was 11.4 years in aggregate, 11.4 years for product licensing rights, 11.0 years for other intangibles, and 3 years for trademarks. Hi-Tech Pharmacal Co., Inc. On April 17, 2014, the Company completed its acquisition of Hi-Tech for a total purchase price of approximately $650.0 million. This purchase price was based on acquiring all outstanding shares of Hi-Tech common stock for $43.50 per share, buying out the intrinsic value of Hi-Tech’s stock options, and paying the single-trigger separation payments to various Hi-Tech executives due upon change in control. The total consideration paid is net of Hi-Tech’s cash acquired subsequent to Hi-Tech’s payment of $44.6 million of stock options and single-trigger separation payments as of April 17, 2014. On August 27, 2013, the Company entered into an Agreement and Plan of Merger (the “HT Merger Agreement”) to acquire Hi-Tech. Subject to the terms and conditions of the HT Merger Agreement, upon completion of the merger on April 17, 2014, each share of Hi-Tech’s common stock, par value $0.01 per share, issued and outstanding and held by non-interested parties at the time of the merger (the “Hi-Tech Shares”), was cancelled and converted into the right to receive $43.50 in cash, without interest, less any applicable withholding taxes, upon surrender of the outstanding Hi-Tech shares. In connection with the Hi-Tech acquisition, the Company entered into an agreement (the “Divestment Agreement”) with Watson Laboratories, Inc., a wholly owned subsidiary of Allergan, Inc. (formerly Actavis plc), to divest certain rights and assets, as further discussed below. Hi-Tech was a specialty pharmaceutical company which developed, manufactured and marketed generic and branded prescription and OTC drug products. Hi-Tech specialized in liquid and semi-solid dosage forms and produced and marketed a range of oral solutions and suspensions, topical ointments and creams, nasal sprays, otics, sterile ophthalmics and sterile ointment and gel products. Hi-Tech’s Health Care Products division was a developer and marketer of OTC products, and their ECR subsidiary marketed branded prescription products. ECR was divested during the year ended December 31, 2014. The Hi-Tech Acquisition complemented and expanded our manufacturing capabilities and product portfolio by diversifying our offerings to our retail customers beyond ophthalmics to other niche dosage forms such as oral liquids, topical creams and ointments, nasal sprays and otics. The Hi-Tech Acquisition also enhanced our new product pipeline. Further, the Hi-Tech Acquisition added branded OTC products in the categories of cough and cold, nasal sprays and topicals to our TheraTears ® brand of eye care products. The Hi-Tech Acquisition was principally funded through a $600.0 million term loan entered into concurrent with completing the acquisition, and through Hi-Tech cash assumed through the acquisition. During the quarters ended March 31, 2015 and 2014 the Company recorded approximately $0.5 million and $0.3 million, respectively, in acquisition-related expenses in connection with the Hi-Tech Acquisition. These expenses principally consisted of various legal fees and other acquisition costs which have been recorded within “acquisition related costs” as part of operating expenses in the Company’s consolidated statement of comprehensive income in the applicable periods. The following table sets forth the consideration paid for the Hi-Tech Acquisition and the fair values of the acquired assets and assumed liabilities (in millions) as of the acquisition date adjusted in accordance with GAAP. The figures below may differ from historical financial results of Hi-Tech. Fair Valuation Consideration: Amount of cash paid to Hi-Tech shareholders $ Amount of cash paid to vested Hi-Tech option holders Amount of cash paid to key executives under single-trigger separation payments upon change-in-control $ Fair Valuation Recognized amounts of identifiable assets acquired and liabilities assumed: Cash and cash equivalents $ Accounts receivable Inventory Other current assets Property and equipment Product licensing rights IPR&D Customer Relationships Trademarks Goodwill Other non-current assets Total assets acquired $ Assumed current liabilities ) Assumed non-current liabilities ) Deferred tax liabilities ) Total liabilities assumed $ ) $ Goodwill represents expected synergies resulting from the combination of the entities and other intangible assets that do not qualify for separate recognition, while IPR&D assets represent ongoing in-process research and development projects obtained through the acquisition. The Company does not anticipate being able to deduct any of the associated incremental value of goodwill and other intangible assets for income tax purposes, but expects to be able to deduct approximately $18.9 million of value associated with pre-existing Hi-Tech goodwill and other intangible assets for income tax purposes in future periods. During the quarter ended March 31, 2015 the Company recorded net revenue of approximately $88.1 million related to sales of the Hi-Tech currently marketed products subsequent to acquisition. Weighted average amortization period of intangible assets acquired other than goodwill and IPR&D through the Hi-Tech acquisitions as of the closing date was 15.6 years in aggregate, 15.7 years for product licensing rights, 1.0 year for customer relationships and 9 years for trademarks. Watson Product Disposition In connection with the Hi-Tech acquisition, Akorn entered into an agreement (the “Disposition Agreement”) with Watson to dispose of certain rights and assets related to three Hi-Tech products marketed under Abbreviated New Drug Applications (“ANDAs”) — Ciprofloxacin Hydrochloride Ophthalmic Solution, Levofloxacin Ophthalmic Solution and Lidocaine Hydrochloride Jelly — and one Akorn product marketed under a New Drug Application: Lidocaine/Prilocaine Topical Cream, collectively “the products.” The Disposition Agreement further included one product under development. Net revenues for the Akorn products: Lidocaine/Prilocaine Topical Cream were approximately $1.5 million and $6.8 million in the years ended December 31, 2014 and 2013, respectively. This disposition was required pursuant to a proposed consent order accepted by vote of the FTC on April 11, 2014. The closing of the disposition agreement, which was contingent upon the consummation of the Company’s acquisition of 50% or more of the voting securities of Hi-Tech, took place on April 17, 2014. Under the terms of the disposition the Company received $16.8 million for the intangible product rights, associated goodwill, and saleable inventory of the products denoted above. The Company recorded a gain of $8.5 million in Other (expense) income, net in the year ended December 31, 2014, resulting from the difference of the consideration received and assets disposed. Calculation of gain from Watson product disposition (in millions) Consideration received $ Intangible assets disposed ) Goodwill disposed ) Other assets disposed ) Pre-Tax gain recognized $ Upon completing the Watson product disposition, the Company entered into a master supply agreement with Watson whereby the Company will continue manufacturing the products for a transitional period. The parties also entered into a transition services agreement, the purpose of which is to affect a smooth transfer of all intellectual property and necessary historical data to complete the ownership transfer to Watson. ECR Divestiture On June 20, 2014, the Company divested its subsidiary, ECR, excluding three branded products (specifically Cormax ® , VoSol ® HC, and Zolvit ® Oral Solution otherwise known as “Lortab Elixir”) to Valeant Pharmaceuticals International, Inc. (“Valeant”) for $41.0 million in cash and assumption of certain liabilities. Through the divestiture, the Company recognized a nominal gain on the sale of the intangible product rights, associated goodwill, saleable inventory and other assets of ECR. ECR, which promotes certain branded pharmaceuticals through its sales force, was acquired through the acquisition of Hi-Tech. As the Company has divested a component of the combined entity and does not expect material continuing cash flows, ECR results which included a net loss from discontinued operations of $0.5 million, net of tax for the period from acquisition to disposition (which both occurred during the year ended December 31, 2014) have been included within discontinued operations in the consolidated statements of comprehensive income. Calculation of gain/from ECR Divestiture (in millions) Consideration received $ Intangible assets divested ) Goodwill divested ) Other assets divested ) Assumed liabilities divested Pre-Tax Gain recognized $ Zioptan Acquisition On April 1, 2014, the Company acquired the rights to the U.S. NDA for Zioptan ® , a prescription ophthalmic eye drop indicated for reducing elevated intraocular pressure in patients with open-angle glaucoma or ocular hypertension, from Merck, Sharp and Dohme Corp. (“Merck”). The Company’s acquisition of the rights to the U.S. NDA for Zioptan ® (the “Zioptan Acquisition”) is being accounted for as a business combination in accordance with ASC 805 - Business Combinations . The purpose of the Zioptan Acquisition is to expand the Company’s product portfolio of prescription pharmaceuticals. The total cash consideration at closing was $11.2 million, all of which was recognized as product licensing rights as of the acquisition date and has an amortization period of 10 years. Upon completing the Zioptan Acquisition, the Company entered into a master supply agreement with Merck whereby Merck will continue manufacturing Zioptan ® for a transitional period. The transfer price, per the terms of the supply agreement, will equal Merck’s historical product cost. The parties also entered into a transition services agreement, the purpose of which is to affect a smooth transfer of all intellectual property and necessary historical data to complete the ownership transfer to the Company. The rights to the U.S. NDA for Zioptan ® are included within product licensing rights, net on the Company’s consolidated balance sheet as of March 31, 2015 and December 31, 2014. The Company has not provided pro forma revenue and earnings of the Company as if the Zioptan Acquisition was completed as of January 1, 2014 because to do so would be impracticable. The acquired Zioptan ® rights were not managed as a discrete business by Merck. Accordingly, determining the pro forma revenue and earnings of the Company including the Zioptan Acquisition would require significant estimates of amounts, and it is impossible to distinguish objectively information about such estimates that provides evidence of circumstances that existed on the dates at which those amounts would be recognized and measured, and would have been available when the financial statements for that prior period were issued. Betimol Acquisition On January 2, 2014, the Company acquired the NDA rights to Betimol ® , a prescription ophthalmic eye drop for the reduction of eye pressure in glaucoma patients, from Santen. The Company’s acquisition of U.S. NDA rights to Betimol ® (the “Betimol Acquisition”) is being accounted for as a business combination in accordance with ASC 805 - Business Combinations . The purpose of the Betimol Acquisition is to expand the Company’s product portfolio of prescription pharmaceuticals. The total consideration will be equal to 1.5 times the Company’s net sales of Betimol ® in the first year following acquisition, such year starting upon the Company’s first sale of the product. The Company paid $7.5 million upon completing the acquisition and paid the remaining amount of $4.7 million following the first year post-acquisition in June 2015. There is also a provision for a $2.0 million increase to the total consideration should net sales of Betimol ® exceed $14.0 million in any one of the first five years following acquisition, the Company currently has valued this at $0. Upon completing the Betimol Acquisition, the Company entered into a supply agreement with Santen whereby Santen will continue manufacturing Betimol ® for a transitional period. The transfer price, per the terms of the supply agreement, will equal Santen’s cost of active pharmaceutical ingredients (“API”) plus actual cost of manufacturing the product, making this a favorable contract pursuant to ASC 805 — Business Combinations . The parties also entered into a transition services agreement, the purpose of which is to affect a smooth transfer of all intellectual property and necessary historical data to complete the ownership transfer to the Company. The following table sets forth the consideration paid for the Betimol Acquisition and the fair values of the acquired assets and assumed liabilities (in millions) as of the acquisition date adjusted in accordance with GAAP. Betimol Acquisition: Consideration paid in cash at closing $ Purchase consideration payable $ Fair value of acquired assets: U.S. NDA rights to Betimol ® $ Favorable supply agreement $ The U.S. NDA rights to Betimol ® are included within product licensing rights, net on the Company’s consolidated balance sheet as of March 31, 2015 and December 31, 2014 and has an amortization period of 15 years. The favorable supply agreement is included within other long-term assets on the Company’s consolidated balance sheet as of March 31, 2015 and December 31, 2014. The Company originally estimated that it would owe additional consideration to Santen of approximately $4.5 million. Since this was a performance-based earn-out payment, this additional consideration was originally discounted to approximately $4.0 million. As noted above and during the year ended December 31, 2015, the Company remitted payment of $4.7 million to settle the outstanding Santen liability in full, recognizing an additional $0.2 million of contingent earn-out expense. The Company has not provided pro forma revenue and earnings of the Company as if the Betimol Acquisition was completed as of January 1, 2014 because to do so would be impracticable. The acquired Betimol ® rights were not managed as a discrete business by Santen. Accordingly, determining the pro forma revenue and earnings of the Company including the Betimol Acquisition would require significant estimates of amounts, and it is impossible to distinguish objectively information about such estimates that provides evidence of circumstances that existed on the dates at which those amounts would be recognized and measured, and would have been available when the financial statements for that prior period were issued. Other Individually Insignificant Product Acquisitions During the three months ended March 31, 2015 and 2014 the Company did not acquire any individually insignificant drug product licensing rights (NDA, ANDA and ANADA rights). Pro Forma Operations The unaudited pro forma results presented below reflect the consolidated results of operations inclusive of the Akorn AG acquisition which occurred during the quarter ended March 31, 2015, as if the transaction had taken place on January 1, 2015, and the Xopenex acquisition, VersaPharm acquisition and Akorn Rifampin product divestiture (“VersaPharm transactions”), and the Hi-Tech acquisition, Watson product disposition and ECR divestiture (“Hi-Tech transactions”) which occurred during the year ended December 31, 2014, as if the transactions had taken place on January 1, 2014. The pro forma results include amortization associated with the acquired tangible and intangible assets, interest on debt incurred for the transactions, amortization of inventory step-up, acquisition related expenses and income tax expense affected for the pro forma results. The unaudited pro forma financial information presented below does not reflect the impact of any actual or anticipated synergies expected to result from the acquisitions. Accordingly, the unaudited pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transactions been effected on the assumed date (amounts in thousands, except per share data): For the Three Months Ended March 31, 2015 2014 Revenue $ $ Net income from continuing operations Net income from continuing operations per share $ $ Other Strategic Investments On August 1, 2011, the Company entered into a Series A-2 Preferred Stock Purchase Agreement to acquire a minority ownership interest in Aciex Therapeutics Inc. (“Aciex”), a private ophthalmic development pharmaceutical company based in Westborough, Massachusetts, for $8.0 million in cash. Subsequently, on September 30, 2011, the Company entered into Amendment No. 1 to Series A-2 Preferred Stock Purchase Agreement to acquire additional shares of Series A-2 Preferred Stock in Aciex for approximately $2.0 million in cash. On April 17, 2014, the Company entered into a secured note and warrant purchase agreement to acquire secured, convertible promissory notes of Aciex for approximately $0.4 million in cash. On June 27, 2014, the Company entered into a second secured note and warrant purchase agreement to acquire additional secured, convertible promissory notes of Aciex for an additional amount of approximately $0.4 million. The Company’s aggregate investment in Aciex was $10.8 million at cost. Aciex was an ophthalmic drug development company focused on developing novel therapeutics to treat ocular diseases. Aciex’s pipeline consisted of both clinical stage assets and pre-investigational new drug stage assets. The investments detailed above provided the Company with an ownership interest in Aciex of below 20%. The Aciex Agreement and Aciex Amendment contained certain customary rights and preferences over the common stock of Aciex and further provided that the Company would have had the right to a seat on the Aciex board of directors. On July 2, 2014 Nicox S.A., (“Nicox”) an international company entered into an arrangement to acquire all of the outstanding equity of Aciex (the “Aciex Acquisition”). On October 22, 2014 Nicox shareholders voted to approve the Aciex Acquisition. The transaction was consummated on October 24, 2014, following the completion of certain legal conditions and formalities. As consideration for its carried investment in Aciex, the Company received from the Aciex Acquisition pro-rata shares of Nicox which are publically traded on the Euronext Paris exchange. Through the closing the Company received approximately 4.3 million shares of Nicox which were subject to certain lockup provisions preventing immediate sale of underlying shares received for the |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2015 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 12 — COMMITMENTS AND CONTINGENCIES Payments Due under Strategic Business Agreements The Company has entered into strategic business agreements for the development and marketing of finished dosage form pharmaceutical products with various pharmaceutical development companies. Each strategic business agreement includes a future payment schedule for contingent milestone payments. The Company will be responsible for contingent milestone payments to these strategic business partners based upon the occurrence of future events. Each strategic business agreement defines the triggering event for any required future payments, such as meeting product development progress timelines, successful product testing and validation, successful clinical studies, various U.S. Food and Drug Administration (“FDA”) and other regulatory approvals and other factors as negotiated in each agreement. None of the contingent milestone payments is expected to be individually material to the Company. The Company’s estimate of future milestone payments may vary significantly from period to period. When realized, milestone payments related to events prior to FDA approval will be reported as part of research and development expense in the Company’s condensed consolidated statement of comprehensive income. Milestone payments due upon receipt of FDA approval will be capitalized as intangible assets. Based on the agreements the Company has in place with strategic business partners as of March 31, 2015, the table below sets forth the approximate timing and dollar amount of payments that would be due under those agreements, assuming the underlying milestones are achieved in the years indicated (in thousands): Year of Payment Amount 2015 $ 2016 2017 Total $ Purchase Commitments The Company is engaged in various supply agreements with third parties which obligate the Company to purchase various API or finished products at contractual minimum levels. None of these agreements are individually or in aggregate material to the Company. Further, the Company does not believe at this time that any of the purchase obligations represent levels above that of normal business demands. Legal Proceedings Shareholder and Derivative Litigation. On March 4, 2015, a purported class action complaint was filed entitled Yeung v. Akorn, Inc., at el. , in the federal district court of Northern District of Illinois, No. 15-cv-1944. The complaint alleged that the Company and three of its officers violated the federal securities laws in connection with matters related to its accounting and financial reporting in the wake of its acquisitions of Hi-Tech Pharmaceutical Co., Inc. and VersaPharm, Inc. The Company and individual defendants dispute these claims and intend to vigorously defend these allegations. Fera Pharmaceuticals, LLC v. Akorn Inc., Sean Brynjelsen, and Michael Stehn , in the United States District Court for the Southern District of New York, Case No. 12-cv-07692-LLS. Fera Pharmaceuticals, LLC (“Fera”) filed this action on September 12, 2012. The defendants in the case are the Company and two of its employees, Sean Brynjelsen and Michael Stehn. The amended complaint generally alleges that the Company breached certain terms of a contract manufacturing supply agreement by, among other things, failing to manufacture Fera’s products, raising the manufacturing cost, and impermissibly terminating the contract. In addition, Fera alleges that the Company misappropriated Fera’s trade secrets in order to manufacture Erythromycin and Bacitracin for its own benefit. The counts in the amended complaint are for (1) breach of contract, (2) misappropriation of trade secrets, (3) fraudulent inducement, and (4) declaratory and injunctive relief. Fera seeks $135 million in compensatory damages, an additional, unspecified amount in punitive damages, and injunctive relief restraining the Company from selling the products at issue in the case. On January 13, 2015, the Company filed a counterclaim against Fera and certain affiliates, as well as Perrigo Company of Tennessee and Perrigo Company plc, asserting violations of Sections 1 and 2 of the Sherman Act and tortious interference with business relations. The case is in the discovery phase, and no trial date has been scheduled. State of Louisiana v. Abbott Laboratories, Inc., et al. , The Louisiana Attorney General filed suit, Number 624,522, Nineteenth Judicial District Court, Parish of East Baton Rouge, including Hi-Tech Pharmacal and other defendants, in Louisiana state court. Louisiana’s complaint alleges that the defendants violated Louisiana state laws in connection with Medicaid reimbursement for certain vitamins, dietary supplements, and DESI products that were allegedly ineligible for reimbursement. The defendants filed exceptions of no cause of action and no right of action in response to Louisiana’s amended complaint. In May 2013, Inspire, a wholly owned subsidiary, received a Notice Letter that Mylan Pharmaceuticals, Inc. (“Mylan”) filed an ANDA with the FDA seeking marketing approval for a 1% azithromycin ophthalmic solution prior to the expiration of the five U.S. patents licensed to us and listed in the Orange Book for Azasite®. On June 14, 2013, Insite, Merck, Inspire and Pfizer filed a complaint against Mylan and a related entity alleging that their proposed product infringes the listed patents. The parties agreed to settle the matter and the case was dismissed by court order on March 4, 2015. Former Hi-Tech director and employee Reuben Seltzer delivered to the Company a demand letter in August 2014 alleging that the Company breached his employment agreement and improperly terminated Mr. Seltzer’s employment. Mr. Seltzer further alleges that he is entitled to compensation in the approximate amount of $5.2 million. The Company disputes these claims and intends to vigorously defend these allegations. See Note 17 - “Subsequent Events” in this Report on Form 10-Q and our most current Form 10-K (Note 22 – “Legal Proceedings”) that was filed with the SEC on May 10, 2016 for updated information regarding the above and other legal proceedings. |
CUSTOMER AND SUPPLIER CONCENTRA
CUSTOMER AND SUPPLIER CONCENTRATION | 3 Months Ended |
Mar. 31, 2015 | |
CUSTOMER AND SUPPLIER CONCENTRATION | |
CUSTOMER AND SUPPLIER CONCENTRATION | NOTE 13 — CUSTOMER AND SUPPLIER CONCENTRATION Customer Concentrations A significant percentage of the Company’s sales are to three large wholesale drug distributors: AmerisourceBergen Corporation; Cardinal Health, Inc.; and McKesson Corporation. These three wholesalers are all distributors of the Company’s products, as well as suppliers of a broad range of health care products. The following table sets forth the percentage of the Company’s gross accounts receivable as of March 31, 2015 and December 31, 2014, and the gross and net sales for the three month periods ended March 31, 2015 and 2014, attributable to the Big 3 Wholesalers: Three months ended March 31, 2015 2014 Big 3 Wholesalers combined: Percentage of gross sales % % Percentage of net sales revenues % % March 31, 2015 December 31, 2014 Percentage of gross trade accounts receivable % % No other customers accounted for more than 10% of gross sales, net revenues or gross trade receivables for the indicated dates and periods. Supplier Concentrations The Company requires a supply of quality raw materials and components to manufacture and package pharmaceutical products for its own use and for third parties with which it has contracted. The principal components of the Company’s products are active and inactive pharmaceutical ingredients and certain packaging materials. Certain of these ingredients and components are available from only a single source and, in the case of many of our products, only one supplier of raw materials has been identified and qualified. Because FDA approval of drugs requires manufacturers to specify their proposed suppliers of active ingredients and certain packaging materials in their applications, FDA approval of any new supplier would be required if such active ingredients or such packaging materials were no longer available from the specified supplier. The qualification of a new supplier could delay the Company’s development and marketing efforts. In addition, certain of the pharmaceutical products marketed by the Company are manufactured by a third party manufacturer that serves as the Company’s sole source of that finished product. If for any reason the Company is unable to obtain sufficient quantities of any of the raw materials or components required to produce and package its products, it may not be able to manufacture its products as planned, which could have a material adverse effect on the Company’s business, financial condition and results of operations. Likewise, if the Company’s manufacturing partners experience any similar difficulties in obtaining raw materials or in manufacturing the finished product, the Company’s results of operations would be negatively impacted. During the three month periods ended March 31, 2015 and 2014, none of the Company’s suppliers accounted for 10% or more of the Company’s total purchases during the applicable periods. Product Concentrations In the three month period ended March 31, 2015 one Prescription Pharmaceutical product represented approximately 10% of the Company’s total net sales. Comparatively, in the three month period ended March 31, 2014 a separate Prescription Pharmaceutical product represented approximately 10% of the Company’s total net sales. The Company attempts to minimize the risk associated with product concentrations by continuing to acquire and develop new products to add to its portfolio. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2015 | |
INCOME TAXES | |
INCOME TAXES | NOTE 14 — INCOME TAXES The following table sets forth information about the Company’s income tax provision for the periods indicated (dollar amounts in thousands): Three Months ended March 31, 2015 2014 Income from continuing operations before income taxes $ $ Income tax provision Net income from continuing operations $ $ Income tax provision as a percentage of income before income taxes % % In accordance with ASC 740-10-25, Income Taxes — Recognition, the Company reviews its tax positions to determine whether it is “more likely than not” that its tax positions will be sustained upon examination, and if any tax positions are deemed to fall short of that standard, the Company establishes reserves based on the financial exposure and the likelihood that its tax positions would not be sustained. Based on its evaluations, the Company determined that it would not recognize tax benefits on $2.0 million and $2.0 million related to uncertain tax positions as of March 31, 2015 and December 31, 2014, respectively. If recognized, $1.2 million of these tax positions will impact the Company’s effective rate with the remaining $0.8 million affecting goodwill. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2015 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 15 — RELATED PARTY TRANSACTIONS During the three month periods ended March 31, 2015 and 2014, the Company obtained legal services totaling $0.3 million and $0.5 million, respectively, of which $0.2 million was payable as of March 31, 2015 and $0.1 million was payable as of March 31, 2014, from Polsinelli PC (formerly Polsinelli Shughart PC), a law firm for which the spouse of the Company’s Senior Vice President, General Counsel and Secretary is an attorney and shareholder. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
Mar. 31, 2015 | |
RECENT ACCOUNTING PRONOUNCEMENTS | |
RECENT ACCOUNTING PRONOUNCEMENTS | NOTE 16 — RECENT ACCOUNTING PRONOUNCEMENTS RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09 - Compensation - Stock Compensation , which simplifies the accounting for the tax effects related to stock based compensation, including adjustments to how excess tax benefits and a company’s payments for tax withholdings should be classified, amongst other items. ASU 2016-09 is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that ASU 2016-09 will have on its statement of financial position or financial statement disclosures. In March 2016, the FASB issued ASU 2016-08 - Revenue from Contracts with Customers: Principal versus Agent Considerations . The amendments of this standard are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. The effective date for ASU 2016-08 is the same as the effective date for ASU 2014-09 and ASU 2015-14 . The Company is currently evaluating the impact that ASU 2016-08 will have on its statement of financial position or financial statement disclosures. In February 2016, the FASB issued ASU 2016-02 - Leases which establishes a comprehensive new lease accounting model. The new standard clarifies the definition of a lease and causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease term of more than one year. ASU 2016-02 is effective for financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The new standard requires a modified retrospective transition for capital or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements, but it does not require transition accounting for leases that expire prior to the date of initial application. The Company is currently evaluating the impact that ASU 2016-02 will have on its statement of financial position or financial statement disclosures. In November 2015, the FASB issued ASU 2015-17 - Balance Sheet Classification of Deferred Taxes to simplify the presentation of deferred income taxes. ASU 2015-17 requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. ASU 2015-17 is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company is currently evaluating the impact that ASU 2015-17 will have on its statement of financial position or financial statement disclosures. In September 2015, the FASB issued ASU 2015-16 - Business Combinations . ASU 2015-16 simplifies the accounting for measurement-period adjustments by requiring adjustments to provisional amounts in a business combination to be recognized in the reporting period in which the adjustment amounts are determined and eliminates the requirement to retrospectively account for those adjustments. ASU 2015-16 requires an entity to present separately on the face of the income statement or disclose in the notes the amount recorded in current-period earnings that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company is currently evaluating the impact that ASU 2015-16 will have on its statement of financial position or financial statement disclosures. In August 2015, the FASB issued ASU No. 2015-14 - Revenue from Contracts with Customers (Topic 606) — Deferral of the Effective Date , which defers the effective date of ASU 2014-09 for one year and permits early adoption as early as the original effective date of ASU 2014-09 . The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company is currently evaluating the impact that ASU 2014-09 will have on its statement of financial position or financial statement disclosures. In July 2015, the FASB issued ASU 2015-12 - Plan Accounting: Defined Benefit Plans (Topic 960) Defined Contribution Pension Plans (Topic 962) Health and Welfare Benefit Plans (Topic 965) . The standard (1) requires an employee benefit plan to use contract value as the only measurement amount for fully benefit-responsive investment contracts, (2) simplifies and increases the effectiveness of plan investment disclosure requirements for employee benefit plans, and (3) provides employee benefit plans with a measurement-date practical expedient. The standard will be effective for the Plan beginning in fiscal year 2017, with early adoption permitted. The Company is currently evaluating the ASU 2015-12 will have on its statement of financial position or financial statement disclosures. In July 2015, the FASB issued ASU 2015-11 - Inventory . ASU 2015-11 simplifies the measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value. ASU 2015-11 is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company is currently evaluating the impact that ASU 2015-11 will have on its statement of financial position or financial statement disclosures. In April 2015, the FASB issued ASU 2015-03 - Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs , which simplifies the presentation of debt issuance costs by requiring that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. ASU 2015-03 is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company is currently evaluating the impact that ASU 2015-03 will have on its statement of financial position or financial statement disclosures. In August 2014, the FASB issued ASU 2014-15 - Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern , to provide guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years.. The Company is currently evaluating the impact that ASU 2014-15 will have on its statement of financial position or financial statement disclosures. In May 2014, FASB issued ASU 2014-09 - Revenue from Contracts with Customers , which provides guidance for revenue recognition. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets and supersedes the revenue recognition requirements in ASC 605 - Revenue Recognition , and most industry-specific guidance. This ASU also supersedes some cost guidance included in ASC 605-35 - Revenue Recognition - Construction-Type and Production-Type Contracts . The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. In doing so, companies will be required to use more judgment and make more estimates than under previous guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09, as amended by ASU 2015-14, is effective for the Company for the fiscal year beginning January 1, 2018 and, at that time the Company may adopt the new standard under the full retrospective approach or the modified retrospective approach, as permitted under the standard. Early adoption of the standard is permitted beginning on January 1, 2017. The Company is currently evaluating the impact that ASU 2014-09 will have on its statement of financial position or financial statement disclosures. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS In April 2014, the FASB issued ASU No. 2014-08 - Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity , which changes the criteria for reporting discontinued operations while enhancing disclosures in this area. Pursuant to ASU 2014-08 , only disposals representing a strategic shift, such as a major line of business, a major geographical area or a major equity investment, which were not expected to have continuing cash flows should be presented as a discontinued operation. If the disposal does qualify as a discontinued operation under ASU 2014-08 , the entity will be required to provide expanded disclosures. ASU 2014-08 was adopted by the Company for the year beginning January 1, 2015 and did not have a material impact on the Company’s consolidated financial statements. In July 2013, the FASB issued ASU 2013-11 - Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. ASU 2013-11 was issued to eliminate the diversity in practice in presentation of unrecognized tax benefits, and amends ASC 740 - Income Taxes, to provide clarification of the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforwar 15-23248-3 d, a similar tax loss, or a tax credit carryforward exists. According to the new guidance, unrecognized tax benefits will be netted against all available same-jurisdiction loss or other tax carryforward that would be utilized, rather than only being netted against carryforwards that are created by the unrecognized tax benefits. The revised guidance was adopted by the Company for the year beginning January 1, 2014 and did not have a material impact on the Company’s consolidated financial statements. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 17 – SUBSEQUENT EVENTS In a judgment entered on October 2, 2015, the trial court in the State of Louisiana case described under “Legal Proceedings” above sustained the defendants' exception of no right of action, which dismissed all of Louisiana’s claims. Louisiana sought appellate review of the court's decision by filing an application for supervisory writs, as well as an appeal pending in the First Circuit Court of Appeal in Louisiana. On May 4, 2015, a case entitled Sarzynski v. Akorn, Inc., et al., No. 15- cv-3921, was filed which makes similar allegations to the Yeung case described in “Legal Proceedings” above and seeks unspecified damages. On August 24, 2015, the two cases were consolidated and a lead plaintiff appointed in In re Akorn, Inc. Securities Litigation. No motions or answer have been filed in the case. Two shareholder derivative lawsuits also have been filed alleging breaches of fiduciary duty in connection with the Company’s accounting for its acquisition and pending restatement of its financials. The cases are Safriet v. Rai, et al., No. 15-cv-7275 filed August 19, 2015, and Glaubach v. Rai, et al., No. 15- 11129 filed December 10, 2015, and seek unspecified monetary damages, restitution from the individual defendants and specified changes to the Company’s corporate governance and internal procedures. Both cases were filed in the Northern District of Illinois and have been stayed pending anticipated rulings on any motions to dismiss the defendants may file in In re Akorn, Inc. Securities Litigation. On March 8, 2016, an additional case was filed, Kogut v. Akorn, Inc., et al., in Louisiana state court in the Parish of East Baton Rouge, No. 646474. The Kogut action seeks an order requiring the Company to make its pending SEC filings, issue audited financial statements, and hold its annual shareholder meeting. In addition, Akorn has received shareholder demands for legal action to be taken against certain of the Company’s directors and officers based on alleged breaches of fiduciary duties and other misconduct in connection with the Company’s restatement of financial results and other matters. Akorn's Board of Directors formed a special committee to conduct an inquiry into the demand allegations and to provide its conclusions and recommendations to the Board. The Chicago Regional Office of the Securities and Exchange Commission (SEC) is conducting an investigation regarding the previously disclosed restatement, internal controls and other related matters. Additionally, the United States Attorney’s Office for the Southern District of New York (USAO) has requested information regarding these matters. Akorn has been furnishing requested information and is fully cooperating with the SEC and USAO. The legal matters discussed above, and in Note 12, could result in losses, including damages, fines and civil penalties, and criminal charges, which could be substantial. We record accruals for these contingencies to the extent that we conclude that a loss is both probable and reasonably estimable. As of the date of this filing, although the Company has determined that liabilities associated with these legal matters are reasonably possible, they cannot be reasonably estimated. Given the nature of the litigation and investigations discussed above and the complexities involved, the Company is unable to reasonably estimate a possible loss for such matters until the Company knows, among other factors, (i) what claims, if any, will survive dispositive motion practice, (ii) the extent of the claims, including the size of any potential class, particularly when damages are not specified or are indeterminate, (iii) how the discovery process will affect the litigation, (iv) the settlement posture of the other parties to the litigation and (v) any other factors that may have a material effect on the litigation or investigation. However, we could incur judgments, enter into settlements or revise our expectations regarding the outcome of certain matters, and such developments could have a material adverse effect on our results of operations in the period in which the amounts are accrued and/or our cash flows in the period in which the amounts are paid. The Company completed several existing and incremental loan modifications which resulted in additional deferred financing fee capitalization and amortization in subsequent periods. On February 16, 2016 the Company voluntarily prepaid a portion of the existing and incremental term loan principal which eliminated any further interim principal repayment obligation after that date. See also related Risk Factors in our Form 10-K that was filed with the SEC on May 10, 2016. |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Consolidation | Consolidation: The accompanying condensed consolidated financial statements include the accounts of Akorn, Inc. and its wholly owned domestic and foreign subsidiaries. All inter-company transactions and balances have been eliminated in consolidation, and the financial statements of Akorn India Private Limited (“AIPL”) and Akorn AG (formerly “Excelvision AG” or “Hettlingen”) have been translated from Indian Rupees to U.S. Dollars and Swiss Francs to U.S. Dollars, respectively based on the currency translation rates in effect during the period or as of the date of consolidation, as applicable. The Company has no involvement with variable interest entities. |
Use of Estimates | Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. Significant estimates and assumptions for the Company relate to the allowances for chargebacks, rebates, product returns, coupons, promotions and doubtful accounts, as well as the reserve for slow-moving and obsolete inventories, the carrying value and lives of intangible assets, the useful lives of fixed assets, the carrying value of deferred income tax assets and liabilities, the assumptions underlying share-based compensation, accrued but unreported employee benefit costs and assumptions underlying the accounting for business combinations. |
Revenue Recognition | Revenue Recognition: Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the sales price is fixed or determinable, and collectability is reasonably assured. Revenue from product sales are recognized when title and risk of loss have passed to the customer. Provision for estimated chargebacks, rebates, discounts, managed care rebates, product returns and doubtful accounts is made at the time of sale and is analyzed and adjusted, if necessary, at each balance sheet date. |
Freight | Freight: The Company records amounts billed to customers for shipping and handling as revenue, and records shipping and handling expense related to product sales as cost of sales. |
Cash and Cash Equivalents | Cash and Cash Equivalents: The Company considers all unrestricted, highly liquid investments with maturity of three months or less when acquired, to be cash and cash equivalents. |
Accounts Receivable | Accounts Receivable: Trade accounts receivables are stated at their net realizable value. The nature of the Company’s business involves, in the ordinary course, significant judgments and estimates relating to chargebacks, coupon redemption, product returns, rebates, discounts given to customers and allowances for doubtful accounts. Depending on the products, the customers, the specific terms of national supply contracts and the particular arrangements with the Company’s wholesaler customers, certain rebates, chargebacks and other credits are recorded as deductions to the Company’s trade accounts receivable. Unless otherwise noted, the provisions and allowances for the following customer deductions are reflected in the accompanying condensed consolidated financial statements as reductions of revenues and trade accounts receivable, respectively. |
Chargebacks, Rebates, Discounts and Other Adjustments | Chargebacks, Rebates, Discounts and Other Adjustments: The Company enters into contractual agreements with certain third parties such as retailers, hospitals, group-purchasing organizations (“GPOs”) and managed care organizations to sell certain products at predetermined prices. Similarly, we maintain an allowance for rebates and discounts related to billbacks, wholesaler service fee for service contracts, GPO administrative fees, government programs, prompt payment and other adjustments with certain customers. Most of the parties have elected to have these contracts administered through wholesalers that buy the product from the Company and subsequently sell it to these third parties. When a wholesaler sells products to one of these third parties that are subject to a contractual price agreement, the difference between the price paid to the Company by the wholesaler and the price under the specific contract is charged back to the Company by the wholesaler. The Company tracks sales and submitted chargebacks by product number and contract for each wholesaler. Utilizing this information, the Company estimates a chargeback percentage for each product and records an allowance as a reduction to gross sales when the Company records its sale of the products. The Company reduces the chargeback allowance when a chargeback request from a wholesaler is processed. Actual chargebacks processed by the Company can vary materially from period to period based upon actual sales volume through the wholesalers. However, the Company’s provision for chargebacks is fully reserved for at the time when sales revenues are recognized. Management obtains certain wholesaler inventory reports to aid in analyzing the reasonableness of the chargeback allowance and which are additionally monitored to ensure that wholesaler inventory levels by product do not significantly exceed underlying customer demand. The Company assesses the reasonableness of its chargeback allowance by applying the product chargeback percentage based on a combination of historical activity and future price and mix expectations to the quantities of inventory on hand at the wholesaler per wholesaler inventory reports. In accordance with its accounting policy, the Company estimates the percentage amount of wholesaler inventory that will ultimately be sold to third parties that are subject to contractual price agreements based on a trend of such sales through wholesalers. The Company uses this percentage estimate until historical trends indicate that a revision should be made. On an ongoing basis, the Company evaluates its actual chargeback rate experience, and new trends are factored into its estimates each quarter as market conditions change. Similarly, the Company maintains an allowance for rebates related to contract and other programs with certain customers. Rebate percentages vary by product and by volume purchased by each eligible customer. The Company tracks sales by product number for each eligible customer and then applies the applicable rebate percentage, using both historical trends and actual experience to estimate its rebate allowance. The Company reduces gross sales and increases the rebate allowance by the estimated rebate amount when the Company sells its products to its rebate-eligible customers. The Company reduces the rebate allowance when it processes a customer request for a rebate. At each balance sheet date, the Company analyzes the allowance for rebates against actual rebates processed and makes necessary adjustments as appropriate. Actual rebates processed can vary materially from period to period. Other adjustments consist primarily of price adjustments, also known as “shelf-stock adjustments” and “price protections,” which are both credits issued to reflect increases or decreases in the invoice or contract prices of the Company’s products. In the case of a price decrease a credit is given for product remaining in customer’s inventories at the time of the price reduction. Contractual price protection results in a similar credit when the invoice or contract prices of the Company’s products increase, effectively allowing customers to purchase products at previous prices for a specified period of time. Amounts recorded for estimated shelf-stock adjustments and price protections are based upon specified terms with direct customers, estimated changes in market prices, and estimates of inventory held by customers. The Company regularly monitors these and other factors and evaluates the reserve as additional information becomes available. Other adjustments also include prompt payment discounts. |
Sales Returns | Sales Returns: Certain of the Company’s products are sold with the customer having the right to return the product within specified periods and guidelines for a variety of reasons, including but not limited to, pending expiration dates. Provisions are made at the time of sale based upon tracked historical experience. Historical factors such as one-time events as well as pending new developments that would impact the expected level of returns are taken into account to determine the appropriate reserve estimate at each balance sheet date. As part of the evaluation of the balance required, the Company considers actual returns to date that are in process, the expected impact of any product recalls and the wholesaler’s inventory information to assess the magnitude of unconsumed product that may result in sales returns to the Company in the future. The sales returns level can be impacted by factors such as overall market demand and market competition and availability for substitute products which can increase or decrease the pull through for sales of the Company’s products and ultimately impact the level of sales returns. Actual returns experience and trends are factored into the Company’s estimates each quarter as market conditions change. Actual returns processed can vary materially from period to period. |
Allowance for Coupons, Promotions and Co-Pay discount cards | Allowance for Coupons, Promotions and Co-Pay discount cards: The Company issues coupons from time to time that are redeemable against certain of our Consumer Health products. Upon release of coupons into the market, the Company records an estimate of the dollar value of coupons expected to be redeemed. This estimate is based on historical experience and is adjusted as needed based on actual redemptions. In addition to couponing, from time to time the Company authorizes various retailers to run in-store promotional sales of its products. Upon receiving confirmation that a promotion was run, the Company accrues an estimate of the dollar amount expected to be owed back to the retailer. This estimate is trued up to actual upon receipt of the invoice from the retailer. Additionally, the Company provides consumer co-pay discount cards, administered through outside agents to provide discounted products when redeemed. Upon release of the cards into the market, the Company records an estimate of the dollar value of co-pay discounts expected to be utilized. This estimate is based on historical experience and is adjusted as needed based on actual usage. |
Doubtful Accounts | Doubtful Accounts: Provisions for doubtful accounts, which reflect trade receivable balances owed to the Company that are believed to be uncollectible, are recorded as a component of selling, general and administrative (“SG&A”) expenses. In estimating the allowance for doubtful accounts, the Company considers its historical experience with collections and write-offs, the credit quality of its customers and any recent or anticipated changes thereto, and the outstanding balances and past due amounts from its customers. Note that in the ordinary course of business, and consistent with our peers, we may from time to time offer extended payment terms to our customers as an incentive for new product launches and in other circumstances in accordance with industry practices. These extended payment terms do not represent a significant risk to the collectability of accounts receivable as of the period-end and are evaluated in accordance with Accounting Standards Codification (ASC) 605 - Revenue Recognition as applicable. Accounts are considered past due when they remain uncollected beyond the due date specified in the applicable contract or on the applicable invoice, whichever is deemed to take precedence. |
Advertising and Promotional Allowances to Customers | Advertising and Promotional Allowances to Customers: The Company routinely sells its consumer health products to major retail drug chains. From time to time, the Company may arrange for these retailers to run in-store promotional sales of the Company’s products. The Company reserves an estimate of the dollar amount owed back to the retailer, recording this amount as a reduction to revenue at the later of the date on which the revenue is recognized or the date the sales incentive is offered. When the actual invoice for the sales promotion is received from the retailer, the Company adjusts its estimate accordingly. Advertising and promotional expenses paid to customers are expensed as incurred in accordance with ASC 605-50 - Customer Payments and Incentives . |
Inventories | Inventories: Inventories are stated at the lower of cost (average cost method) or market. The Company maintains an allowance for slow-moving and obsolete inventory as well as inventory where the cost is in excess of its net realizable value. For finished goods inventory, the Company estimates the amount of inventory that may not be sold prior to its expiration or is slow moving based upon review of recent sales activity and wholesaler inventory information. The Company also analyzes its raw material and component inventory for slow moving items. The Company capitalizes inventory costs associated with its products prior to regulatory approval when, based on management judgment, future commercialization is considered probable and future economic benefit is expected to be realized. The Company assesses the regulatory approval process and where the product stands in relation to that approval process including any known constraints or impediments to approval. The Company also considers the shelf life of the product in relation to the product timeline for approval. |
Intangible Assets | Intangible Assets: Intangible assets consist primarily of goodwill and in-process research and development, which are carried at initial value and subject to evaluation for impairment, and product licensing costs, trademarks and other such costs, which are capitalized and amortized on a straight-line basis over their useful lives, normally ranging from one year to thirty years. The Company regularly assesses its intangible assets for impairment based on several factors, including estimated fair value and anticipated cash flows. If the Company incurs additional costs to renew or extend the life of an intangible asset, such costs are added to the remaining unamortized cost of the asset, if any, and the sum is amortized over the extended remaining life of the asset. Goodwill is tested for impairment annually or more frequently if changes in circumstances or the occurrence of events suggest that impairment may exist. The Company uses widely accepted valuation techniques to determine the fair value of its reporting units used in its annual goodwill impairment analysis. The Company’s valuation is primarily based on qualitative and quantitative assessments regarding the fair value of goodwill relative to its carrying value. The Company models the fair value of the reporting unit based on projected earnings and cash flows of the reporting unit. |
Property, Plant and Equipment | Property, Plant and Equipment: Property, plant and equipment is stated at cost, less accumulated depreciation. Depreciation is provided using the straight-line method in amounts considered sufficient to amortize the cost of the assets to operations over their estimated useful lives or capital lease terms. The amortization of assets under capital leases is included within depreciation expense. |
Net Income Per Common Share | Net Income Per Common Share: Basic net income per common share is based upon weighted average common shares outstanding. Diluted net income per common share is based upon the weighted average number of common shares outstanding, including the dilutive effect, if any, of stock options and convertible securities using the treasury stock and if converted methods. Anti-dilutive shares are excluded from the computation of diluted net income per share. |
Income Taxes | Income Taxes: Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities, and net operating loss and other tax credit carry-forwards. These items are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce the recognized deferred tax assets to the amount that is more likely than not to be realized. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments: The Company applies ASC 820 , which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability, and are to be developed based on the best information available in the circumstances. The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below: · Level 1 —Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. The carrying value of the Company’s cash and cash equivalents and the portion of the value of the Nicox S.A. (“Nicox”) shares which are available to trade on the exchange are considered Level 1 assets as of the periods ended March 31, 2015 and December 31, 2014. · Level 2 —Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as directly or indirectly observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. · Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. The portion of the fair valuation of the available for sale investment held in shares of Nicox subject to a lock-up provision is considered a Level 3 asset as of the periods ended March 31, 2015 and December 31, 2014, respectively. The additional consideration payable to Santen Pharmaceutical Co. Ltd. (“Santen”) in relation to the Company’s acquisition of the U.S. New Drug Application (“NDA”) rights to Betimol ® on January 2, 2014 and the additional consideration payable as a result of the ECR divestiture on June 20, 2014 and other insignificant contingent amounts are considered Level 3 liabilities as of periods ended March 31, 2015 and December 31, 2014, respectively. The following table summarizes the basis used to measure the fair values of the Company’s financial instruments (amounts in thousands): Fair Value Measurements at Reporting Date, Using: Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable March 31, Identical Items Inputs Inputs Description 2015 (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ $ $ — $ — Available-for-sale securities — Total assets $ $ $ — $ Purchase consideration payable $ $ — $ — $ Total liabilities $ $ — $ — $ Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable December 31, Identical Items Inputs Inputs Description 2014 (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ $ $ — $ — Available-for-sale securities — — Total assets $ $ $ — $ Purchase consideration payable $ $ — $ — $ Total liabilities $ $ — $ — $ |
Discontinued Operations | Discontinued Operations: During the year ended December 31, 2014 and subsequent to the Hi-Tech Pharmacal Co. Inc. (“Hi-Tech”) acquisition the Company divested the ECR subsidiary. As a result of the sale the Company will have no continuing involvement or cash flows from the operations of this business. In accordance with FASB ASC 205 - Presentation of Financial Statements , and to allow for meaningful comparison of our continuing operations, the operating results of this business are reported as “discontinued operations.” All other operations are considered “continuing operations.” Unless noted otherwise, discussion in these notes to the financial statements pertain to our continuing operations. |
Business Combinations | Business Combinations: Business combinations are accounted for in accordance with ASC 805 - Business Combinations , using the acquisition method of accounting. The acquisition method of accounting requires an acquirer to recognize the assets acquired and the liabilities assumed at the acquisition date measured at their fair values as of that date. Fair value determinations are based on discounted cash flow analyses or other valuation techniques. In determining the fair value of the assets acquired and liabilities assumed in a material acquisition, the Company may utilize appraisals from third party valuation firms to determine fair values of some or all of the assets acquired and liabilities assumed, or may complete some or all of the valuations internally. In either case, the Company takes full responsibility for the determination of the fair value of the assets acquired and liabilities assumed. The value of goodwill reflects the excess of the fair value of the consideration conveyed to the seller over the fair value of the net assets received. Under the acquisition method of accounting, the Company will identify the acquirer and the closing date and apply applicable recognition principles and conditions. Acquisition-related costs are costs the Company incurs to effect a business combination. The Company accounts for acquisition-related costs as expenses in the periods in which the costs are incurred. |
Stock-Based Compensation | Stock-Based Compensation: Stock-based compensation cost is estimated at grant date based on the fair value of the award, and the cost is recognized as expense ratably over the vesting period. The Company uses the Black-Scholes model for estimating the grant date fair value of stock options. Determining the assumptions to be used in the model is highly subjective and requires judgment. The Company uses an expected volatility that is based on the historical volatility of its common stock. The expected life assumption is based on historical employee exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the average market rate on U.S. Treasury securities of similar term in effect during the quarter in which the options were granted. The dividend yield reflects the Company’s historical experience as well as future expectations over the expected term of the option. The Company estimates forfeitures at the time of grant and revises the estimate in subsequent periods, as necessary, if actual forfeitures differ from initial estimates. |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis used to measure the fair value of financial instruments | The following table summarizes the basis used to measure the fair values of the Company’s financial instruments (amounts in thousands): Fair Value Measurements at Reporting Date, Using: Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable March 31, Identical Items Inputs Inputs Description 2015 (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ $ $ — $ — Available-for-sale securities — Total assets $ $ $ — $ Purchase consideration payable $ $ — $ — $ Total liabilities $ $ — $ — $ Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable December 31, Identical Items Inputs Inputs Description 2014 (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ $ $ — $ — Available-for-sale securities — — Total assets $ $ $ — $ Purchase consideration payable $ $ — $ — $ Total liabilities $ $ — $ — $ |
STOCK BASED COMPENSATION (Table
STOCK BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2015 | |
STOCK BASED COMPENSATION | |
Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan | The following table sets forth the components of the Company’s stock-based compensation expense for the three month periods ended March 31, 2015 and 2014 (in thousands): Three months ended March 31, 2015 2014 Stock options and employee stock purchase plan $ $ Restricted stock units Total stock-based compensation expense $ |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | Three months ended March 31, 2015 2014 Expected volatility % — Expected life (in years) — Risk-free interest rate % — Dividend yield — — Fair value per stock option $ — Forfeiture rate % — |
Schedule of Share-based Compensation, Activity | Number of Options (in thousands) Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) (1) Outstanding at December 31, 2014 $ $ Granted Exercised ) Forfeited ) Outstanding at March 31, 2015 $ $ Exercisable at March 31, 2015 $ $ (1) May include value from potentially anti-dilutive options whose exercise price exceeds the closing stock price. |
Schedule of Nonvested Restricted Stock Units Activity | Number of Units Weighted Average (in thousands) Grant Date Fair Value Non-vested at December 31, 2014 $ Granted — — Forfeited — — Vested — — Non-vested at March 31, 2015 $ |
ACCOUNTS RECEIVABLE ALLOWANCES
ACCOUNTS RECEIVABLE ALLOWANCES (Tables) | 3 Months Ended |
Mar. 31, 2015 | |
ACCOUNTS RECEIVABLE ALLOWANCES | |
Summary of net trade accounts receivable | Net trade accounts receivable consists of the following (in thousands): DECEMBER 31, MARCH 31, 2014 2015 (as Restated) Gross accounts receivable $ $ Less reserves for: Chargebacks and rebates ) ) Product returns ) ) Discounts and allowances ) ) Advertising and promotions ) ) Doubtful accounts ) ) Trade accounts receivable, net $ $ |
Schedule of adjustments to gross sales | For the three month periods ended March 31, 2015 and 2014, the Company recorded the following adjustments to gross sales (in thousands): Three Months Ended March 31, 2015 2014 (as Restated) Gross sales $ $ Less adjustments for: Chargebacks and rebates ) ) Product returns ) ) Discounts and allowances ) ) Administrative fees ) ) Advertising, promotions and others ) ) Revenues, net $ $ |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 3 Months Ended |
Mar. 31, 2015 | |
INVENTORIES, NET. | |
Components of inventory | The components of inventories are as follows (in thousands): MARCH 31, 2015 DECEMBER 31, 2014 (as Restated) Finished goods $ $ Work in process Raw materials and supplies Inventories, net $ $ |
PROPERTY, PLANT AND EQUIPMENT30
PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 3 Months Ended |
Mar. 31, 2015 | |
PROPERTY, PLANT AND EQUIPMENT, NET. | |
Property, plant and equipment | Property, plant and equipment consist of the following (in thousands): MARCH 31, 2015 DECEMBER 31, 2014 (as Restated) Land and land improvements $ $ Buildings and leasehold improvements Furniture and equipment Sub-total Accumulated depreciation ) ) Property, plant and equipment placed in service, net Construction in progress Property, plant and equipment, net $ $ |
GOODWILL AND OTHER INTANGIBLE31
GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Tables) | 3 Months Ended |
Mar. 31, 2015 | |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET. | |
Schedule of goodwill | The following table provides a summary of the activity in goodwill by segment for the three months ended March 31, 2015 (in thousands): Consumer Health Prescription Pharmaceuticals Total Balances at December 31, 2014 (as Restated) $ $ $ Currency translation adjustments — Acquisitions — — — Dispositions — — — Balances at March 31, 2015 $ $ $ |
Schedule of Finite-Lived Intangible Assets [Table Text Block] | The following table sets forth information about the net book value of the Company’s other intangible assets as of March 31, 2015 and December 31, 2014, and the weighted average remaining amortization period as of March 31, 2015 and December 31, 2014 (dollar amounts in thousands): Gross Amount Accumulated Amortization Impairment Net Balance Wgtd Avg Remaining Amortization Period MARCH 31, 2015 Product licensing rights $ $ ) $ — $ 13.9 IPR&D — — N/A - Indefinite lived Trademarks ) — 22.6 Customer relationships ) — 12.5 Other Intangibles ) — 8.7 Non-compete agreement ) — 0.8 $ $ ) $ — $ DECEMBER 31, 2014 (as Restated) Product licensing rights $ $ ) $ — $ 12.1 IPR&D — — N/A - Indefinite lived Trademarks ) — 18.6 Customer relationships ) — 11.0 Other Intangibles ) — 7.5 Non-compete agreement ) — 1.4 $ $ ) $ — $ |
FINANCING ARRANGEMENTS (Tables)
FINANCING ARRANGEMENTS (Tables) | 3 Months Ended |
Mar. 31, 2015 | |
FINANCING ARRANGEMENTS | |
Schedule Of Basis Spread Based On Fixed Charge Coverage Ratio [Table Text Block] | Fixed Charge Coverage Ratio Revolver ABR Spread Revolver Eurodollar Spread Category 1 > 1.50 to 1.0 % % Category 2 > 1.25 to 1.00 but ≤ 1.50 to 1.00 % % Category 3 ≤ 1.25 to 1.00 % % |
Carrying Amount of Liability Component and Remaining Unamortized Debt Discount | At the dates indicated, the net carrying amount of the liability component and the remaining unamortized debt discount were as follows (in thousands): March 31, 2015 December 31, 2014 Carrying amount of equity component $ $ Carrying amount of the liability component Unamortized discount of the liability component Unamortized debt financing costs |
Expenses in Relation to Convertible Notes | For the three month periods ended March 31, 2015 and 2014, the Company recorded the following expenses in relation to the Notes (in thousands): Three Months Ended March 31, 2015 2014 Interest expense at 3.50% coupon rate $ $ Debt discount amortization Deferred financing cost amortization Loss on conversion — $ $ |
Schedule of Maturities of Long-term Debt | (In thousands) 2015 2016 2017 2018 Thereafter Maturities (1) $ $ $ $ $ (1) On February 16, 2016 the Company voluntarily prepaid $200.0 million of existing and incremental term loan principal which eliminated any further interim principal repayment obligations. The Company has not altered the schedule above for the subsequent event as of and for the quarter ended March 31, 2015. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2015 | |
EARNINGS PER SHARE | |
Schedule of Earnings Per Share, Basic and Diluted | Information about the computation of basic and diluted earnings per share is detailed below (in thousands, except per share data): Three Months Ended March 31, 2015 2014 Income from continuing operations used for basic earnings per share $ $ Convertible debt income adjustments, net of tax (1) — Income from continuing operations adjusted for convertible debt as used for diluted earnings per share $ $ Income from continuing operations per share: Basic $ $ Diluted $ $ Shares used in computing net income (loss) per share: Weighted average basic shares outstanding Dilutive securities: Stock option and unvested RSUs Stock warrants — Shares issuable upon conversion of convertible notes (1) Total dilutive securities Weighted average diluted shares outstanding Shares subject to stock options omitted from the calculation of income per share as their effect would have been anti-dilutive (1) As of the period ended March 31, 2014 the number of shares issuable upon conversion of the Notes is based on the assumption that the Company would repay the principal of the Notes in cash and pay any incremental value in shares of common stock. Due to a change in the expectation that management may settle all future note conversions solely through shares in the quarter ended December 31, 2014, the diluted income from continuing operations per share calculation includes the dilutive effect of convertible debt and is offset by the exclusion of interest expense and deferred financing fees related to the convertible debt of $1.1 million, after-tax for the quarter ended March 31, 2015. This also alters the dilutive share effect of the convertible notes as the Company is now using the if-converted method for debt conversion obligations. |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2015 | |
SEGMENT INFORMATION | |
Selected financial info by reportable segment | Selected financial information by reportable segment is presented below (in thousands). Three Months Ended March 31, 2015 2014 Revenues: Prescription Pharmaceuticals $ $ Consumer Health Total revenues Gross Profit: Prescription Pharmaceuticals Consumer Health Total gross profit Operating expenses Operating income Other (expense) ) ) Income from continuing operations before income taxes $ $ |
BUSINESS COMBINATIONS, DISPOS35
BUSINESS COMBINATIONS, DISPOSITIONS AND OTHER STRATEGIC INVESTMENTS (Tables) | 3 Months Ended |
Mar. 31, 2015 | |
Business Acquisition [Line Items] | |
Business Acquisition, Pro Forma Information | Accordingly, the unaudited pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transactions been effected on the assumed date (amounts in thousands, except per share data): For the Three Months Ended March 31, 2015 2014 Revenue $ $ Net income from continuing operations Net income from continuing operations per share $ $ |
Watson Product [Member] | |
Business Acquisition [Line Items] | |
Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures | Calculation of gain from Watson product disposition (in millions) Consideration received $ Intangible assets disposed ) Goodwill disposed ) Other assets disposed ) Pre-Tax gain recognized $ |
ECR Pharmaceuticals Divestiture [Member] | |
Business Acquisition [Line Items] | |
Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures | Calculation of gain/from ECR Divestiture (in millions) Consideration received $ Intangible assets divested ) Goodwill divested ) Other assets divested ) Assumed liabilities divested Pre-Tax Gain recognized $ |
Excelvision [Member] | |
Business Acquisition [Line Items] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table sets forth the consideration paid for the Akorn AG acquisition and the fair values of the acquired assets and assumed liabilities (in millions of USD) as of the acquisition date adjusted in accordance with GAAP. Consideration: Amount of cash paid $ Outstanding amount payable to Fareva Total consideration at closing $ Recognized amounts of identifiable assets acquired: Cash and cash equivalents $ Accounts receivable Inventory Other current assets Property and equipment Total assets acquired Assumed current liabilities ) Assumed non-current liabilities ) Deferred tax liabilities ) Total liabilities assumed ) Bargain purchase gain ) Fair value of assets acquired $ |
Lloyd Animal Health Products [Member] | |
Business Acquisition [Line Items] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table sets forth the consideration paid for the Lloyd Acquisition and the fair values of the acquired assets and assumed liabilities (in millions) as of the acquisition date adjusted in accordance with GAAP. Consideration: Amount of cash paid $ Fair value of contingent payment Total consideration at closing $ Recognized amounts of identifiable assets acquired: Accounts receivable Inventory Product licensing rights IPR&D Accounts payable assumed ) Fair value of assets acquired $ |
Xopenex Acquisition [Member] | |
Business Acquisition [Line Items] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table sets forth the consideration paid for the Xopenex Acquisition and the fair values of the acquired assets and assumed liabilities (in millions) as of the acquisition date adjusted in accordance with GAAP. Consideration: Amount of cash paid $ Product returns and reserves assumed Total consideration at closing $ Recognized amounts of identifiable assets acquired: Accounts Receivable, net (product returns and reserves assumed) ) Inventory Product licensing rights Fair value of net assets acquired $ |
VersaPharm [Member] | |
Business Acquisition [Line Items] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table sets forth the consideration paid for the VersaPharm Acquisition and the fair values of the acquired assets and assumed liabilities (in millions) as of the acquisition date adjusted in accordance with GAAP. Fair Valuation Consideration: Amount of cash paid to VersaPharm stockholders $ Amount of cash paid to vested VersaPharm option holders Amounts paid to escrow accounts Transaction expenses paid for previous owners of VersaPharm Total consideration paid at closing VersaPharm debt paid off through closing cash Total cash paid at closing $ Recognized amounts of identifiable assets acquired and liabilities assumed: Cash and cash equivalents $ Accounts receivable Inventory Other current assets Property and equipment Trademarks Product licensing rights Intangibles, other IPR&D Goodwill Total assets acquired $ Assumed current liabilities ) Assumed non-current liabilities ) Deferred tax liabilities ) Total liabilities assumed $ ) $ |
Hi Tech Pharmacal [Member] | |
Business Acquisition [Line Items] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table sets forth the consideration paid for the Hi-Tech Acquisition and the fair values of the acquired assets and assumed liabilities (in millions) as of the acquisition date adjusted in accordance with GAAP. Fair Valuation Consideration: Amount of cash paid to Hi-Tech shareholders $ Amount of cash paid to vested Hi-Tech option holders Amount of cash paid to key executives under single-trigger separation payments upon change-in-control $ Fair Valuation Recognized amounts of identifiable assets acquired and liabilities assumed: Cash and cash equivalents $ Accounts receivable Inventory Other current assets Property and equipment Product licensing rights IPR&D Customer Relationships Trademarks Goodwill Other non-current assets Total assets acquired $ Assumed current liabilities ) Assumed non-current liabilities ) Deferred tax liabilities ) Total liabilities assumed $ ) $ |
Betimol Acquisition [Member] | |
Business Acquisition [Line Items] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table sets forth the consideration paid for the Betimol Acquisition and the fair values of the acquired assets and assumed liabilities (in millions) as of the acquisition date adjusted in accordance with GAAP. Betimol Acquisition: Consideration paid in cash at closing $ Purchase consideration payable $ Fair value of acquired assets: U.S. NDA rights to Betimol ® $ Favorable supply agreement $ |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended |
Mar. 31, 2015 | |
COMMITMENTS AND CONTINGENCIES | |
Commitment Payment to Strategic Business Partners | Based on the agreements the Company has in place with strategic business partners as of March 31, 2015, the table below sets forth the approximate timing and dollar amount of payments that would be due under those agreements, assuming the underlying milestones are achieved in the years indicated (in thousands): Year of Payment Amount 2015 $ 2016 2017 Total $ |
CUSTOMER AND SUPPLIER CONCENT37
CUSTOMER AND SUPPLIER CONCENTRATION (Tables) | 3 Months Ended |
Mar. 31, 2015 | |
Sales Revenue, Net | |
Schedules of Concentration of Risk, by Risk Factor | Three months ended March 31, 2015 2014 Big 3 Wholesalers combined: Percentage of gross sales % % Percentage of net sales revenues % % |
Accounts Receivable | |
Schedules of Concentration of Risk, by Risk Factor | March 31, 2015 December 31, 2014 Percentage of gross trade accounts receivable % % |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 3 Months Ended |
Mar. 31, 2015 | |
INCOME TAXES | |
Information about the Company's Income Tax Provision | The following table sets forth information about the Company’s income tax provision for the periods indicated (dollar amounts in thousands): Three Months ended March 31, 2015 2014 Income from continuing operations before income taxes $ $ Income tax provision Net income from continuing operations $ $ Income tax provision as a percentage of income before income taxes % % |
SUMMARY OF SIGNIFICANT ACCOUN39
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Value (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Minimum | ||
Valuation and Qualifying Accounts Disclosure [Line Items] | ||
Finite-Lived Intangible Asset, Useful Life | 1 year | |
Maximum | ||
Valuation and Qualifying Accounts Disclosure [Line Items] | ||
Finite-Lived Intangible Asset, Useful Life | 30 years | |
Fair Value, Measurements, Recurring [Member] | ||
Valuation and Qualifying Accounts Disclosure [Line Items] | ||
Cash and cash equivalents | $ 123,532 | $ 70,679 |
Available-for-sale securities | 6,047 | 8,391 |
Total assets | 129,579 | 79,070 |
Purchase consideration payable | 12,443 | 11,101 |
Total liabilities | 12,443 | 11,101 |
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Valuation and Qualifying Accounts Disclosure [Line Items] | ||
Cash and cash equivalents | 123,532 | 70,679 |
Available-for-sale securities | 3,259 | |
Total assets | 126,791 | 70,679 |
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Valuation and Qualifying Accounts Disclosure [Line Items] | ||
Available-for-sale securities | 2,788 | 8,391 |
Total assets | 2,788 | 8,391 |
Purchase consideration payable | 12,443 | 11,101 |
Total liabilities | $ 12,443 | $ 11,101 |
STOCK BASED COMPENSATION - Opti
STOCK BASED COMPENSATION - Option Details (Details) - USD ($) $ in Millions | Sep. 05, 2014 | May. 02, 2014 | Mar. 31, 2015 | Mar. 31, 2014 |
Stock Option Plan 2014 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 7,500,000 | |||
2014 and 2003 Stock Option Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 2,222,000 | 56,000 | ||
Proceeds from Stock Options Exercised (in Dollars) | $ 9.2 | $ 0.2 | ||
Employee Service Share-based Compensation, Tax Benefit from Compensation Expense (in Dollars) | $ 84.9 | $ 1.1 | ||
Restricted Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 0 | |||
Restricted Stock [Member] | Director [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 8,034 | |||
Restricted Stock [Member] | Senior Management [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 257,416 | 71,582 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 25.00% | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Modified in Period (in Dollars) | 2,300,000 | |||
Restricted Stock [Member] | Senior Management and Director [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 25.00% |
STOCK BASED COMPENSATION - Allo
STOCK BASED COMPENSATION - Allocated Share-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated Share-based Compensation Expense, Total | $ 2,974 | $ 1,282 |
Stock Options and Employee Stock Purchase Plan (ESSP) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated Share-based Compensation Expense, Total | 2,252 | 1,221 |
Restricted Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated Share-based Compensation Expense, Total | $ 722 | $ 61 |
STOCK BASED COMPENSATION - Weig
STOCK BASED COMPENSATION - Weighted-average Assumptions for Stock Options (Details) - 2014 and 2003 Stock Option Plan [Member] | 3 Months Ended |
Mar. 31, 2015$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected volatility | 42.00% |
Expected life (in years) | 4 years 9 months |
Risk-free interest rate | 1.56% |
Fair value per stock option (in Dollars per share) | $ 18.21 |
Forfeiture rate | 8.00% |
STOCK BASED COMPENSATION - Stoc
STOCK BASED COMPENSATION - Stock Option Activity (Details) - 2014 and 2003 Stock Option Plan [Member] - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Outstanding, Beginning balance | 6,386,000 | ||
Outstanding, Beginning balance (in per share) | $ 11.44 | ||
Granted (in shares) | 297,000 | ||
Granted (in per share) | $ 48.05 | ||
Exercised (in shares) | (2,222,000) | (56,000) | |
Exercised (in per share) | $ 4.17 | ||
Forfeited or expired (in shares) | (63,000) | ||
Forfeited or expired (in per share) | $ 35.03 | ||
Outstanding, Ending balance | 4,398,000 | 6,386,000 | |
Outstanding, Ending balance (in per share) | $ 17.28 | $ 11.44 | |
Exercisable, Ending balance (in shares) | 2,173,000 | ||
Exercisable, Ending balance (in per share) | $ 7.01 | ||
Weighted Average Remaining Contractual Term (Years) | 3 years 4 months 6 days | 2 years 5 months 23 days | |
Exercisable, contractual term | 1 year 29 days | ||
Aggregate Intrinsic Value (in thousands) | $ 132,985 | $ 158,097 | |
Exercisable, aggregate intrinsic value | $ 87,991 |
STOCK BASED COMPENSATION - Non-
STOCK BASED COMPENSATION - Non-vested Restricted Stock Activity (Details) shares in Thousands | 3 Months Ended |
Mar. 31, 2015$ / sharesshares | |
Non-vested Restricted Stock Activity [Abstract] | |
Nonvested, Beginning balance | shares | 337 |
Nonvested, Beginning balance (in per share) | $ / shares | $ 35.31 |
Nonvested, Ending balance | shares | 337 |
Nonvested, Ending balance (in per share) | $ / shares | $ 35.31 |
ACCOUNTS RECEIVABLE ALLOWANCE45
ACCOUNTS RECEIVABLE ALLOWANCES - Net Trade Accounts Receivable (Details) - USD ($) $ in Thousands | Mar. 31, 2015 | Dec. 31, 2014 |
Net Trade Accounts Receivable [Abstract] | ||
Gross accounts receivable | $ 414,757 | $ 446,925 |
Less reserves for: | ||
Chargebacks and rebates | (162,249) | (198,112) |
Product returns | (47,578) | (44,646) |
Discounts and allowances | (13,503) | (15,554) |
Advertising and promotions | (440) | (758) |
Doubtful accounts | (277) | (309) |
Trade accounts receivable, net | $ 190,710 | $ 187,545 |
ACCOUNTS RECEIVABLE ALLOWANCE46
ACCOUNTS RECEIVABLE ALLOWANCES - Summary of Adjustments to Gross Sales (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Summary of Adjustments to Gross Sales [Abstract] | ||
Gross sales | $ 568,016 | $ 149,300 |
Less adjustments for: | ||
Chargebacks and rebates | (293,181) | (51,873) |
Product returns | (5,574) | (886) |
Discounts and allowances | (14,044) | (2,435) |
Administrative fees | (26,123) | (2,152) |
Advertising, promotions, and other | (1,716) | (1,332) |
Revenues, net | $ 227,378 | $ 90,622 |
INVENTORIES, NET - Components o
INVENTORIES, NET - Components of Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2015 | Dec. 31, 2014 |
Inventories [Abstract] | ||
Finished goods | $ 76,194 | $ 69,499 |
Work in process | 10,032 | 4,075 |
Raw materials and supplies | 63,177 | 61,623 |
Inventories, net | $ 149,403 | $ 135,197 |
INVENTORIES, NET - Inventories
INVENTORIES, NET - Inventories (Details) - USD ($) $ in Millions | Mar. 31, 2015 | Dec. 31, 2014 |
INVENTORIES, NET. | ||
Inventory Valuation Reserves | $ 24.1 | $ 21.4 |
PROPERTY, PLANT AND EQUIPMENT49
PROPERTY, PLANT AND EQUIPMENT, NET - Components of Property, Plant, and Equipment (Details) - USD ($) $ in Thousands | Mar. 31, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Line Items] | ||
Property, plant, and equipment, gross | $ 220,685 | $ 185,721 |
Accumulated depreciation | (72,756) | (67,937) |
Property, plant and equipment, net | 175,991 | 144,196 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant, and equipment, gross | 17,721 | 9,323 |
Building and Building Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant, and equipment, gross | 79,216 | 63,846 |
Furniture and Fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant, and equipment, gross | 123,748 | 112,552 |
Property, Plant and Equipment Placed in Service, Net [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant, and equipment, gross | 147,929 | 117,784 |
Construction in Progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant, and equipment, gross | $ 28,062 | $ 26,412 |
PROPERTY, PLANT AND EQUIPMENT50
PROPERTY, PLANT AND EQUIPMENT, NET - Property, Plant and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Net | $ 175,991 | $ 144,196 | |
Depreciation | 5,000 | $ 1,900 | |
INDIA | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Net | $ 55,600 | $ 25,600 |
GOODWILL AND OTHER INTANGIBLE51
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Summary of Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2015USD ($) | |
Goodwill [Line Items] | |
Balance | $ 285,283 |
Goodwill Translation Adjustments | 391 |
Balance | 285,674 |
Consumer Health [Member] | |
Goodwill [Line Items] | |
Balance | 16,717 |
Balance | 16,717 |
Prescription Pharmaceuticals [Member] | |
Goodwill [Line Items] | |
Balance | 268,566 |
Goodwill Translation Adjustments | 391 |
Balance | $ 268,957 |
GOODWILL AND OTHER INTANGIBLE52
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Gross | $ 1,042,140 | $ 1,042,063 |
Accumulated Amortization | (98,060) | (81,660) |
Net Carrying amount | 944,080 | 960,403 |
Licensing Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Gross | 778,734 | 778,734 |
Accumulated Amortization | (89,244) | (73,943) |
Net Carrying amount | $ 689,490 | $ 704,791 |
Weighted Average Remaining Amortization Period | 13 years 10 months 24 days | 12 years 1 month 6 days |
Trademarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Gross | $ 16,000 | $ 16,000 |
Accumulated Amortization | (2,036) | (1,721) |
Net Carrying amount | $ 13,964 | $ 14,279 |
Weighted Average Remaining Amortization Period | 22 years 7 months 6 days | 18 years 7 months 6 days |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Gross | $ 6,464 | $ 6,502 |
Accumulated Amortization | (3,569) | (3,467) |
Net Carrying amount | $ 2,895 | $ 3,035 |
Weighted Average Remaining Amortization Period | 12 years 6 months | 11 years |
Other Intangible Assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Gross | $ 11,234 | $ 11,235 |
Accumulated Amortization | (1,309) | (879) |
Net Carrying amount | $ 9,925 | $ 10,356 |
Weighted Average Remaining Amortization Period | 8 years 8 months 12 days | 7 years 6 months |
Noncompete Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Gross | $ 2,449 | $ 2,333 |
Accumulated Amortization | (1,902) | (1,650) |
Net Carrying amount | $ 547 | $ 683 |
Weighted Average Remaining Amortization Period | 9 months 18 days | 1 year 4 months 24 days |
IPR&D [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Gross | $ 227,259 | $ 227,259 |
Net Carrying amount | $ 227,259 | $ 227,259 |
GOODWILL AND OTHER INTANGIBLE53
GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET. | ||
Amortization | $ 16,377 | $ 4,757 |
FINANCING ARRANGEMENTS (Details
FINANCING ARRANGEMENTS (Details) | Feb. 16, 2016USD ($) | Aug. 12, 2014USD ($) | Apr. 17, 2014USD ($)item | Jun. 01, 2011USD ($)$ / shares | Mar. 31, 2015USD ($)$ / shares | Mar. 31, 2014USD ($) | Mar. 31, 2012$ / shares | Dec. 31, 2014USD ($) | Mar. 31, 2015USD ($)$ / shares | Oct. 07, 2011USD ($) |
Debt Instrument [Line Items] | ||||||||||
Amortization of Financing Costs | $ 996,000 | $ 4,251,000 | ||||||||
Deferred Tax Liabilities, Financing Arrangements | $ 8,600,000 | |||||||||
Debt Instrument, Unamortized Discount | 21,300,000 | |||||||||
Debt Issued Reduction in Common Stock | 8,600,000 | |||||||||
Deferred Tax Assets, Valuation Allowance | 8,600,000 | |||||||||
Debt Issued Increase in Common Stock | 8,600,000 | |||||||||
Letter of Credit [Member] | B of A [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 2,000,000 | |||||||||
B of A Revolving Facility [Member] | B of A [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 20,000,000 | |||||||||
Incremental Term Loan Facility [Member] | JPMorgan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Face Amount | $ 445,000,000 | |||||||||
Debt Instrument, Periodic Payment, Percent of Initial Loan Amount | 0.25% | |||||||||
Debt Instrument, Term | 7 years | |||||||||
Long-term Debt | $ 442,800,000 | $ 442,800,000 | ||||||||
Debt Instrument, Potential Reduction in Basis Spread on Variable Rate | 0.25% | 0.25% | ||||||||
Debt Instrument, Potential Reduction in Basis Spread on Variable Rate, EBITDA Ratio Threshold | 2.25 | 2.25 | ||||||||
Debt Instrument, Debt Default, Rate Increase | 2.00% | 2.00% | ||||||||
Debt Instrument, Debt Modification Fees | $ 300,000 | |||||||||
Amortization of Financing Costs | $ 8,200,000 | |||||||||
Incremental Term Loan Facility [Member] | Base Rate [Member] | JPMorgan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Basis Spread on Variable Rate | 2.50% | |||||||||
Incremental Term Loan Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | JPMorgan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Basis Spread on Variable Rate | 3.50% | |||||||||
Debt Instrument, Interest Rate, Effective Percentage Rate Range, Minimum | 4.50% | |||||||||
Term Loan Facility [Member] | JPMorgan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Face Amount | $ 600,000,000 | |||||||||
Debt Instrument, Periodic Payment, Percent of Initial Loan Amount | 0.25% | |||||||||
Debt Instrument, Term | 7 years | |||||||||
Long-term Debt | $ 597,000,000 | |||||||||
Debt Instrument, Potential Reduction in Basis Spread on Variable Rate | 0.25% | 0.25% | ||||||||
Debt Instrument, Potential Reduction in Basis Spread on Variable Rate, EBITDA Ratio Threshold | 2.25 | 2.25 | ||||||||
Debt Instrument, Debt Default, Rate Increase | 2.00% | 2.00% | ||||||||
Debt Instrument, Debt Modification Fees | $ 500,000 | |||||||||
Interest expense | 6,700,000 | |||||||||
Amortization of Financing Costs | $ 13,200,000 | 4,000,000 | ||||||||
Debt Instrument, Potential Increase to Maximum Borrowing Capacity | $ 150,000,000 | |||||||||
Term Loan Facility [Member] | Base Rate [Member] | JPMorgan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Basis Spread on Variable Rate | 2.50% | |||||||||
Term Loan Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | JPMorgan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Interest Rate, Effective Percentage Rate Range, Minimum | 4.50% | |||||||||
Term Loan Facility [Member] | Eurodollar [Member] | JPMorgan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Basis Spread on Variable Rate | 3.50% | |||||||||
JPM Revolving Facility [Member] | JPMorgan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Debt Default, Rate Increase | 2.00% | |||||||||
Line of Credit Facility, Covenant, Minimum Liquidity | $ 120,000,000 | |||||||||
Line of Credit Facility, Covenant, Minimum Liquidity, Additional Percentage of Commitments | 25.00% | |||||||||
Line of Credit Facility, Covenant, Minimum EBITDA to Fixed Charges Ratio | 1 | |||||||||
Line of Credit Facility, Covenant, Minimum EBITDA to Fixed Charges Ratio, Measurement Duration | 12 months | |||||||||
Letters of Credit Outstanding, Number | item | 1 | |||||||||
Letters of Credit Outstanding, Amount | $ 1,200,000 | $ 1,200,000 | ||||||||
JPM Revolving Facility [Member] | Revolving Credit Facility [Member] | JPMorgan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Term | 5 years | |||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 150,000,000 | |||||||||
Debt Instrument, Borrowing Base, Percent of Eligible Accounts Receivable | 85.00% | |||||||||
Line of Credit Facility, Commitment Fee, Threshold, Percent of Commitments | 12.50% | |||||||||
Line of Credit Facility, Commitment Fee, Threshold, Amount of Commitments | $ 15,000,000 | |||||||||
Line of Credit Facility, Commitment Fee, Threshold, Number of Consecutive Days | 30 days | |||||||||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.25% | |||||||||
Long-term Line of Credit | 0 | 0 | ||||||||
Line of Credit Facility, Remaining Borrowing Capacity | 148,800,000 | 148,800,000 | ||||||||
JPM Revolving Facility [Member] | Letter of Credit [Member] | JPMorgan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 10,000,000 | |||||||||
Senior Notes [Member] | Notes [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Face Amount | 85,200,000 | 85,200,000 | ||||||||
Convertible Notes Payable | $ 120,000,000 | |||||||||
Debt Instrument, Interest Rate, Stated Percentage | 3.50% | |||||||||
Proceeds from Convertible Debt | $ 115,300,000 | |||||||||
Debt Instrument, Convertible, Conversion Price (in Dollars per share) | $ / shares | $ 8.76 | |||||||||
Debt Instrument, Convertible, If-converted Amount of Principal | $ 1,000 | |||||||||
Debt Instrument, Convertible, Threshold Non-Consecutive Trading Days | 20 days | |||||||||
Debt Instrument, Convertible, Threshold Consecutive Trading Days | 30 days | |||||||||
Debt Instrument, Convertible, Stock Price Trigger (in Dollars per share) | $ / shares | $ 11.39 | |||||||||
Debt Conversion, Converted Instrument, Amount | 2,400,000 | 32,500,000 | $ 34,800,000 | |||||||
Debt Conversion, Converted Instrument, Additional Amount | $ 100,000 | $ 1,000,000 | ||||||||
Debt Instrument, Trading Amount, Percent of Face Value | 541.50% | 541.50% | ||||||||
Debt Instrument, Convertible, Total Market Value | $ 461,100,000 | $ 461,100,000 | ||||||||
Share Price (in Dollars per share) | $ / shares | $ 47.51 | $ 47.51 | ||||||||
Debt Instrument, Convertible, Pro Forma Conversion Value | $ 461,900,000 | $ 461,900,000 | ||||||||
Debt Instrument, Convertible, If-converted Value in Excess of Principal | 21,300,000 | |||||||||
Payments of Stock Issuance Costs | 800,000 | |||||||||
Debt Issuance Cost | 4,700,000 | |||||||||
Debt Issuance Cost Allocated to Liability Component of Debt | 3,900,000 | |||||||||
Debt Issuance Cost Allocated to Equity Component of Debt | 800,000 | |||||||||
Convertible Debt [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest expense | 1,820,000 | 2,319,000 | ||||||||
Amortization of Financing Costs | $ 151,000 | $ 194,000 | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 3.50% | |||||||||
Prepayment Term Six Months [Member] | Incremental Term Loan Facility [Member] | JPMorgan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Prepayment Fee Percentage | 1.00% | |||||||||
Terminated [Member] | JPM Revolving Facility [Member] | Revolving Credit Facility [Member] | B of A [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 60,000,000 | |||||||||
The Lesser Of For Scenario Two Consideration A [Member] | JPM Revolving Facility [Member] | Revolving Credit Facility [Member] | JPMorgan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument Borrowing Base Percent Of Materials And WIP On FIFO | 65.00% | |||||||||
The Lesser Of For Scenario Two Consideration B [Member] | JPM Revolving Facility [Member] | Revolving Credit Facility [Member] | JPMorgan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument Borrowing Base Percent Of Liquidation Value | 85.00% | |||||||||
The Lesser Of For Scenario Three Consideration A [Member] | JPM Revolving Facility [Member] | Revolving Credit Facility [Member] | JPMorgan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument Borrowing Base Percent Finished Goods | 75.00% | |||||||||
The Lesser Of For Scenario Three Consideration B [Member] | JPM Revolving Facility [Member] | Revolving Credit Facility [Member] | JPMorgan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument Borrowing Base Percent Of Liquidation Of Finished Goods | 85.00% | |||||||||
Debt Instrument Borrowing Base Percent Of Eligible Inventory Liquidation Value | 85.00% | |||||||||
Debt Instrument Borrowing Base Percent Of Market Value Finished Goods | 75.00% | |||||||||
Potential [Member] | JPM Revolving Facility [Member] | Revolving Credit Facility [Member] | JPMorgan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 200,000,000 | |||||||||
Per $1,000 Principal Amount of Notes [Member] | Senior Notes [Member] | Notes [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Convertible, Conversion Rate | 114.1553 | |||||||||
Scenario #1 [Member] | Senior Notes [Member] | Notes [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Convertible, Threshold Non-Consecutive Trading Days | 20 days | |||||||||
Debt Instrument, Convertible, Threshold Consecutive Trading Days | 30 days | |||||||||
Debt Instrument, Convertible, Threshold Percentage of Stock Price Trigger | 130.00% | |||||||||
Scenario #2 [Member] | Senior Notes [Member] | Notes [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Convertible, If-converted Amount of Principal | $ 1,000 | |||||||||
Debt Instrument, Convertible, Threshold Consecutive Trading Days | 5 days | |||||||||
Debt Instrument, Convertible, Threshold Percentage of Stock Price Trigger | 98.00% | |||||||||
Scenario #2 [Member] | Senior Notes [Member] | Notes [Member] | Minimum | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Convertible, Threshold Consecutive Trading Days | 5 days | |||||||||
Forecast [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Repayments of Long-term Debt | $ 200,000,000 | |||||||||
Over-Allotment Option [Member] | Senior Notes [Member] | Notes [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Convertible Notes Payable | $ 20,000,000 |
FINANCING ARRANGEMENTS - JPM Re
FINANCING ARRANGEMENTS - JPM Revolving Facility, Interest Terms (Details) - JPM Revolving Facility [Member] - Revolving Credit Facility [Member] | 3 Months Ended |
Mar. 31, 2015 | |
Category 1 [Member] | Base Rate [Member] | |
Guarantor Obligations [Line Items] | |
Basis spread on variable rate | 0.50% |
Category 1 [Member] | Eurodollar [Member] | |
Guarantor Obligations [Line Items] | |
Basis spread on variable rate | 1.50% |
Category 2 [Member] | Base Rate [Member] | |
Guarantor Obligations [Line Items] | |
Basis spread on variable rate | 0.75% |
Category 2 [Member] | Eurodollar [Member] | |
Guarantor Obligations [Line Items] | |
Basis spread on variable rate | 1.75% |
Category 3 [Member] | Base Rate [Member] | |
Guarantor Obligations [Line Items] | |
Basis spread on variable rate | 1.00% |
Category 3 [Member] | Eurodollar [Member] | |
Guarantor Obligations [Line Items] | |
Basis spread on variable rate | 2.00% |
FINANCING ARRANGEMENTS - JPM 56
FINANCING ARRANGEMENTS - JPM Revolving Facility, Interest Terms (Parentheticals) (Details) - JPM Revolving Facility [Member] - Revolving Credit Facility [Member] | Mar. 31, 2015 |
Category 1 [Member] | Base Rate [Member] | Minimum | |
Guarantor Obligations [Line Items] | |
Fixed charge coverage ratio | 1.50 |
Category 2 [Member] | Base Rate [Member] | Minimum | |
Guarantor Obligations [Line Items] | |
Fixed charge coverage ratio | 1.25 |
Category 2 [Member] | Base Rate [Member] | Maximum | |
Guarantor Obligations [Line Items] | |
Fixed charge coverage ratio | 1.50 |
Category 2 [Member] | Eurodollar [Member] | Minimum | |
Guarantor Obligations [Line Items] | |
Fixed charge coverage ratio | 1.25 |
Category 2 [Member] | Eurodollar [Member] | Maximum | |
Guarantor Obligations [Line Items] | |
Fixed charge coverage ratio | 1.50 |
Category 3 [Member] | Base Rate [Member] | Maximum | |
Guarantor Obligations [Line Items] | |
Fixed charge coverage ratio | 1.25 |
Category 3 [Member] | Eurodollar [Member] | Maximum | |
Guarantor Obligations [Line Items] | |
Fixed charge coverage ratio | 1.25 |
FINANCING ARRANGEMENTS - Net Ca
FINANCING ARRANGEMENTS - Net Carrying Amount of the Liability Component and the Remaining Unamortized Debt Discount (Details) - USD ($) $ in Thousands | Mar. 31, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | ||
Carrying amount of the liability component | $ 1,110,458 | $ 1,114,481 |
Convertible Debt [Member] | ||
Debt Instrument [Line Items] | ||
Carrying amount of equity component | 14,527 | 14,930 |
Carrying amount of the liability component | 81,133 | 82,543 |
Unamortized discount of the liability component | 4,027 | 4,982 |
Unamortized debt financing costs | $ 728 | $ 901 |
FINANCING ARRANGEMENTS - Expens
FINANCING ARRANGEMENTS - Expenses in Relation to Convertible Notes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Debt Instrument [Line Items] | ||
Amortization of Financing Costs | $ 996 | $ 4,251 |
Convertible Debt [Member] | ||
Debt Instrument [Line Items] | ||
Interest expense at 3.50% coupon rate | 761 | 1,050 |
Debt discount amortization | 835 | 1,075 |
Amortization of Financing Costs | 151 | 194 |
Loss on conversion | 73 | |
Interest expense | $ 1,820 | $ 2,319 |
FINANCING ARRANGEMENTS - Expe59
FINANCING ARRANGEMENTS - Expenses in Relation to Convertible Notes (Parentheticals) (Details) | Mar. 31, 2014 |
Convertible Debt [Member] | |
Debt Instrument [Line Items] | |
Coupon Rate | 3.50% |
FINANCING ARRANGEMENTS - Maturi
FINANCING ARRANGEMENTS - Maturities of Long-term Obligations (Details) $ in Thousands | Mar. 31, 2015USD ($) |
Maturities of Long-term Obligations [Abstract] | |
2,015 | $ 7,838 |
2,016 | 95,610 |
2,017 | 10,450 |
2,018 | 10,450 |
Thereafter | $ 1,000,588 |
EARNINGS PER SHARE - Reconcilia
EARNINGS PER SHARE - Reconciliation of Earnings Per Share Data (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Reconciliation of Earnings Per Share Data [Abstract] | ||
Income (Loss) from Continuing Operations Attributable to Parent | $ 37,538 | $ 9,494 |
Convertible debt income adjustments, net of tax (1) | 1,107 | |
Income from continuing operations adjusted for convertible debt as used for diluted earnings per share (in Dollars) | $ 38,645 | $ 9,494 |
Income (loss) from continuing operations per share: | ||
Basic (in Dollars per share) | $ 0.33 | |
Diluted (1) (in Dollars per share) | $ 0.31 | |
Shares used in computing net income (loss) per share: | ||
Weighted average basic shares outstanding | 113,352 | 96,633 |
Dilutive securities: | ||
Stock options and unvested RSUs | 2,085 | 4,845 |
Stock warrants | 6,843 | |
Shares issuable on conversion of the Notes (2) | 9,940 | 8,563 |
Total dilutive securities | 12,025 | 20,251 |
Weighted average diluted shares outstanding | 125,377 | 116,884 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 575 | 50 |
Exclusion of Interest and Deferred Financing Fees from Diluted Income | $ 1,100 |
EARNINGS PER SHARE - Stock Warr
EARNINGS PER SHARE - Stock Warrant Exercise (Details) - Board of Directors Chairman [Member] - USD ($) shares in Millions, $ in Millions | Apr. 10, 2014 | Dec. 31, 2014 |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
Outstanding Stock Warrants Exercised | 7.2 | |
Proceeds from Warrant Exercises | $ 8.2 |
SEGMENT INFORMATION - Reportabl
SEGMENT INFORMATION - Reportable Segments (Details) - segment | 1 Months Ended | 3 Months Ended |
Mar. 31, 2014 | Mar. 31, 2015 | |
SEGMENT INFORMATION | ||
Number of Reportable Segments | 3 | 2 |
SEGMENT INFORMATION - Financial
SEGMENT INFORMATION - Financial Information by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Revenues [Abstract] | ||
Revenue, Net | $ 227,378 | $ 90,622 |
Gross Profit [Abstract] | ||
Gross Profit | 130,163 | 49,656 |
Operating Expenses | 56,896 | 26,216 |
Operating Income (Loss) | 73,267 | 23,440 |
Other (expense) | (14,939) | (5,845) |
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 58,328 | 17,595 |
Prescription Pharmaceuticals [Member] | ||
Revenues [Abstract] | ||
Revenue, Net | 210,554 | 81,848 |
Gross Profit [Abstract] | ||
Gross Profit | 121,159 | 45,284 |
Consumer Health [Member] | ||
Revenues [Abstract] | ||
Revenue, Net | 16,824 | 8,774 |
Gross Profit [Abstract] | ||
Gross Profit | $ 9,004 | $ 4,372 |
BUSINESS COMBINATIONS, DISPOS65
BUSINESS COMBINATIONS, DISPOSITIONS AND OTHER STRATEGIC INVESTMENTS (Details) $ / shares in Units, shares in Millions, SFr in Millions | Jan. 02, 2015USD ($) | Oct. 02, 2014USD ($) | Aug. 12, 2014USD ($) | Jul. 22, 2014CHF (SFr) | Jun. 27, 2014USD ($) | Jun. 20, 2014USD ($)product | Apr. 17, 2014USD ($)item$ / shares | Apr. 17, 2014USD ($)item$ / shares | Apr. 01, 2014USD ($) | Jan. 02, 2014USD ($)item | Sep. 30, 2011USD ($) | Aug. 01, 2011USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($)shares | Mar. 31, 2014USD ($) | Dec. 31, 2014USD ($)shares | Dec. 31, 2013USD ($) | Oct. 22, 2014shares | Aug. 27, 2013$ / shares |
Business Acquisition [Line Items] | |||||||||||||||||||
Acquisition-related costs | $ 1,257,000 | $ 454,000 | |||||||||||||||||
Bargain purchase gain | 849,000 | ||||||||||||||||||
Revenue, Net | 227,378,000 | $ 90,622,000 | |||||||||||||||||
Number of products dispositioned | item | 1 | 1 | |||||||||||||||||
Gain (Loss) on Disposition of Business | $ 8,500,000 | ||||||||||||||||||
Business Acquisition Percentage Not Exceeded Of Voting Interests Acquired | 20.00% | ||||||||||||||||||
Available-for-sale Securities, Current | 5,558,000 | 7,268,000 | |||||||||||||||||
ECR Pharmaceuticals Divestiture [Member] | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Gain (Loss) on Disposition of Business | 900,000 | ||||||||||||||||||
Disposal Group, Including Discontinued Operation, Consideration | $ 41,000,000 | 41,000,000 | |||||||||||||||||
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest | $ 500,000 | ||||||||||||||||||
Business Combination, Number of Products | product | 3 | ||||||||||||||||||
Excelvision [Member] | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Business Combination, Consideration Transferred | $ 28,400,000 | SFr 21.7 | |||||||||||||||||
Acquisition-related costs | 100,000 | ||||||||||||||||||
Payments to Acquire Businesses, Gross | 25,900,000 | ||||||||||||||||||
Business Combination, Contingent Consideration, Liability | 2,500,000 | ||||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents | 1,200,000 | ||||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables | 3,400,000 | ||||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory | 4,200,000 | ||||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Other | 900,000 | ||||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment | 26,600,000 | ||||||||||||||||||
Total fair value of acquired assets | 36,300,000 | ||||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities | 1,700,000 | ||||||||||||||||||
Assumed non-current liabilities | (3,900,000) | ||||||||||||||||||
Deferred tax liabilities | (1,400,000) | ||||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities, Total | 7,000,000 | ||||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired And Liabilities Assumed, Bargain Purchase Gain Adjustment To Net Assets And Liabilities | (900,000) | ||||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net, Total | 28,400,000 | ||||||||||||||||||
Bargain purchase gain | 900,000 | ||||||||||||||||||
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual | 6,500,000 | ||||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Liabilities Noncurrent | 1,400,000 | ||||||||||||||||||
Lloyd Animal Health Products [Member] | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Business Combination, Consideration Transferred | $ 18,000,000 | ||||||||||||||||||
Payments to Acquire Businesses, Gross | 16,100,000 | ||||||||||||||||||
Business Combination, Contingent Consideration, Liability | 2,000,000 | ||||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables | 100,000 | ||||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory | 2,500,000 | ||||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net, Total | $ 18,000,000 | ||||||||||||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years 8 months 12 days | ||||||||||||||||||
VersaPharm [Member] | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Acquisition-related costs | $ 7,000,000 | 400,000 | |||||||||||||||||
Payments to Acquire Businesses, Gross | 433,000,000 | ||||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents | 100,000 | ||||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables | 3,100,000 | ||||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory | 21,000,000 | ||||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Other | 2,800,000 | ||||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment | 1,500,000 | ||||||||||||||||||
Total fair value of acquired assets | 597,800,000 | ||||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities | 12,200,000 | ||||||||||||||||||
Assumed non-current liabilities | (81,800,000) | ||||||||||||||||||
Deferred tax liabilities | (153,200,000) | ||||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities, Total | 247,200,000 | ||||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net, Total | 350,600,000 | ||||||||||||||||||
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual | $ 13,100,000 | ||||||||||||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 11 years 4 months 24 days | ||||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Liabilities Noncurrent | $ 153,200,000 | ||||||||||||||||||
Hi-Tech Pharmacal Co., Inc [Member] | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Business Combination, Consideration Transferred | $ 649,600,000 | ||||||||||||||||||
Acquisition-related costs | $ 500,000 | $ 300,000 | |||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents | 89,700,000 | $ 89,700,000 | |||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables | 48,600,000 | 48,600,000 | |||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory | 52,400,000 | 52,400,000 | |||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Other | 34,000,000 | 34,000,000 | |||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment | 45,200,000 | 45,200,000 | |||||||||||||||||
Total fair value of acquired assets | 796,600,000 | 796,600,000 | |||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities | 22,600,000 | 22,600,000 | |||||||||||||||||
Assumed non-current liabilities | (3,300,000) | (3,300,000) | |||||||||||||||||
Deferred tax liabilities | (121,100,000) | (121,100,000) | |||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities, Total | 147,000,000 | 147,000,000 | |||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net, Total | 649,600,000 | 649,600,000 | |||||||||||||||||
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual | $ 88,100,000 | ||||||||||||||||||
Debt Instrument, Face Amount | $ 600,000,000 | $ 600,000,000 | |||||||||||||||||
Business Acquisition, Share Price (in Dollars per share) | $ / shares | $ 43.50 | $ 43.50 | |||||||||||||||||
Common Stock, Par or Stated Value Per Share (in Dollars per share) | $ / shares | $ 0.01 | ||||||||||||||||||
Business Acquisition, Percentage of Voting Interests Acquired | 50.00% | 50.00% | |||||||||||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 15 years 7 months 6 days | ||||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Liabilities Noncurrent | $ 121,100,000 | $ 121,100,000 | |||||||||||||||||
Betimol Acquisition [Member] | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Business Combination, Consideration Transferred | 11,500,000 | ||||||||||||||||||
Payments to Acquire Businesses, Gross | $ 7,500,000 | $ 7,500,000 | |||||||||||||||||
Business Combination, Contingent Consideration, Liability | $ 4,700,000 | ||||||||||||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 15 years | 15 years | |||||||||||||||||
Business Acquisition, Consideration, Sales Multiplier | item | 1.5 | ||||||||||||||||||
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High | $ 2,000,000 | ||||||||||||||||||
Business Combination, Contingent Consideration Arrangements, Triggering Sales Amount | $ 14,000,000 | ||||||||||||||||||
Business Combination, Contingent Consideration Arrangements, Triggering Duration | 1 year | ||||||||||||||||||
Business Combination, Contingent Consideration Arrangements, Triggering Duration Span | 5 years | ||||||||||||||||||
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, Low | $ 0 | ||||||||||||||||||
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability | $ 200,000 | ||||||||||||||||||
Aciex Agreement [Member] | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Business Combination, Consideration Transferred | $ 10,800,000 | ||||||||||||||||||
Payments to Acquire Additional Interest in Subsidiaries | $ 2,000,000 | $ 8,000,000 | |||||||||||||||||
Shares Received on Disposition of Assets (in Shares) | shares | 4.3 | ||||||||||||||||||
Shares Sold (in Shares) | shares | 1 | 0.2 | |||||||||||||||||
Shares Sold Value | $ 2,400,000 | $ 600,000 | |||||||||||||||||
Gain Loss On Sale Of Shares | 100,000 | ||||||||||||||||||
Available-for-sale Securities, Gross Unrealized Gain (Loss) | 1,600,000 | ||||||||||||||||||
Available-for-sale Securities | 6,000,000 | ||||||||||||||||||
Available-for-sale Securities, Current | 5,500,000 | ||||||||||||||||||
Available-for-sale Securities, Noncurrent | $ 500,000 | ||||||||||||||||||
Convertible Debt [Member] | Aciex Agreement [Member] | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Payments for (Proceeds from) Other Investing Activities | $ 400,000 | $ 400,000 | |||||||||||||||||
Trademarks [Member] | VersaPharm [Member] | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 3 years | ||||||||||||||||||
Trademarks [Member] | Hi-Tech Pharmacal Co., Inc [Member] | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 9 years | ||||||||||||||||||
Customer Relationships [Member] | Hi-Tech Pharmacal Co., Inc [Member] | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 1 year | ||||||||||||||||||
Before Discount [Member] | Betimol Acquisition [Member] | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Business Combination, Contingent Consideration, Liability | $ 4,500,000 | ||||||||||||||||||
After Discount [Member] | Betimol Acquisition [Member] | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Business Combination, Contingent Consideration, Liability | $ 4,000,000 | ||||||||||||||||||
Marketed Under Abbreviated New Drug Applications [Member] | Watson Laboratories, Inc. [Member] | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Number of products dispositioned | item | 3 | 3 | |||||||||||||||||
Marketed Under a New Drug Application [Member] | Watson Laboratories, Inc. [Member] | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Number of products dispositioned | item | 1 | 1 | |||||||||||||||||
Forecast [Member] | Betimol Acquisition [Member] | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Payments to Acquire Businesses, Gross | $ 4,700,000 | ||||||||||||||||||
Lidocaine/Prilocaine Topical Cream [Member] | Watson Laboratories, Inc. [Member] | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Disposal Group, Including Discontinued Operation, Revenue | $ 1,500,000 | $ 6,800,000 | |||||||||||||||||
Zioptan [Member] | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years | ||||||||||||||||||
Zioptan [Member] | Licensing Agreements [Member] | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Business Combination, Consideration Transferred | $ 11,200,000 | ||||||||||||||||||
Other Nonoperating Income (Expense) [Member] | Watson Product Disposition [Member] | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Gain (Loss) on Disposition of Business | $ 16,800,000 |
BUSINESS COMBINATIONS, DISPOS66
BUSINESS COMBINATIONS, DISPOSITIONS AND OTHER STRATEGIC INVESTMENTS - Consideration Paid for the Lloyd Animal Health Products Acquisition and the Fair Value of the Acquired Assets and Assumed Liabilities (Details) - Lloyd Animal Health Products [Member] $ in Millions | Oct. 02, 2014USD ($) |
Business Acquisition [Line Items] | |
Amount of cash paid | $ 16.1 |
Contingent payment | $ 2 |
Business Combination Discount Rate of Additional Consideration Owed | 4.50% |
Total consideration at closing | $ 18 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables | 0.1 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory | 2.5 |
Product licensing rights | 10 |
IPR&D | 5.5 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities | (0.1) |
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net, Total | $ 18 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years 8 months 12 days |
Adjusted Fair Valuation [Member] | |
Business Acquisition [Line Items] | |
Contingent payment | $ 1.9 |
BUSINESS COMBINATIONS, DISPOS67
BUSINESS COMBINATIONS, DISPOSITIONS AND OTHER STRATEGIC INVESTMENTS - Consideration Paid for Xopenex adn the Fair Value of the Acquired Assets and Assumed Liabilities (Details) - USD ($) $ in Thousands | Oct. 01, 2014 | Mar. 31, 2015 | Mar. 31, 2014 |
Business Acquisition [Line Items] | |||
Business Combination, Acquisition Related Costs | $ 1,257 | $ 454 | |
Xopenex Acquisition [Member] | |||
Business Acquisition [Line Items] | |||
Amount of cash paid | $ 41,500 | ||
Product returns and reserves assumed | 3,500 | ||
Total consideration at closing | 45,000 | ||
Account Receivable, net (product returns and reserve assumed) | (3,500) | ||
Inventory | 6,300 | ||
Product licensing rights | 38,700 | ||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net, Total | $ 41,500 | ||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years | ||
Business Combination, Acquisition Related Costs | $ 100 |
BUSINESS COMBINATIONS, DISPOS68
BUSINESS COMBINATIONS, DISPOSITIONS AND OTHER STRATEGIC INVESTMENTS - Consideration Paid For VersaPharm (Details) - USD ($) | Aug. 12, 2014 | Aug. 04, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Apr. 17, 2014 |
Business Acquisition [Line Items] | ||||||
Acquisition related expense | $ 1,257,000 | $ 454,000 | ||||
Goodwill | 285,674,000 | $ 285,283,000 | ||||
VersaPharm [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Amount of cash paid | $ 433,000,000 | |||||
Acquisition related expense | 7,000,000 | 400,000 | ||||
Proceeds from sale of pending product rights | $ 1,000,000 | |||||
Gain (Loss) on Disposition of Intangible Assets | 800,000 | |||||
Cash and cash equivalents | 100,000 | |||||
Accounts receivable | 3,100,000 | |||||
Inventory | 21,000,000 | |||||
Other current assets | 2,800,000 | |||||
Property and equipment | 1,500,000 | |||||
Goodwill | 100,000,000 | |||||
Total assets acquired | 597,800,000 | |||||
Assumed current liabilities | (12,200,000) | |||||
Assumed non-current liabilities | (81,800,000) | |||||
Deferred tax liabilities | (153,200,000) | |||||
Total liabilities assumed | (247,200,000) | |||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | 350,600,000 | |||||
Goodwill and other intangible assets expected to be deducted for tax purposes in future periods | 43,200,000 | |||||
Net revenue recorded since acquisition | $ 13,100,000 | |||||
Weighted average amortization period | 11 years 4 months 24 days | |||||
Hi-Tech Pharmacal Co., Inc [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Acquisition related expense | $ 500,000 | $ 300,000 | ||||
Debt Instrument, Face Amount | $ 600,000,000 | |||||
Cash and cash equivalents | 89,700,000 | |||||
Accounts receivable | 48,600,000 | |||||
Inventory | 52,400,000 | |||||
Other current assets | 34,000,000 | |||||
Property and equipment | 45,200,000 | |||||
Goodwill | 171,300,000 | |||||
Total assets acquired | 796,600,000 | |||||
Assumed current liabilities | (22,600,000) | |||||
Assumed non-current liabilities | (3,300,000) | |||||
Deferred tax liabilities | (121,100,000) | |||||
Total liabilities assumed | (147,000,000) | |||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | 649,600,000 | |||||
Goodwill and other intangible assets expected to be deducted for tax purposes in future periods | 18,900,000 | |||||
Net revenue recorded since acquisition | $ 88,100,000 | |||||
Weighted average amortization period | 15 years 7 months 6 days | |||||
Initial Fair Valuation [Member] | VersaPharm [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Amount of cash paid | 440,000,000 | |||||
Product Licensing Rights [Member] | VersaPharm [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | 250,800,000 | |||||
Weighted average amortization period | 11 years 4 months 24 days | |||||
Product Licensing Rights [Member] | Hi-Tech Pharmacal Co., Inc [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | 339,600,000 | |||||
Weighted average amortization period | 15 years 8 months 12 days | |||||
Intangibles Other [Member] | VersaPharm [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | 5,200,000 | |||||
Weighted average amortization period | 11 years | |||||
Trademarks [Member] | VersaPharm [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | 1,000,000 | |||||
Weighted average amortization period | 3 years | |||||
Trademarks [Member] | Hi-Tech Pharmacal Co., Inc [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | 5,500,000 | |||||
Weighted average amortization period | 9 years | |||||
IPR&D [Member] | VersaPharm [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | 212,300,000 | |||||
IPR&D [Member] | Hi-Tech Pharmacal Co., Inc [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | 9,400,000 | |||||
Customer Relationships [Member] | Hi-Tech Pharmacal Co., Inc [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 300,000 | |||||
Weighted average amortization period | 1 year | |||||
Cash Paid To VersaPharm Stockholder [Member] | VersaPharm [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Amount of cash paid | 322,700,000 | |||||
Cash Paid To VersaPharm Option Holders [Member] | VersaPharm [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Amount of cash paid | 14,200,000 | |||||
Cash Paid To Escrow [Member] | VersaPharm [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Amount of cash paid | 10,300,000 | |||||
Transaction Expenses Paid For Previous Owners Of VersaPharm [Member] | VersaPharm [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Amount of cash paid | 3,400,000 | |||||
Cash Paid At Closing Excluding Debt Payoff [Member] | VersaPharm [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Amount of cash paid | 350,600,000 | |||||
Cash Paid To Pay Off VersaPharm Debt [Member] | VersaPharm [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Amount of cash paid | 82,400,000 | |||||
Term Loan Facility [Member] | VersaPharm [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Debt Instrument, Face Amount | $ 445,000,000 |
BUSINESS COMBINATIONS, DISPOS69
BUSINESS COMBINATIONS, DISPOSITIONS AND OTHER STRATEGIC INVESTMENTS - Consideration Paid for Hi-Tech (Details) - USD ($) | Apr. 17, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Aug. 27, 2013 |
Business Acquisition [Line Items] | |||||
Acquisition related expense | $ 1,257,000 | $ 454,000 | |||
Goodwill | 285,674,000 | $ 285,283,000 | |||
Hi-Tech Pharmacal Co., Inc [Member] | |||||
Business Acquisition [Line Items] | |||||
Consideration paid | $ 649,600,000 | ||||
Price per share | $ 43.50 | ||||
Payment of stock options | $ 44,600,000 | ||||
Common stock par value per share | $ 0.01 | ||||
Debt Instrument, Face Amount | 600,000,000 | ||||
Acquisition related expense | 500,000 | $ 300,000 | |||
Cash and cash equivalents | 89,700,000 | ||||
Accounts receivable | 48,600,000 | ||||
Inventory | 52,400,000 | ||||
Other current assets | 34,000,000 | ||||
Property and equipment | 45,200,000 | ||||
Goodwill | 171,300,000 | ||||
Other non-current assets | 600,000 | ||||
Total assets acquired | 796,600,000 | ||||
Assumed current liabilities | (22,600,000) | ||||
Assumed non-current liabilities | (3,300,000) | ||||
Deferred tax liabilities | (121,100,000) | ||||
Total liabilities assumed | (147,000,000) | ||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | 649,600,000 | ||||
Goodwill and other intangible assets expected to be deducted for tax purposes in future periods | 18,900,000 | ||||
Net revenue recorded since acquisition | $ 88,100,000 | ||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 15 years 7 months 6 days | ||||
Cash Paid to Hi-Tech Stockholders [Member] | Hi-Tech Pharmacal Co., Inc [Member] | |||||
Business Acquisition [Line Items] | |||||
Consideration paid | 605,000,000 | ||||
Cash Paid to Vested Hi-Tech Option Holders [Member] | Hi-Tech Pharmacal Co., Inc [Member] | |||||
Business Acquisition [Line Items] | |||||
Consideration paid | 40,500,000 | ||||
Cash Paid to Key Executives [Member] | Hi-Tech Pharmacal Co., Inc [Member] | |||||
Business Acquisition [Line Items] | |||||
Consideration paid | 4,100,000 | ||||
Product Licensing Rights [Member] | Hi-Tech Pharmacal Co., Inc [Member] | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | 339,600,000 | ||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 15 years 8 months 12 days | ||||
IPR&D [Member] | Hi-Tech Pharmacal Co., Inc [Member] | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | 9,400,000 | ||||
Customer Relationships [Member] | Hi-Tech Pharmacal Co., Inc [Member] | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | 300,000 | ||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 1 year | ||||
Trademarks [Member] | Hi-Tech Pharmacal Co., Inc [Member] | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | $ 5,500,000 | ||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 9 years |
BUSINESS COMBINATIONS, DISPOS70
BUSINESS COMBINATIONS, DISPOSITIONS AND OTHER STRATEGIC INVESTMENTS - Disposal Groups, Including Discontinued Operations (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2014USD ($) | Jun. 20, 2014USD ($)product | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Pre-Tax gain recognized | $ 8.5 | |
Watson Product [Member] | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Consideration received | 16.8 | |
Intangible assets divested | (5.9) | |
Goodwill divested | (1.1) | |
Other assets divested | (1.3) | |
Pre-Tax gain recognized | 8.5 | |
ECR Pharmaceuticals Divestiture [Member] | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Business Combination, Number of Products | product | 3 | |
Consideration received | 41 | $ 41 |
Intangible assets divested | (29.8) | |
Goodwill divested | (14.2) | |
Other assets divested | (1.2) | |
Assumed liabilities divested | 5.1 | |
Pre-Tax gain recognized | $ 0.9 |
BUSINESS COMBINATIONS, DISPOS71
BUSINESS COMBINATIONS, DISPOSITIONS AND OTHER STRATEGIC INVESTMENTS - Consideration Paid for the Betimol Acquisition and the Fair Value of the Acquired Assets and Assume Liabilities (Details) - Betimol Acquisition [Member] - USD ($) $ in Millions | Jan. 02, 2015 | Jan. 02, 2014 |
Business Acquisition [Line Items] | ||
Consideration paid in cash at closing | $ 7.5 | $ 7.5 |
Purchase consideration payable | 4 | |
Consideration paid | 11.5 | |
Intangible assets | 11.5 | |
Licensing Agreements [Member] | ||
Business Acquisition [Line Items] | ||
Intangible assets | 11.4 | |
Other Intangible Assets [Member] | ||
Business Acquisition [Line Items] | ||
Intangible assets | $ 0.1 |
BUSINESS COMBINATIONS, DISPOS72
BUSINESS COMBINATIONS, DISPOSITIONS AND OTHER STRATEGIC INVESTMENTS - Unaudited Pro Forma Financial Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Unaudited Pro Forma Financial Information [Abstract] | ||
Revenue | $ 227,378 | $ 148,953 |
Net income from continuing operations | $ 37,189 | $ 17,410 |
Net income from continuing operations per share (in Dollars per share) | $ 0.30 | $ 0.15 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Commitment Payment to Strategic Business Partners (Details) $ in Thousands | Mar. 31, 2015USD ($) |
Commitment Payment to Strategic Business Partners [Abstract] | |
2,015 | $ 4,351 |
2,016 | 12,689 |
2,017 | 2,903 |
Total | $ 19,943 |
COMMITMENTS AND CONTINGENCIES74
COMMITMENTS AND CONTINGENCIES - Legal Proceedings (Details) $ in Millions | Mar. 04, 2015item | Sep. 12, 2012USD ($)item | Aug. 31, 2014USD ($) | May. 31, 2013item |
Loss Contingency, Number of Defendants | item | 3 | 2 | ||
Number of US Patents Licensed | item | 5 | |||
Threatened Litigation [Member] | ||||
Loss Contingency, Damages Sought, Value | $ | $ 5.2 | |||
Fera Pharmaceuticals [Member] | Pending Litigation [Member] | ||||
Loss Contingency, Damages Sought, Value | $ | $ 135 |
CUSTOMER AND SUPPLIER CONCENT75
CUSTOMER AND SUPPLIER CONCENTRATION - Concentration Risk for the Company's Gross and Net Sales (Details) - Big 3 Wholesalers [Member] - Customer Concentration Risk [Member] | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Gross Sales [Member] | |||
Concentration Risk [Line Items] | |||
Customer concentration | 76.00% | 62.00% | |
Sales Revenue, Net | |||
Concentration Risk [Line Items] | |||
Customer concentration | 67.00% | 45.00% | |
Accounts Receivable | |||
Concentration Risk [Line Items] | |||
Customer concentration | 84.00% | 85.00% |
CUSTOMER AND SUPPLIER CONCENT76
CUSTOMER AND SUPPLIER CONCENTRATION - Supplier and Product Concentrations (Details) | 3 Months Ended | ||
Mar. 31, 2015Distributorproductitem | Mar. 31, 2014Distributoritem | Mar. 31, 2015item | |
Customer Concentration Risk [Member] | |||
Product Information [Line Items] | |||
Number of Customers Considered as Concentration Risks | 3 | 3 | 0 |
Supplier Concentration Risk [Member] | |||
Product Information [Line Items] | |||
Number of Suppliers Considered as Concentration Risks | item | 0 | 0 | |
Sales Revenue, Net | Product Concentration Risk [Member] | |||
Product Information [Line Items] | |||
Concentration Risk, Percentage | 10.00% | ||
Number of Products Considered as Concentration Risks | product | 1 |
INCOME TAXES - Income Tax Provi
INCOME TAXES - Income Tax Provision (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Income Tax Provision [Abstract] | ||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | $ 58,328 | $ 17,595 |
Income Tax Expense (Benefit) | 20,790 | 8,101 |
Net Income (loss) From Continuing Operations, Amount | $ 37,538 | $ 9,494 |
Income tax provision/benefit as a percentage of income/loss before income taxes | 35.60% | 46.00% |
INCOME TAXES - Tax Benefits (De
INCOME TAXES - Tax Benefits (Details) - USD ($) $ in Millions | Mar. 31, 2015 | Dec. 31, 2014 |
INCOME TAXES | ||
Unrecognized Tax Benefits | $ 2 | $ 2 |
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | 1.2 | |
Unrealized Reduction in Goodwill if Realized | $ 0.8 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - Polsinelli [Member] - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Related Party Transaction [Line Items] | ||
Related Party Transaction, Amounts of Transaction | $ 0.3 | $ 0.5 |
Accounts Payable, Related Parties | $ 0.2 | $ 0.1 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | Aug. 24, 2015item |
Subsequent Event [Member] | Forecast [Member] | |
Subsequent Event [Line Items] | |
Loss Contingency, New Claims Filed, Number | 2 |